State Capacity as an Organizational Problem. Evidence from the Growth of the U.S. State Over 100 Years - Mastrorocco, Nicola; Teso, Edoardo (National Bureau of Economic Research Working Paper Series, 2023)
We study how the organization of the state evolves over the process of development of a nation, using a new dataset on the internal organization of the U.S. federal bureaucracy over 1817- 1905. First, we show a series of novel facts, describing how the size of the state, its presence across the territory, and its key organizational features evolved over the nineteenth century. Second, exploiting the staggered expansion of the railroad and telegraph networks across space, we show that the ability of politicians to monitor state agents throughout the territory is an important driver of these facts: locations with lower transportation and communication costs with Washington DC have more state presence, are delegated more decision power, and have lower employee turnover. The results suggest that high monitoring costs are associated with small, personalistic state organizations based on networks of trust; technological innovations lowering monitoring costs facilitate the emergence of modern bureaucratic states.
Author contact info: Nicola Mastrorocco University of Bologna Department of Economics Piazza Scaravilli 2, 40126 Bologna Italy E-Mail: nicola.mastrorocco@unibo.it Edoardo Teso Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 857/250-1485 E-Mail: edoardo.teso@kellogg.northwestern.edu

Infrastructure and Finance: Evidence from India's GQ Highway Network - Das, Abhiman; Ghani, Ejaz; Grover Goswami, Arti; Kerr, William R; Nanda, Ramana (National Bureau of Economic Research Working Paper Series, 2023)
We use data from Reserve Bank of India to study the impact of India's Golden Quadrilateral (GQ) highway project on finance-dependent activity. Loan volumes increase by 20-30% in districts along GQ and are stronger in industries more dependent upon external finance. Loan growth begins with increases in average branch size and in places with more pre-GQ loan activity. New branch openings come later, consistent with short-run adjustment costs to expanding branch networks. These patterns are not evident in placebo tests using delayed investments in NS-EW highways. Results suggest the depth of initial financial infrastructure shapes how infrastructure investments impact localities.
Author contact info: Abhiman Das Vastrapur Ahmedabad India E-Mail: abhiman@iima.ac.in Ejaz Ghani South Asia PREM The World Bank Washington D.C. E-Mail: eghaniwb@gmail.com Arti Grover Goswami World Bank Washington, DC E-Mail: agrover1@worldbank.org William R. Kerr Harvard Business School Rock Center 212 Soldiers Field Boston, MA 02163 Tel: 617/496-7021 E-Mail: wkerr@hbs.edu Ramana Nanda Exhibition Road London SW7 2AZ United Kingdom E-Mail: ramana.nanda@imperial.ac.uk

Domino Secessions: Evidence from the U.S. - Lacroix, Jean; Mitchener, Kris James; Oosterlinck, Kim (National Bureau of Economic Research Working Paper Series, 2023)
A secession movement is an uncertain process that evolves over time. We develop a simple theoretical framework in which regions use news to update their decisions to secede. Uncertainty and economies of scale are necessary conditions to observe “domino secessions” – sequential interdependent secessions. Empirically, we use geographically-specific assets (state bonds) to assess how uncertainty and economies of scale influenced some slaveholding states’ decisions to secede from the U.S. in the 1860s. Uncertainty prevailed over the outcome of the secession movement with financial markets updating their priors on potential seceders at the election of Abraham Lincoln, but also every time a state seceded. We further document that financial markets priced in economies of scale to both state and federal debt.
Author contact info: Jean Lacroix RITM Department of Economics Université Paris-Saclay 54 Boulevard Desgranges Sceaux 92330 France E-Mail: jean.lacroix@universite-paris-saclay.fr Kris James Mitchener Department of Economics Leavey School of Business Santa Clara University Santa Clara, CA 95053 Tel: 408/554-4340 Fax: 408/554-2331 E-Mail: kmitchener@scu.edu Kim Oosterlinck Université libre de Bruxelles Solvay Brussels School of Economics and Management 50 Av F D Roosevelt (CP 114/03) 1050 Brussels Belgium E-Mail: koosterl@ulb.ac.be

Industry Wage Differentials: A Firm-Based Approach - Card, David; Rothstein, Jesse; Yi, Moises (National Bureau of Economic Research Working Paper Series, 2023)
We revisit the estimation of industry wage differentials using linked employer-employee data from the U.S. LEHD program. Building on recent advances in the measurement of employer wage premiums, we define the industry wage effect as the employment-weighted average workplace premium in that industry. We show that cross-sectional estimates of industry differentials overstate the pay premiums due to unmeasured worker heterogeneity. Conversely, estimates based on industry movers understate the true premiums, due to unmeasured heterogeneity in pay premiums within industries. Industry movers who switch to higher-premium industries tend to leave firms in the origin sector that pay above-average premiums and move to firms in the destination sector with below-average premiums (and vice versa), attenuating the measured industry effects. Our preferred estimates reveal substantial heterogeneity in narrowly-defined industry premiums, with a standard deviation of 12%. On average, workers in higher-paying industries have higher observed and unobserved skills, widening between-industry wage inequality. There are also small but systematic differences in industry premiums across cities, with a wider distribution of pay premiums and more worker sorting in cities with more high-premium firms and high-skilled workers.
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 Jesse Rothstein Goldman School of Public Policy and Department of Economics University of California, Berkeley 2607 Hearst Avenue #7320 Berkeley, CA 94720-7320 Tel: 510/495-0646 Fax: 510/643-9657 E-Mail: rothstein@berkeley.edu Moises Yi U.S. Census Bureau Center for Economic Studies 4600 Silver Hill Rd 5K056B Suitland, MD 20746 E-Mail: moisesyi@gmail.com

Location, Location, Location - Card, David; Rothstein, Jesse; Yi, Moises (National Bureau of Economic Research Working Paper Series, 2023)
We use data from the Longitudinal Employer-Household Dynamics program to study the causal effects of location on earnings. Starting from a model with employer and employee fixed effects, we estimate the average earnings premiums associated with jobs in different commuting zones (CZs) and different CZ-industry pairs. About half of the variation in mean wages across CZs is attributable to differences in worker ability (as measured by their fixed effects); the other half is attributable to place effects. We show that the place effects from a richly specified cross sectional wage model overstate the causal effects of place (due to unobserved worker ability), while those from a model that simply adds person fixed effects understate the causal effects (due to unobserved heterogeneity in the premiums paid by different firms in the same CZ). Local industry agglomerations are associated with higher wages, but overall differences in industry composition and in CZ-specific returns to industries explain only a small fraction of average place effects. Estimating separate place effects for college and non-college workers, we find that the college wage gap is bigger in larger and higher-wage places, but that two-thirds of this variation is attributable to differences in the relative skills of the two groups in different places. Most of the remaining variation reflects the enhanced sorting of more educated workers to higher-paying industries in larger and higher-wage CZs. Finally, we find that local housing costs at least fully offset local pay premiums, implying that workers who move to larger CZs have no higher net-of-housing consumption.
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 Jesse Rothstein Goldman School of Public Policy and Department of Economics University of California, Berkeley 2607 Hearst Avenue #7320 Berkeley, CA 94720-7320 Tel: 510/495-0646 Fax: 510/643-9657 E-Mail: rothstein@berkeley.edu Moises Yi U.S. Census Bureau Center for Economic Studies 4600 Silver Hill Rd 5K056B Suitland, MD 20746 E-Mail: moisesyi@gmail.com

Plata y Plomo: How Higher Wages Expose Politicians to Criminal Violence - Pulejo, Massimo; Querubín, Pablo (National Bureau of Economic Research Working Paper Series, 2023)
Adequate wages are an important tool to shield public officials from special interests and corruption. But what is the equilibrium effect of higher wages in the presence of criminal pressure groups, who use both bribes and violence? By means of a regression discontinuity design, we show that an increase in the remuneration of Italian municipal cabinets triggers a sizable and significant increase in criminal attacks against their members. We argue that this is triggered by higher-paid officials' lower likelihood of catering to criminal interests. In particular, we show that better-paid politicians are significantly more likely to prevent corruption in public procurement, a key area of illicit interactions between the state and criminal organizations. Additional analyses reveal that the disciplining effect of wages is driven by a change in incumbents' behavior rather than improved selection. These findings reveal how -- in the presence of criminal groups -- higher wages may limit corruption, but also foster the use of violence as an alternative tool to influence policymaking.
Author contact info: Massimo Pulejo Via Festa del Perdono, 7 Milan 20122 Italy E-Mail: massimo.pulejo@unimi.it Pablo Querubín Department of Politics New York University 19 West Fourth Street, Room 428 New York, NY 10012 Tel: 212/992-6525 E-Mail: pablo.querubin@nyu.edu

Population Aging and Economic Growth: From Demographic Dividend to Demographic Drag? - Kotschy, Rainer; Bloom, David E (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines the extent to which changes in working-age shares associated with population aging might slow economic growth in upcoming years. We first analyze the economic effects of changing working-age shares in a standard empirical growth model using country panel data from 1950–2015. We then juxtapose the estimates with predicted shifts in population age structure to project economic growth in 2020–2050. Our results indicate that population aging will slow economic growth throughout much of the world. Expansions of labor supply due to improvements in functional capacity among older people can cushion much of this demographic drag.
Author contact info: Rainer Kotschy Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave Building 1, Suite 1202 Boston, MA 02115 E-Mail: rkotschy@hsph.harvard.edu David E. Bloom Harvard T.H. Chan School of Public Health Department of Global Health and Population 665 Huntington Ave. Building 1, Suite 1202 Boston, MA 02115 Tel: 617/432-0866 Fax: 617/432-6733 E-Mail: dbloom@hsph.harvard.edu

Micro MPCs and Macro Counterfactuals: The Case of the 2008 Rebates - Orchard, Jacob; Ramey, Valerie A; Wieland, Johannes F (National Bureau of Economic Research Working Paper Series, 2023)
We present evidence that the high estimated MPCs from the leading household studies result in implausible macroeconomic counterfactuals. Using the 2008 tax rebate as a case study, we calibrate a standard medium-scale New Keynesian model with the estimated micro MPCs to construct counterfactual macroeconomic consumption paths in the absence of a rebate. The counterfactual paths imply that consumption expenditures would have plummeted in spring and summer 2008 and then recovered when Lehman Brothers failed in September 2008. We use narratives and forecasts to argue that these paths are implausible. We then show that standard two-way fixed effect estimates of the micro MPCs are upward biased. When we correct for the biases, we estimate smaller micro MPCs than the previous literature. We also show that reasonable modifications of the model result in general equilibrium forces that dampen rather than amplify micro MPCs. The combination of smaller micro MPCs and dampening general equilibrium forces implies general equilibrium consumption multipliers that are below 0.2.
Author contact info: Jacob Orchard 2001 C St NW, 20006 Federal Reserve Board Washington, DC 20006 USA E-Mail: jake.orchard@frb.gov Valerie A. Ramey Hoover Institution Stanford University 434 Galvez Mall Stanford, CA 94305 Tel: 858/534-2388 Fax: 858/534-7040 E-Mail: vramey@stanford.edu Johannes Wieland Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 510/388-2785 E-Mail: jfwieland@ucsd.edu

Machine Forecast Disagreement - Bali, Turan G; Kelly, Bryan T; Mörke, Mathis; Rahman, Jamil (National Bureau of Economic Research Working Paper Series, 2023)
We propose a statistical model of differences in beliefs in which heterogeneous investors are represented as different machine learning model specifications. Each investor forms return forecasts from their own specific model using data inputs that are available to all investors. We measure disagreement as dispersion in forecasts across investor-models. Our measure aligns with extant measures of disagreement (e.g., analyst forecast dispersion), but is a significantly stronger predictor of future returns. We document a large, significant, and highly robust negative cross-sectional relation between belief disagreement and future returns. A decile spread portfolio that is short stocks with high forecast disagreement and long stocks with low disagreement earns a value-weighted average return of 14% per year. A range of analyses suggest the alpha is mispricing induced by short-sale costs and limits-to-arbitrage.
Author contact info: Turan G. Bali McDonough School of Business Georgetown University Between 37th and O Streets Washington, DC 20057 Tel: (202) 687-5388 Fax: (202) 687-4031 E-Mail: turan.bali@georgetown.edu Bryan T. Kelly Yale School of Management 165 Whitney Ave. New Haven, CT 06511 Tel: 203-432-2221 E-Mail: bryan.kelly@yale.edu Mathis Mörke Unterer Graben 21 CH-9000 St. Gallen Switzerland E-Mail: mathis.moerke@unisg.ch Jamil Rahman E-Mail: jamil.rahman@yale.edu

Organizational Responses to Product Cycles - Adhvaryu, Achyuta; Bassi, Vittorio; Nyshadham, Anant; Tamayo, Jorge A; Torres, Nicolas (National Bureau of Economic Research Working Paper Series, 2023)
We use daily administrative data from a leading automobile manufacturer to study the organizational impacts of introducing new models to the auto assembly line. We first show that costly defects per vehicle spike when new models are introduced. As a response, the firm trains in problem-solving skills and promotes lower- and mid-level employees to solve the more complex problems that arise, thus moving to a less pyramidal knowledge hierarchy with fewer layers. We develop an extension to the classic theory of knowledge-based hierarchies that reconciles our novel empirical results by allowing the firm to also invest in its training resources.
Author contact info: Achyuta Adhvaryu School of Global Policy and Strategy University of California, San Diego La Jolla, CA 92093 Tel: 734/615-2327 E-Mail: aadhvaryu@ucsd.edu Vittorio Bassi University of Southern California Department of Economics 3620 South Vermont Avenue, Kaprielian Hall Los Angeles, CA 90089 E-Mail: vbassi@usc.edu Anant Nyshadham Stephen M. Ross School of Business University of Michigan 701 Tappan Street Ann Arbor, MI 48109-1234 E-Mail: nyshadha@umich.edu Jorge A. Tamayo Harvard Business School Soldiers Field, Morgan Hall 292 Boston, MA 02163 E-Mail: jtamayo@hbs.edu Nicolas Torres E-Mail: nicolas.t@goodbusinesslab.org

The Impact of Criminal Financial Sanctions: A Multi-State Analysis of Survey and Administrative Data - Finlay, Keith; Gross, Matthew; Lieberman, Carl; Luh, Elizabeth; Mueller-Smith, Michael G (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the impact of financial sanctions in the U.S. criminal justice system using nine distinct natural experiments across five states. These regression discontinuity designs capture a range of enforcement levels ($17–$6,000) and institutional environments, providing robust causal evidence and external validity. We leverage survey and administrative data to consider a variety of short and long-term outcomes including employment, recidivism, household expenditures, spousal spillovers, and other self-reported measures of well-being. We find consistent, robust evidence of precise null effects on the population, including ruling out long-run impacts larger than -$347–$168 in annual earnings and -0.002–0.01 in annual convictions.
Author contact info: Keith Finlay U.S. Census Bureau 4600 Silver Hill Road Washington, DC 20233 United States Tel: 3017636056 E-Mail: keith.ferguson.finlay@census.gov Matthew Gross E-Mail: mbgross@umich.edu Carl Lieberman U.S. Census Bureau E-Mail: carl.lieberman@census.gov Elizabeth Luh E-Mail: eluh@uh.edu Michael G. Mueller-Smith Department of Economics University of Michigan 365C Lorch Hall 611 Tappan Ave. Ann Arbor, MI 48109-1220 Tel: 410/218-3189 E-Mail: mgms@umich.edu

Roots of Inequality - Galor, Oded; Klemp, Marc; Wainstock, Daniel C (National Bureau of Economic Research Working Paper Series, 2023)
Why does inequality vary across societies? We advance the hypothesis that in a market economy, where earning differentials reflect variations in productive traits, a significant component of the differences in income inequality across societies can be attributed to variation in societal interpersonal diversity, shaped during the prehistoric Out-of-Africa Migration. The roots of income inequality within the US population provide supporting evidence for the hypothesis. It suggests that variation in income inequality across groups of individuals originating from different ancestral backgrounds can be traced to the degree of diversity of their ancestral populations as was carved in the course of the dispersal of humanity from Africa.
Author contact info: Oded Galor Department of Economics Brown University Box B Providence, RI 02912 Tel: 401/863-2117 Fax: 401/863-1970 E-Mail: oded_galor@brown.edu Marc Klemp Økonomisk Institut University of Copenhagen Øster Farimagsgade 5, bygning 26 1353 København K E-Mail: marc.klemp@econ.ku.dk Daniel Crisóstomo Wainstock E-Mail: daniel_crisostomo_wainstock@brown.edu

Broadband Internet Access and Health Outcomes: Patient and Provider Responses in Medicare - Van Parys, Jessica; Brown, Zach Y (National Bureau of Economic Research Working Paper Series, 2023)
High-speed internet has increased the amount of information available in health care markets. Online information may improve health outcomes if it reduces information frictions and helps patients choose higher quality providers or causes providers to improve quality. We examine how health outcomes for common procedures in Medicare changed after broadband internet rolled out across ZIP Codes from 1999 to 2008. Estimates imply that broadband expansion improved health outcomes by 5%. Broadband access primarily helped patients choose higher-quality providers; we also find some evidence that broadband improved provider quality. We use a structural model to decompose the improvements in patient outcomes over time. Counterfactual simulations imply that broadband roll-out was responsible for 16% of the improvement in outcomes by the end of the period.
Author contact info: Jessica Van Parys Department of Economics Hunter College 695 Park Avenue, HW 1534 New York, NY 10065 E-Mail: jessica.vanparys@hunter.cuny.edu Zach Y. Brown Department of Economics University of Michigan 611 Tappan Ave Ann Arbor, MI 48109 E-Mail: zachb@umich.edu

Long Term Expectations and Aggregate Fluctuations - Bordalo, Pedro; Gennaioli, Nicola; La Porta, Rafael; O'Brien, Matthew; Shleifer, Andrei (National Bureau of Economic Research Working Paper Series, 2023)
In line with Keynes’ intuition, volatility in the stock market and in real economic activity are linked by expectations of long term profits. We show that analysts’ optimism about the long term earnings growth of S&P 500 firms is associated with a near term boom in major US financial markets, real investment, and other business cycle indicators. The same optimism however predicts disappointing earnings growth and a contraction in financial markets and real activity one to two years later. Overreaction of measured long term profit expectations emerges as a promising mechanism for reconciling Shiller’s excess volatility puzzle with the business cycle.
Author contact info: Pedro Bordalo Saïd Business School University of Oxford Park End Street Oxford, OX1 1HP United Kingdom E-Mail: pedro.bordalo@sbs.ox.ac.uk Nicola Gennaioli Department of Finance Università Bocconi Via Roentgen 1 20136 Milan, Italy E-Mail: nicola.gennaioli@unibocconi.it Rafael La Porta Brown University 70 Waterman Street Room 101 Providence, RI 02912 E-Mail: Rafael.Laporta@brown.edu Matthew O'Brien Department of Economics Harvard University Cambridge, MA 02138 E-Mail: matthewalexobrien@gmail.com Andrei Shleifer Department of Economics Harvard University Littauer Center M-9 Cambridge, MA 02138 Tel: 617/495-5046 Fax: 617/496-1708 E-Mail: ashleifer@harvard.edu

Did the U.S. Really Grow Out of Its World War II Debt? - Acalin, Julien; Ball, Laurence M (National Bureau of Economic Research Working Paper Series, 2023)
The fall in the U.S. public debt/GDP ratio from 106% in 1946 to 23% in 1974 is often attributed to high rates of economic growth. This paper examines the roles of three other factors: primary budget surpluses, surprise inflation, and pegged interest rates before the Fed-Treasury Accord of 1951. Our central result is a simulation of the path that the debt/GDP ratio would have followed with primary budget balance and without the distortions in real interest rates caused by surprise inflation and the pre-Accord peg. In this counterfactual, debt/GDP declines only to 74% in 1974, not 23% as in actual history. Moreover, the ratio starts rising again in 1980 and in 2022 it is 84%. These findings imply that, over the last 76 years, only a small amount of debt reduction has been achieved through growth rates that exceed undistorted interest rates.
Author contact info: Julien Acalin 1900 Pennsylvania Avenue NW Washington, DC 20431 E-Mail: jacalin@imf.org 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

The Changing Skill Content of Private Sector Union Coverage - Dodini, Samuel; Lovenheim, Michael F; Willén, Alexander (National Bureau of Economic Research Working Paper Series, 2023)
Concurrent with the precipitous decline in private sector unionization over the past half century, there has been a shift in the type of work covered by unions. We take a skill-based approach to studying this shift, using data from the Current Population Survey combined with occupation-specific task requirements from the Dictionary of Occupational Titles and the Occupational Information Network. We partition skills into four groups based on two dimensions of task requirements: non-routine cognitive, non-routine manual, routine cognitive, and routine manual. For both men and women, private sector unionized jobs have changed to require more non-routine, cognitive skills and for women, less routine/manual skills. Union, non-union skill differences have grown, with unionized jobs requiring relatively more non-routine cognitive skill for both groups but also relatively more routine skills. We decompose these skill changes into: (1) changes in skills within an occupation, (2) changes in worker concentration across existing occupations, and (3) changes to the occupational mix from entry and exit. Most of the skill changes we document are driven by the second two forces. Finally, we discuss how this evidence can be reconciled with a model of skill-biased technological change that explicitly accounts for the institutional framework surrounding collective bargaining.
Author contact info: Samuel Dodini Department of Economics Norwegian School of Economics Helleveien 30 5045 Bergen Norway Tel: +47 45515929 E-Mail: samuel.dodini@nhh.no Michael F. Lovenheim Brooks School of Public Policy ILR School, and Department of Economics Cornell University 271 Ives Hall Ithaca, NY 14853 E-Mail: mfl55@cornell.edu Alexander Willén Department of Economics Norwegian School of Economics Helleveien 30 5045 Bergen Norway E-Mail: alexander.willen@nhh.no

The Value of Intermediaries for GSE Loans - Bosshardt, Joshua; Kakhbod, Ali; Kermani, Amir (National Bureau of Economic Research Working Paper Series, 2023)
We analyze the costs and benefits of intermediaries for government-sponsored enterprise (GSE) mortgages using regulatory data. We find evidence of lenders pricing for observable and unobservable default risk independently from the GSEs. These findings are explained using a model of competitive lending in which lenders have skin-in-the-game and acquire information beyond the GSEs' underwriting criteria, but also charge markups. We find that most borrowers are better off in a counterfactual in which the GSEs' underwriting criteria are implemented passively. Finally, the observed differences between banks and nonbanks are more consistent with differences in their skin-in-the-game rather than screening quality.
Author contact info: Joshua Bosshardt Federal Housing Finance Agency Constitution Center 400 7th Street SW Washington, DC 20219 E-Mail: joshua.bosshardt@fhfa.gov Ali Kakhbod Haas School of Business University of California, Berkeley 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: akakhbod@berkeley.edu Amir Kermani Haas School of Business University of California, Berkeley 545 Student Services Building #1900 Berkeley, CA 94720 Tel: 510/664-4139 E-Mail: kermani@berkeley.edu

Accounting for Environmental Activity: Measuring Public Environmental Expenditures and the Environmental Goods and Services Sector in the US - Fixler, Dennis; Hass, Julie L; Highfill, Tina; Wentland, Kelly M; Wentland, Scott A (National Bureau of Economic Research Working Paper Series, 2023)
How much of the economy is focused on protecting, rehabilitating, or managing the environment? To answer this question, we develop a proof-of-concept environmental activity account to quantify the environmental goods and services sector (EGSS) in the United States. Methodologically, we employ a satellite account approach similar to the method used by the US Bureau of Economic Analysis (BEA) to quantify other sectors of the economy (e.g., Outdoor Recreation Account, Marine Economy Account) while following the accounting principles and methods outlined in the SEEA Central Framework (SEEA-CF). This approach draws on detailed internal supply-use data, drawn primarily from Census’s Industry and Product data along with other supplemental sources. Overall, we estimate gross output of the EGSS was $725 billion in 2019, or about 1.9% of the total gross output of the US economy. Government expenditures (across all levels) comprise a substantial portion of the EGSS in the US, as the public sector accounted for about 27% of total EGSS output ($197 billion) in 2019. Although these estimates are still preliminary and are not official statistics, the goals of this research are to provide new insights into classification and measurement challenges in producing environmental activity accounts more generally, while also documenting data gaps and accounting issues in the US context more specifically.
Author contact info: Dennis Fixler Chief Economist Bureau of Economic Analysis U.S. Department of Commerce 1441 L Street NW Washington, DC 20230 E-Mail: Dennis.Fixler@bea.gov Julie L. Hass Office of the Chief Economist Bureau of Economic Analysis 4600 Silver Hill Rd Suitland, MD 20746 United States E-Mail: jlhass@gmail.com Tina Highfill Bureau of Economic Analysis E-Mail: tina.highfill@bea.gov Kelly M. Wentland School of Business Enterprise Hall 4400 University Drive Fairfax, VA 22030 E-Mail: kwentlan@gmu.edu Scott A. Wentland 4600 Silver Hill Rd Suitland, MD 20746 E-Mail: scott.wentland@bea.gov

On the Source and Instability of Probability Weighting - Frydman, Cary; Jin, Lawrence J (National Bureau of Economic Research Working Paper Series, 2023)
We propose and experimentally test a new theory of probability distortions in risky choice. The theory is based on a core principle from neuroscience called efficient coding, which states that information is encoded more accurately for those stimuli that the agent expects to encounter more frequently. As the agent's prior beliefs vary, the model predicts that probability distortions change systematically. We provide novel experimental evidence consistent with the prediction: lottery valuations are more sensitive to probabilities that occur more frequently under the subject's prior beliefs. Our theory generates additional novel predictions regarding heterogeneity and time variation in probability distortions.
Author contact info: Cary Frydman University of Southern California Marshall School of Business 3670 Trousdale Parkway, BRI 204G Los Angeles, CA 90089 E-Mail: cfrydman@marshall.usc.edu Lawrence J. Jin Johnson College of Business Cornell University Ithaca, NY 14850 Tel: 607-255-0581 E-Mail: lawrence.jin@cornell.edu

Skills, Majors, and Jobs: Does Higher Education Respond? - Conzelmann, Johnathan G; Hemelt, Steven W; Hershbein, Brad; Martin, Shawn M; Simon, Andrew; Stange, Kevin M (National Bureau of Economic Research Working Paper Series, 2023)
How do college students and postsecondary institutions react to changes in skill demand in the U.S. labor market? We quantify the magnitude and nature of response in the 4-year sector using a new measure of labor demand at the institution-major level that combines online job ads with geographic locations of alumni from a professional networking platform. Within a shift-share setup, we find that the 4-year sector responds. We estimate elasticities for undergraduate degrees and credits centered around 1.3, generally increasing with time horizon. Changes in non-tenure-track faculty allocations and the credits they teach partially mediate this overall response. We provide further evidence that the magnitude of the overall response depends on both student demand and institutional supply-side constraints. Our findings illuminate the nature of educational production in higher education and suggest that policy efforts that aim to align human capital investment with labor demand may struggle to achieve such goals if they target only one side of the market.
Author contact info: Johnathan G. Conzelmann Department of Public Policy 131 S. Columbia Street Abernethy Hall, Campus Box 3435 Chapel Hill, NC 27599 E-Mail: jconzelm@unc.edu Steven W. Hemelt Department of Public Policy University of North Carolina at Chapel Hill 131 S. Columbia Street Abernethy Hall, Campus Box 3435 Chapel Hill, NC 27599 E-Mail: hemelt@email.unc.edu Brad Hershbein W.E. Upjohn Institute for Employment Research 300 S. Westnedge Ave. Kalamazoo, MI 49007 E-Mail: hershbein@upjohn.org Shawn M. Martin E-Mail: shawnmm@umich.edu Andrew Simon University of Chicago, Department of Economics 1126 E. 59th St Chicago, IL 60637 United States E-Mail: andrewsimon@uchicago.edu Kevin M. Stange Gerald R. Ford School of Public Policy University of Michigan 5236 Weill Hall 735 South State Street Ann Arbor, MI 48109 Tel: 734/615-6990 E-Mail: kstange@umich.edu

How to Fund Unemployment Insurance with Informality and False Claims: Evidence From Senegal - Ndiaye, Abdoulaye; Herkenhoff, Kyle F; Cisse, Abdoulaye; Dell'Acqua, Alessandro; Mbaye, Ahmadou Aly (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the welfare effects of unemployment insurance (UI) in low-income countries characterized by high levels of informality, weak enforcement of UI claims, and job search frictions. We assess the impact of UI on workers’ welfare in the presence of moral hazard and liquidity constraints. Our analysis highlights the significance of the UI scheme design on workers’ welfare and identifies potential funding constraints in implementing UI in imperfect labor markets. Using a custom labor force survey conducted in Senegal, we estimate the key parameters of an extended Chetty (2006) model incorporating an informal sector, and we evaluate the welfare implications of three different UI schemes with varying degrees of enforcement and funding sources. Our results demonstrate that workers respond to UI benefits and that welfare gains depend on the design of the UI system. We find that broad-based taxation through a VAT, inflation tax, or external funding can compensate for weak enforcement (i.e., high false UI claim rates), leading to substantial and quantifiable welfare gains. Moreover, safety net expansions reduce loan default rates, potentially fostering greater credit access. This study suggests that increasing the prevalence of UI in low-income countries could raise standard measures of consumer welfare.
Author contact info: Abdoulaye Ndiaye New York University 44 W 4th St Office 7-72 New York, NY 10012 United States Tel: 8572417251 E-Mail: andiaye@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 Abdoulaye Cisse E-Mail: cisse@berkeley.edu Alessandro Dell'Acqua E-Mail: dellacqua.alessandro.98@gmail.com Ahmadou Aly Mbaye Universite Cheikh Anta Diop (UCAD) BP 16448 Dakar Fann Dakar Senegal Tel: +221775699527 E-Mail: mbayealy93@yahoo.fr

Monitoring for Waste: Evidence from Medicare Audits - Shi, Maggie (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines the tradeoffs of monitoring for wasteful public spending. By penalizing unnecessary spending, monitoring improves the quality of public expenditure and incentivizes firms to invest in compliance technology. I study a large Medicare program that monitored for unnecessary healthcare spending and consider its effect on government savings, provider behavior, and patient health. Every dollar Medicare spent on monitoring generated $24–29 in government savings. The majority of savings stem from the deterrence of future care, rather than reclaimed payments from prior care. I do not find evidence that the health of the marginal patient is harmed, indicating that monitoring primarily deters low-value care. Monitoring does increase provider administrative costs, but these costs are mostly incurred upfront and include investments in technology to assess the medical necessity of care.
Author contact info: Maggie Shi Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: m.shi@uchicago.edu

The Search for Good Jobs: Evidence from a Six-year Field Experiment in Uganda - Bandiera, Oriana; Bassi, Vittorio; Burgess, Robin; Rasul, Imran; Sulaiman, Munshi; Vitali, Anna (National Bureau of Economic Research Working Paper Series, 2023)
There are 420 million young people in Africa today. Understanding how youth search for jobs and what affects their ability to find good jobs is of paramount importance. We do so using a field experiment tracking young job seekers for six years in Uganda's main cities. We examine how two standard labor market interventions impact their search for good jobs: vocational training, vocational training combined with matching youth to firms, and matching only. Training is offered in sectors with high quality firms. The matching intervention assigns workers for interviews with such firms. At baseline, unskilled youth are optimistic about their job prospects, especially over the job offer arrival rate from high quality firms. Those offered vocational training become even more optimistic, search more intensively and direct their search towards high quality firms. However, youth additionally offered matching become discouraged because call back rates from firm owners are far lower than their prior. As a result, they search less intensively and direct their search towards lower quality firms. These divergent expectations and search behaviors have persistent impacts: vocational trainees without match offers achieve greater labor market success, largely because they end up employed at higher quality firms than youth additionally offered matching. Our analysis highlights the foundational but separate roles of skills and expectations in job search, how interventions cause youth to become optimistic or discouraged, and how this matters for long run sorting and individual labor market outcomes.
Author contact info: Oriana Bandiera London School of Economics International Growth Centre Houghton Street London WC2A 2AE, UK E-Mail: o.bandiera@lse.ac.uk Vittorio Bassi University of Southern California Department of Economics 3620 South Vermont Avenue, Kaprielian Hall Los Angeles, CA 90089 E-Mail: vbassi@usc.edu Robin Burgess Department of Economics, 32L.3.03 London School of Economics Houghton Street London WC2A 2AE United Kingdom E-Mail: r.burgess@lse.ac.uk Imran Rasul University College London Department Of Economics Drayton House 30 Gordon Street London WC1E 6BT United Kingdom Tel: +44 207 679 5853 E-Mail: i.rasul@ucl.ac.uk Munshi Sulaiman Plot 880, Heritage Road, Nsambya, P.O Box 31817 Kampala Uganda E-Mail: munshi.sulaiman@bracu.ac.bd Anna Vitali 306b Silsby Dartmouth College Department Of Economics Hanover, 0375 US E-Mail: anna.vitali.16@ucl.ac.uk

Productivity Variation and Input Misallocation: Evidence from Hospitals - Chandra, Amitabh; Colla, Carrie H; Skinner, Jonathan S (National Bureau of Economic Research Working Paper Series, 2023)
There are widespread differences in total factor productivity across producers in the U.S. and around the world. To help explain these variations, we devise a general test for misallocation in input choices – the underuse of effective inputs and overuse of ineffective ones. Misallocation implies that conditional on total input use, the return to using a particular input is not zero (a positive return implies underuse, and a negative return implies overuse). We measure misallocation across hospitals, where inputs and outputs are better measured than in other industries. Applying our test to a sample of 1.6 million Medicare beneficiaries with heart attacks (of which 436 thousand were admitted by ambulance), we reject the hypothesis of productive efficiency; moving a patient from a 10th percentile to a 90th percentile hospital with respect to misallocation, holding spending constant, is predicted to increase survival by 3.1 percentage points. With misallocation accounting for as much as 25 percent of the variation in hospital productivity, our results suggest that how the money is spent, rather than how much money is spent, is central to understanding productivity differences both in health care, and in the rest of the economy.
Author contact info: Amitabh Chandra John F. Kennedy School of Government Harvard University 79 JFK Street Cambridge, MA 02138 Tel: 617/496-7356 E-Mail: amitabh_chandra@harvard.edu Carrie H. Colla The Dartmouth Institute for Health Policy and Clinical Practice Geisel School of Medicine 1 Medical Center Dr. Lebanon E-Mail: carrie.h.colla@dartmouth.edu Jonathan S. Skinner Department of Economics 6106 Rockefeller Hall Dartmouth College Hanover, NH 03755 Tel: 603/646-2535 Fax: 603/646-2122 E-Mail: jonathan.skinner@dartmouth.edu

Drinking Water Contaminant Concentrations and Birth Outcomes - DiSalvo, Richard; Hill, Elaine L (National Bureau of Economic Research Working Paper Series, 2023)
Previous research in the US has found negative health effects of contamination when it triggers regulatory violations. An important question is whether levels of contamination that do not trigger a health-based violation impact health. We study the impact of drinking water contamination in community water systems on birth outcomes using drinking water sampling results data in Pennsylvania. We create an overall water quality index and an index specific to reproductive health. We focus on the effects of water contamination for births not exposed to regulatory violations. Our most rigorous specification employs mother fixed effects and finds changing from the 10th to the 90th percentile of water contamination (among births not exposed to regulatory violations) increases low birth weight by 12% and preterm birth by 17%.
Author contact info: Richard DiSalvo New York City Independent Budget Office 110 William St # 1401 New York, NY 10038 E-Mail: rdisalv2@gmail.com Elaine L. Hill Department of Public Health Sciences Department of Economics University of Rochester 265 Crittenden Boulevard Rochester, NY 14642 E-Mail: elaine_hill@urmc.rochester.edu

The Summer Drop in Female Employment - Price, Brendan M; Wasserman, Melanie (National Bureau of Economic Research Working Paper Series, 2023)
We provide the first systematic account of summer declines in women’s labor market activity. From May to July, the employment-to-population ratio among prime-age US women declines by 1.1 percentage points, whereas male employment rises; women’s total hours worked fall by 9.8 percent, more than twice the decline among men. School closures for summer break—and corresponding lapses in implicit childcare—provide a unifying explanation for these patterns. The summer drop in female employment aligns with cross-state differences in the timing of school closures, is concentrated among mothers with young school-age children, and coincides with increased time spent engaging in childcare. Decomposing the gender gap in summer work interruptions across job types defined by sector and occupation, we find large contributions from both gender differences in job allocation and gender differences within job types in the propensity to exit employment over the summer. Women’s summer work interruptions contribute to gender gaps in pay: women’s weekly earnings decline by 3.3 percent over the summer months, about five times the decline among men.
Author contact info: Brendan M. Price Federal Reserve Board 20th Street and Constitution Ave NW Washington, DC 20551 E-Mail: brendan.m.price@frb.gov Melanie Wasserman UCLA Anderson School of Management 110 Westwood Plaza C521 Los Angeles, CA 90095 E-Mail: melanie.wasserman@anderson.ucla.edu

Author Country of Origin and Attention on Open Science Platforms: Evidence from COVID-19 Preprints - Fry, Caroline; MacGarvie, Megan (National Bureau of Economic Research Working Paper Series, 2023)
Online platforms such as preprint servers have become an important way to disseminate new scientific knowledge prior to peer review. However, little is known about how attention to preprints may vary across authors from different countries of origin, particularly relative to evaluation in expert-controlled systems such as scientific journals. This study explores how readers allocated attention across preprints in the initial months of the COVID-19 pandemic, a time when there was an increase in demand for new research and a corresponding increase in the use of preprint platforms around the world. We find that, after controlling carefully for article quality and topic as well as the prominence of the preprint’s ultimate publication outlet, preprints with authors from Chinese institutions receive less attention, and preprints with authors from U.S. institutions receive more attention, than preprints with authors from the rest of the world. In an exploration of potential mechanisms driving the observed effects, we find evidence that when evaluation is more constrained, in terms of lack of knowledge or expertise and increase in time pressure, audiences tend to make greater use of preprint authors’ country of origin as a proxy for quality or relevance. The results suggest that geographic biases may persist or even be exacerbated on platforms designed to promote unfettered access to early research findings.
Author contact info: Caroline Fry Management and Industrial Relations Shidler College of Business University of Hawaiʻi at Mānoa 2404 Maile Way Honolulu, HI 96822 E-Mail: cvfry@hawaii.edu Megan MacGarvie Boston University School of Management 595 Commonwealth Avenue, Room 522H Boston, MA 02215 Tel: 617/353-9490 Fax: 617/353-6667 E-Mail: mmacgarv@bu.edu

Testing Above the Limit: Drinking Water Contamination and Test Scores - Marcus, Michelle M (National Bureau of Economic Research Working Paper Series, 2023)
This paper provides the first estimates of the contemporaneous effect of drinking water quality violations on students’ academic achievement. Using student-level test score data with residential addresses, geographic information on water systems, and drinking water violations from North Carolina, I estimate the within-student impacts of poor water quality on student test scores. Exposure to a bacteria violation during the school year decreases math scores by about 0.037 standard deviations when the public is uninformed. Results suggest that poor water quality may impact retention or comprehension of material throughout the school year.
Author contact info: Michelle M. Marcus Department of Economics Vanderbilt University 310 Calhoun Hall Nashville, TN 37240 Tel: 419/392-0361 E-Mail: michelle.marcus@vanderbilt.edu

Seniority - Kang, DongIk; Kimball, Miles S (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the optimal wage structure of a firm with imperfect monitoring of worker effort. We find that when firms can commit to (implicit) long-term contracts, imperfect monitoring leads to optimal wage profiles that reflect worker seniority. We provide a precise measure of seniority as a ratio of co-state variables and illustrate how this measure of seniority evolves over the worker’s tenure with the firm and how it affects wages, effort, and separation rates. We also show how earnings loss from unemployment reflects seniority and how optimal monitoring intensity, amenities and on-the-job training evolve with seniority.
Author contact info: DongIk Kang 336 Sicheong-daero Sejong-si South Korea E-Mail: dikang@kipf.re.kr Miles S. Kimball Economics Building University of Colorado Boulder 261 UCB #212 Boulder, CO 80302 Tel: 303/492-8295 Fax: 303/492-8960 E-Mail: miles.kimball@colorado.edu

Who Benefits From The Export-Import Bank Aid? - Benmelech, Efraim; Monteiro, Joao (National Bureau of Economic Research Working Paper Series, 2023)
We study the effectiveness of government aid to exporters by exploring an exogenous shock that affected the ability of the Export-Import Bank of the United States (EXIM) to provide aid to U.S. exporters through loan guarantees to importers. We focus on Boeing, the largest individual recipient of aid. We find that Boeing sales declined only modestly – despite Boeing’s significant reliance on EXIM for export credit. Moreover, we find that this decline is driven by financially constrained airlines or by airlines operating in countries with underdeveloped financial systems. We show that airlines in developed countries were easily able to substitute EXIM guaranteed loans for private credit and thus could still purchase Boeing aircraft despite the EXIM shock. Our results are consistent with the view that government-sponsored export credit is mostly relevant for importers in countries with underdeveloped financial systems, which represent a relatively small share of total EXIM aid.
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 Joao Monteiro via Sallustiana 62 Rome 00187 Italy Tel: +39.06.4792.4968 Fax: +39.06.4792.4872 E-Mail: joao.mcmonteiro93@gmail.com

Strategic Money and Credit Ledgers - Brunnermeier, Markus K; Payne, Jonathan (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies strategic decision making by a private currency ledger operator, which faces competition from public money and/or other ledgers. A monopoly ledger operator can incentivize contract enforcement across the financial sector by threatening exclusion, but it can also impose markups through its pricing power. Currency competition limits rent extraction, but also makes coordinated contract enforcement more fragile. The emergent market structure bundles the provision of ledger and platform trading technologies. Regulation to ensure platform cooperation on contract enforcement and competition on markup setting is effective so long as agents can easily switch between platforms.
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 Jonathan Payne Department of Economics 307 Julis Romo Rabinowitz Building Princeton, NJ 08540 USA Tel: 15162534750 Fax: 6092589444 E-Mail: jepayne@princeton.edu

The Effect of Child Endowment on Fertility Choices - Lavy, Victor; Nussbaum, Yeshaya (National Bureau of Economic Research Working Paper Series, 2023)
Does the intellectual endowment of children affect parents’ fertility choices? The quantity-quality model of fertility predicts that a positive (negative) shock to child endowment increases (decreases) parental demand for children. We test these predictions using Israeli data on intellectually gifted and intellectually disabled children. Because families with an exceptional-endowment child differ from those without, we propose quasi-experiments that exploit differences in the child’s birth order to estimate the effect of her birth on further fertility. We find that the birth of a gifted child increases family size. However, parents must recognize the endowment’s exceptionality for it to have an effect. Similarly, the birth of an intellectually disabled child negatively affects family size, but only when the child is of high birth order. Our results point to child endowment as an important factor in determining fertility choices.
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 Yeshaya Nussbaum E-Mail: yeshaya.nussbaum@mail.huji.ac.il

Artificial Intelligence and Scientific Discovery: A Model of Prioritized Search - Agrawal, Ajay K; McHale, John; Oettl, Alexander (National Bureau of Economic Research Working Paper Series, 2023)
We model a key step in the innovation process, hypothesis generation, as the making of predictions over a vast combinatorial space. Traditionally, scientists and innovators use theory or intuition to guide their search. Increasingly, however, they use artificial intelligence (AI) instead. We model innovation as resulting from sequential search over a combinatorial design space, where the prioritization of costly tests is achieved using a predictive model. We represent the ranked output of the predictive model in the form of a hazard function. We then use discrete survival analysis to obtain the main innovation outcomes of interest – the probability of innovation, expected search duration, and expected profit. We describe conditions under which shifting from the traditional method of hypothesis generation, using theory or intuition, to instead using AI that generates higher fidelity predictions, results in a higher likelihood of successful innovation, shorter search durations, and higher expected profits. We then explore the complementarity between hypothesis generation and hypothesis testing; potential gains from AI may not be realized without significant investment in testing capacity. We discuss the policy implications.
Author contact info: Ajay K. Agrawal Rotman School of Management University of Toronto 105 St. George Street Toronto, ON M5S 3E6 Tel: 416/946-0203 Fax: 416/978-5433 E-Mail: ajay.agrawal@rotman.utoronto.ca John McHale J.E. Cairnes School of Business and Economics University of Galway 49 Upper Newcastle Galway, H91 YK8V Ireland E-Mail: john.mchale@universityofgalway.ie Alexander Oettl Scheller College of Business Georgia Institute of Technology 800 West Peachtree Street NW Atlanta, GA 30308 Tel: 404/385-4570 E-Mail: alexander.oettl@scheller.gatech.edu

The Effect of Medicaid Expansion on the Take-up of Disability Benefits by Race and Ethnicity - Staiger, Becky; Helfer, Madeline S; Van Parys, Jessica (National Bureau of Economic Research Working Paper Series, 2023)
Public disability programs provide financial support to 12 million working-age individuals per year, though not all eligible individuals take up these programs. Mixed evidence exists regarding the impact of Medicaid eligibility expansion on program take-up, and even less is known about the relationship between Medicaid expansion and racial and ethnic disparities in take-up. Using 2009—2020 Current Population Survey (CPS) data, we compare changes in Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) take-up among respondents with disabilities living in Medicaid expansion states to respondents with disabilities living in non-expansion states, before and after Medicaid expansion. We further explore heterogeneity by race/ethnicity. We find that Medicaid expansion reduced SSI take-up by 10% overall, particularly among White and Hispanic respondents (10% and 21%, respectively). Medicaid expansion increased SSDI take-up by 8% overall, particularly among White and Black respondents (9% and 11%, respectively). Moreover, we find that Medicaid expansion reduced the probability that respondents with disabilities had employer-sponsored health insurance by approximately 8%, suggesting that expansion may have reduced job-lock among the SSDI-eligible, contributing to the observed increase in SSDI take-up.
Author contact info: Becky Staiger 2121 Berkeley Way #5424 Health Policy & Management School of Public Health Berkeley, CA 94720 E-Mail: bstaiger@berkeley.edu Madeline S. Helfer E-Mail: mshelfer@nber.org Jessica Van Parys Department of Economics Hunter College 695 Park Avenue, HW 1534 New York, NY 10065 E-Mail: jessica.vanparys@hunter.cuny.edu

School Accountability, Long-Run Criminal Activity, and Self-Sufficiency - Eren, Ozkan; Figlio, David N; Mocan, Naci H; Ozturk, Orgul (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines the impact of school accountability on adult crime and economic self-sufficiency. We employ a unique source of linked administrative data from a Southern state and exploit exogenous variation generated by the state's accountability regime. Our findings indicate that a school's receipt of a lower accountability rating, at the bottom end of the ratings distribution, decreases adult criminal involvement. Accountability pressures also reduce the propensity of students' reliance on social welfare programs in adulthood and these effects persist at least until when individuals reach their early 30s. Further examination reveals that our results are consistent with an explanation related to improvements in human capital accumulation.
Author contact info: Ozkan Eren Department of Economics University of California, Riverside Sproul Hall Riverside, CA 92521 E-Mail: ozkan.eren@ucr.edu David N. Figlio University of Rochester 220 Hutchinson Road Rochester, NY 14611 E-Mail: david.figlio@rochester.edu Naci H. Mocan Department of Economics Louisiana State University 2439 BEC Baton Rouge, LA 70803-6306 Tel: 225/578-4570 E-Mail: mocan@lsu.edu Orgul Ozturk 821 Beltline Blvd Columbia SC Columbia, Sout 29208 United States Tel: 8034636168 E-Mail: odozturk@moore.sc.edu

The Dynastic Benefits of Early Childhood Education: Participant Benefits and Family Spillovers - García, Jorge Luis; Bennhoff, Frederik H; Ermini Leaf, Duncan (National Bureau of Economic Research Working Paper Series, 2023)
We demonstrate the social efficiency of investing in high-quality early childhood education using newly collected data from the HighScope Perry Preschool Project. The data analyzed are the longest follow-up of any randomized early childhood education program. Annual observations of participant outcomes up to midlife allow us to provide a cost-benefit analysis without relying on forecasts. Adult outcomes on the participants' children and siblings allow us to quantify spillover benefits. The program generates a benefit-cost ratio of 6.0 (p-value = 0.03). Spillover benefits increase this ratio to 7.5 (p-value = 0.00).
Author contact info: Jorge Luis García John E. Walker Department of Economics Clemson University 309-C Wilbur O. and Ann Powers Hall Clemson, SC 29634 Tel: 864/656-3481 E-Mail: jlgarci@clemson.edu Frederik H. Bennhoff Department of Economics University of Zurich Schoenberggasse 1 Zurich 8001 Switzerland E-Mail: frederik.bennhoff@econ.uzh.ch Duncan Ermini Leaf Leonard D. Schaeffer Center for Health Policy and Economics University of Southern California 635 Downey Way Los Angeles, CA 90089-3333 USA E-Mail: dleaf@healthpolicy.usc.edu

Urban Forests: Environmental Health Values and Risks - Xing, Jianwei; Hu, Zhiren; Xia, Fan; Xu, Jintao; Zou, Eric (National Bureau of Economic Research Working Paper Series, 2023)
We study a massive urban afforestation policy in Beijing that planted 1/3 of a million acres of greenery in less than a decade. The policy reduces PM₂.₅ concentration at population hubs by 4.2 percent, the health value of which amounts to 1.5% of the city’s annual GDP. Rapid vegetation growth unexpectedly led to a 7.4 percent increase in pollen exposure, triggering respiratory emergency room visits, although the medical costs are outweighed by the pollution benefits. Urban forests are only partially capitalized in housing values, with buyers mainly appreciating proximity to green spaces but not the air quality improvements they bring.
Author contact info: Jianwei Xing National School of Development Peking University No.5 Yiheyuan Road Beijing 100871 China E-Mail: jerryxing@nsd.pku.edu.cn Zhiren Hu Charles H. Dyson School of Applied Economics and Management Cornell University 137 Reservoir Ave Ithaca, NY 14853 United States E-Mail: zh443@cornell.edu Fan Xia Nanjing University 163 Xianlin Avenue Nanjing, 210023 China E-Mail: xiafan@nju.edu.cn Jintao Xu National School of Development Peking University No.5 Yiheyuan Road Beijing 100871 China E-Mail: xujt@pku.edu.cn Eric Zou Stephen M. Ross School Of Business University of Michigan 701 Tappan Ave Ann Arbor, MI 48109 E-Mail: ericzou@umich.edu

The Impact of Public School Choice: Evidence from Los Angeles' Zones of Choice - Campos, Christopher; Kearns, Caitlin (National Bureau of Economic Research Working Paper Series, 2023)
Does a school district that expands school choice provide better outcomes for students than a neighborhood-based assignment system? This paper studies the Zones of Choice (ZOC) program, a school choice initiative of the Los Angeles Unified School District (LAUSD) that created small high school markets in some neighborhoods but left attendance-zone boundaries in place throughout the rest of the district. We study market-level impacts of choice on student achievement and college enrollment using a differences-in-differences design. Student outcomes in ZOC markets increased markedly, narrowing achievement and college enrollment gaps between ZOC neighborhoods and the rest of the district. The effects of ZOC are larger for schools exposed to more competition, supporting the notion that competition is a key channel. Demand estimates suggest families place substantial weight on schools' academic quality, providing schools with competition-induced incentives to improve their effectiveness. The evidence demonstrates that public school choice programs have the potential to improve school quality and reduce neighborhood-based disparities in educational opportunity.
Author contact info: Christopher Campos Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 818/631-7106 E-Mail: Christopher.Campos@chicagobooth.edu Caitlin Kearns E-Mail: ckearns@berkeley.edu

Trends in Social Security Incentives in Belgium - Fraikin, Anne-Lore; Jousten, Alain; Lefebvre, Mathieu (National Bureau of Economic Research Working Paper Series, 2023)
In Belgium, a series of social security reforms have been implemented over the years with the overarching goal of increasing the labor force participation through better work incentives. Using individual-level administrative data, the paper studies the impact of those incentive-based reforms on observed changes in older workers’ employment patterns. We investigate how social security incentives and particularly their changes over time can explain the retirement decision. We calculate indicators of benefit entitlement and derive retirement incentive measures. Using micro-estimation techniques, we find that more generous retirement provision contribute to earlier retirement. Counterfactual reform simulations show strongly incentivizing effects at lower ages and more mixed results at higher ages – particularly for men.
Author contact info: Anne-Lore Fraikin Labour Market Information Council 410 Laurier Avenue West Ottawa, Ontario Canada E-Mail: annelore.fraikin@gmail.com Alain Jousten University of Liege Law Faculty, HEC-ULg and Tax Institute Place des Orateurs 3 4000 Liege 1 BELGIUM E-Mail: ajousten@ulg.ac.be Mathieu Lefebvre BETA University of Strasbourg CREPP - Universite de Liege Bvd du Rectorat 7 (B31) - B4000 Liège Tel: ++32 4 366 31 03 Fax: ++32 4 366 31 06 E-Mail: mathieu.lefebvre@ulg.ac.be

Market Access and Migration: Evidence from the Panama Canal Opening during the First Great Migration - Galiani, Sebastian; Jaramillo, Luis F; Uribe-Castro, Mateo (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines the influence of transportation infrastructure on migration decisions in the context of the Great Migration in the United States. Focusing on the opening of the Panama Canal in 1920, we isolate the effect of improved economic opportunities from reduced migration costs. Using full-count Census data, we find that Southern African American migrants preferred areas with enhanced market access, leading to higher inflows after 1920. The study highlights the inter- play between migrant networks and labor markets in shaping migration patterns. Our findings underscore the significance of local market conditions induced by improvements in local market access in influencing migration decisions during the Great Migration.
Author contact info: Sebastian Galiani Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742 Tel: 301/405-3518 E-Mail: sgaliani@umd.edu Luis F. Jaramillo Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742 E-Mail: luis.jaramillo@gmail.com Mateo Uribe-Castro Calle 19A #1e-37 Edificio W, Facultad de Economia Bogota Colombia E-Mail: m.uribecastro@uniandes.edu.co

Estimating the Spatial Amplification of Damage Caused by Degradation in the Amazon - Araujo, Rafael; Assunção, Juliano; Hirota, Marina; Scheinkman, José A (National Bureau of Economic Research Working Paper Series, 2023)
The Amazon rainforests have been undergoing unprecedented levels of human-induced disturbances. In addition to local impacts, such changes are likely to cascade following the eastern-western atmospheric flow generated by trade winds. We propose a model of spatial and temporal interactions created by this flow to estimate the spread of local disturbances to downwind locations along atmospheric trajectories. The spatial component captures cascading effects propagated by neighboring regions while the temporal component captures persistence. All these network effects can be described by a single matrix, acting as a spatial multiplier that amplifies local disturbances. This matrix can be used to easily map where the damage of an initial forest disturbance is amplified and propagated to. We identify regions that are likely to cause the largest impact throughout the basin, and those that are the most vulnerable to shocks caused by remote deforestation. On average, the presence of cascading effects mediated by winds doubles the impact of an initial damage. However, there is heterogeneity in this impact. While damage in some regions does not propagate, in others amplification may reach 250%.
Author contact info: Rafael Araujo Fundação Getulio Vargas’ Sao Paulo School of Economics (FGV EESP) Rua Itapeva, 474 01302-000, São Paulo/SP Brazil E-Mail: carlquist.rafael@gmail.com Juliano Assunção Departamento de Economia PUC-Rio Rua Marquês de São Vicente, 225/F210 22453-900 - Rio de Janeiro/RJ Brazil E-Mail: juliano@econ.puc-rio.br Marina Hirota Federal University of Santa Catarina Florianópolis, SC Brazil E-Mail: marinahirota@gmail.com José A. Scheinkman Department of Economics Columbia University New York, NY 10027 E-Mail: js3317@columbia.edu

Micro vs Macro Labor Supply Elasticities: The Role of Dynamic Returns to Effort - Kleven, Henrik; Kreiner, Claus Thustrup; Larsen, Kristian; Egholt Søgaard, Jakob (National Bureau of Economic Research Working Paper Series, 2023)
A key contention in economics is the discrepancy between micro and macro elasticities of labor supply with respect to marginal tax rates. We revisit this question, focusing on the role of dynamic returns to effort among top earners. We develop a new model of earnings responses to taxes in the presence of dynamic returns. In this model, the returns to effort are delayed and mediated by job switches such as promotions within firms or movements between firms. Short-run micro elasticities are attenuated relative to the true long-run macro elasticity. We proceed by providing two main empirical analyses using rich administrative data from Denmark. The first part presents descriptive evidence on earnings and hours-worked patterns over the lifecycle that confirm the predictions of the theoretical model. The second part presents quasi-experimental evidence on earnings responses to taxes using discrete job switches. The empirical strategy is informed by the theoretical model, according to which job switches can be used to (partially) identify the macro elasticity of labor supply. The evidence shows that, at the top of the distribution, macro elasticities are much larger than micro elasticities due to dynamic compensation effects.
Author contact info: Henrik Kleven Department of Economics Princeton University 238 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 609/986-6890 E-Mail: kleven@princeton.edu Claus Thustrup Kreiner Department of Economics University of Copenhagen and CEBI Øster Farimagsgade 5 Building 35 DK-1353 Copenhagen K Denmark Tel: 4535323020 Fax: 4535323000 E-Mail: ctk@econ.ku.dk Kristian Larsen University of Copenhagen and CEBI Department of Economics Øster Farimagsgade 5 Building 35 DK-1353 Copenhagen K Denmark E-Mail: kuol@econ.ku.dk Jakob Egholt Søgaard University of Copenhagen and CEBI Øster Farimagsgade 5 Building 26 DK-1353 Copenhagen K Denmark E-Mail: jes@econ.ku.dk

Unpacking P-Hacking and Publication Bias - Brodeur, Abel; Carrell, Scott E; Figlio, David N; Lusher, Lester R (National Bureau of Economic Research Working Paper Series, 2023)
We use unique data from journal submissions to identify and unpack publication bias and p-hacking. We find that initial submissions display significant bunching, suggesting the distribution among published statistics cannot be fully attributed to a publication bias in peer review. Desk-rejected manuscripts display greater heaping than those sent for review i.e. marginally significant results are more likely to be desk rejected. Reviewer recommendations, in contrast, are positively associated with statistical significance. Overall, the peer review process has little effect on the distribution of test statistics. Lastly, we track rejected papers and present evidence that the prevalence of publication biases is perhaps not as prominent as feared.
Author contact info: Abel Brodeur 120 University, Social Sciences Building (9037) Ottawa, ON, Canada K1N 6N5 Canada E-Mail: abrodeur@uottawa.ca 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

Selling Subscriptions - Einav, Liran; Klopack, Benjamin; Mahoney, Neale (National Bureau of Economic Research Working Paper Series, 2023)
Retailers are increasingly selling goods and services via subscriptions instead of spot markets. In this paper, we study one benefit to the retailer of selling subscriptions: the possibility that – presumably because of inattention or inertia – consumers continue to pay for subscriptions after the flow benefit falls below its price. We use comprehensive data from a large payment card network and focus on credit and debit cards that get replaced (e.g., due to expiration). Replaced cards require an active subscription renewal decision, and we document that months during which cards are replaced are associated with much higher rates of cancellation for the ten subscriptions we study. We write down and estimate a stylized model of subscription renewals that allows us to recover the baseline degree of inattention. We find that estimated inattention is higher for consumers that took cash advances, a proxy for low financial sophistication. Relative to a counterfactual in which consumers are fully attentive, inattention raises seller revenues by between 14% and more than 200%. We use the estimated model to explore the quantitative impact of possible regulatory remedies.
Author contact info: Liran Einav Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305-6072 Tel: 650/723-3704 Fax: 650/725-5702 E-Mail: leinav@stanford.edu Benjamin Klopack Department of Economics Texas A&M University 4228 TAMU College Station, TX 77843 Tel: 7604192832 E-Mail: ben.klopack@gmail.com Neale Mahoney Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: nmahoney@stanford.edu

The Effects of Social Insurance Benefits on Leaving Employment at Older Ages in the Netherlands - Kalwij, Adriaan; Kapteyn, Arie (National Bureau of Economic Research Working Paper Series, 2023)
In the Netherlands, from 1989 to 2013, in the age group 55-63 the annual exit rate from employment to receiving social insurance benefits in the following year decreased from around 17 percent to 7 percent for men, and from 14 percent to 5 percent for women. We found that less generous social insurance benefits have had small but significant negative effects on these exit rates: The annual exit rate to social insurance benefit receipt next year (at ages 56-64) would have been about 14 percent higher for both men and women in 2013 should social insurance benefits schemes of 1989 still have been in place. This increase amounts to staying, on average, three months longer in employment from age 55 onwards in 2013 than in 1989. These findings are driven to some extent by the reduction in the maximum duration of unemployment insurance benefits in 2007, but predominantly by making (early) retirement schemes actuarially fair from 2006 onwards. The increase in disability insurance’s income replacement rate in 2006 has led to a slight increase in the exit rate from employment, conditional on eligibility. As the estimated effects of changes in the social insurance benefits from 1989 to 2013 on working beyond age 55 are relatively small, they suggest the importance of other factors such as changes in workers’ skills, improved health (on which we provide some evidence), and social insurance’s tighter eligibility criteria.
Author contact info: Adriaan Kalwij Utrecht University School of Economics Network for Studies on Pensions, Aging and Retirement The Netherlands E-Mail: a.s.kalwij@uu.nl Arie Kapteyn University of Southern California Center for Economic and Social Research 635 Downey Way Suite 312 Los Angeles, CA 90089-3332 Tel: 310/448-5383 E-Mail: kapteyn@usc.edu

Divorce and Property Division Laws Shape Human Capital Investment - Blair, Peter Q; Neilson, Elijah (National Bureau of Economic Research Working Paper Series, 2023)
In theory, unilateral divorce laws alter the private incentive to invest in human capital by permitting either spouse to initiate the division of the marital assets. Using several causal research designs we show that both men and women are less likely to attain a bachelor’s degree in states with unilateral divorce laws—especially individuals who were exposed to the laws when making educational choices and who live in states requiring an even split of assets upon divorce. Unilateral divorce laws do not distort human capital investment generically—but rather in contexts where the property division laws invite moral hazard.
Author contact info: Peter Q. Blair Harvard University Graduate School of Education 407 Gutman Library Cambridge, MA 02138 Tel: 617-458-6010 E-Mail: peter_blair@gse.harvard.edu Elijah Neilson Dixie L. Leavitt School of Business 550 W University Blvd Cedar City, UT 84720 United States Tel: 3852048302 E-Mail: elijahneilson@suu.edu

Why Global and Local Solutions of Open-Economy Models with Incomplete Markets Differ and Why it Matters - de Groot, Oliver; Durdu, Ceyhun Bora; Mendoza, Enrique G (National Bureau of Economic Research Working Paper Series, 2023)
Global and local methods used to study open-economy incomplete-markets models yield different cyclical moments, impulse responses, spectral densities and precautionary savings. Endowment and RBC model solutions obtained with first-order, higher-order, and risky-steady-state local methods are compared with fixed-point-iteration global solutions. Analytic and numerical results show that the differences are due to the near-unit-root nature of net foreign assets under incomplete markets and inaccuracies of local methods in computing their autocorrelation. In a Sudden Stops model, quasi-linear methods that handle occasionally binding constraints understate the size of credit constraint multipliers, financial premia and macroeconomic responses.
Author contact info: Oliver de Groot University of Liverpool Management School Chatham Street, Liverpool, L69 7ZH UK E-Mail: oliverdegroot@gmail.com Ceyhun Bora Durdu Federal Reserve Board 20th Street and Constitution Avenue N.W. Washington, DC 20551 E-Mail: bora.durdu@frb.gov Enrique G. Mendoza Department of Economics University of Pennsylvania 3718 Locust Walk Philadelphia, PA 19104 Tel: 215-898-7701 E-Mail: egme@sas.upenn.edu

Managing an Energy Shock: Fiscal and Monetary Policy - Auclert, Adrien; Monnery, Hugo; Rognlie, Matthew; Straub, Ludwig (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the macroeconomic effects of energy price shocks in energy-importing economies using a heterogeneous-agent New Keynesian model. When MPCs are realistically large and the elasticity of substitution between energy and domestic goods is realistically low, increases in energy prices depress real incomes and cause a recession, even if the central bank does not tighten monetary policy. Imported energy inflation can spill over to wage inflation through a wage-price spiral, but this does not mitigate the decline in real wages. Monetary tightening has limited effect on imported inflation when done in isolation, but can be powerful when done in coordination with other energy importers by lowering world energy demand. Fiscal policy, especially energy price subsidies, can isolate individual energy importers from the shock, but it has large negative externalities on other economies.
Author contact info: Adrien Auclert Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 E-Mail: aauclert@stanford.edu Hugo Monnery E-Mail: hmonnery@g.harvard.edu Matthew Rognlie Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 847/491-8215 E-Mail: matthew.rognlie@northwestern.edu Ludwig Straub Department of Economics Harvard University Littauer Center Cambridge, MA 02138 E-Mail: ludwigstraub@g.harvard.edu

Workers and the Green-Energy Transition: Evidence from 300 Million Job Transitions - Curtis, E. Mark; O'Kane, Layla; Park, R. Jisung (National Bureau of Economic Research Working Paper Series, 2023)
Using micro-data representing over 130 million online work profiles, we explore transitions into and out of jobs most likely to be affected by a transition away from carbon-intensive production technologies. Exploiting detailed textual data on job title, firm name, occupation, and industry to focus on workers employed in carbon-intensive (“dirty”) and non-carbon-intensive (“green”) jobs, we find that the rate of transition from dirty to green jobs is rising rapidly, increasing ten-fold over the period 2005-2021 including a significant uptick in EV-related jobs in recent years. Overall however, fewer than 1 percent of all workers who leave a dirty job appear to transition to a green job. We find that the persistence of employment within dirty industries varies enormously across local labor markets; in some states, over half of all transitions out of dirty jobs are into other dirty jobs. Older workers and those without a college education appear less likely to make transitions to green jobs, and more likely to transition to other dirty jobs, other jobs, or non-employment. When accounting for the fact that green jobs tend to have later start dates, it appears that green and dirty jobs have roughly comparable job durations.
Author contact info: E. Mark Curtis Wake Forest University Department of Economics Winston-Salem, NC 27109 E-Mail: curtisem@wfu.edu Layla O'Kane 66 Long Wharf Boston, MA 02110 USA E-Mail: layla.okane@lightcast.io R. Jisung Park 3701 Locust Walk University of Pennsylvania Philadelphia, PA 19104 USA Tel: 347-860-0814 E-Mail: rjpark@upenn.edu

Who Benefits from Remote Schooling? Self-Selection and Match Effects - Bruhn, Jesse M; Campos, Christopher; Chyn, Eric (National Bureau of Economic Research Working Paper Series, 2023)
We study the distributional effects of remote learning. Our approach combines newly collected data on parental preferences with administrative data from Los Angeles. The preference data allow us to account for selection into remote learning while also studying selection patterns and treatment effect heterogeneity. We find a negative average effect of remote learning on reading (–0.14 SD) and math (–0.17 SD). Notably, we find evidence of positive learning effects for children whose parents have the strongest demand for remote learning. Our results suggest an important subset of students who currently sort into post-pandemic remote learning benefit from expanded choice.
Author contact info: Jesse Bruhn Department of Economics Brown University Providence, RI 02912 E-Mail: jesse_bruhn@brown.edu Christopher Campos Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 818/631-7106 E-Mail: Christopher.Campos@chicagobooth.edu Eric Chyn The University of Texas at Austin Department of Economics 2225 Speedway, Stop C3100 Austin, TX 78712-1690 E-Mail: eric.chyn@austin.utexas.edu

Accelerating Innovation Ecosystems: The Promise and Challenges of Regional Innovation Engines - Guzman, Jorge; Murray, Fiona; Stern, Scott; Williams, Heidi L (National Bureau of Economic Research Working Paper Series, 2023)
Motivated by the establishment of major U.S. Federal programs seeking to harness the potential of regional innovation ecosystems, we assess the promise and challenges of place-based innovation policy interventions. Relative to traditional research grants, place-based innovation policy interventions are not directed toward a specific research project but rather aim to reshape interactions among researchers and other stakeholders within a given geographic location. The most recent such policy - the NSF “Engines” program - is designed to enhance the productivity and impact of the investments made within a given regional innovation ecosystem. The impact of such an intervention depends on whether, in its implementation, it induces change in the behavior of individuals and the ways in which knowledge is distributed and translated within that ecosystem. While this logic is straightforward, from it follows an important insight: innovation ecosystem interventions – Engines -- are more likely to succeed when they account for the current state of a given regional ecosystem (latent capacities, current bottlenecks, and economic and institutional constraints) and when they involve extended commitments by multiple stakeholders within that ecosystem. We synthesize the logic, key dependencies, and opportunities for real-time assessment and course correction for these place-based innovation policy interventions.
Author contact info: Jorge Guzman Columbia Business School Kravis Hall, 975 655 W 130th St New York, NY 10027 E-Mail: jag2367@gsb.columbia.edu Fiona Murray MIT Sloan School of Management 100 Main Street, E62-470 Cambridge, MA 02142 Tel: 617/253-3681 Fax: 617/253-2660 E-Mail: fmurray@mit.edu Scott Stern MIT Sloan School of Management 100 Main Street, E62-476 Cambridge, MA 02142 Tel: 617/253-3053 Fax: 617/253-2660 E-Mail: sstern@mit.edu Heidi L. Williams Department of Economics 6106 Rockefeller Center, Office 328 Dartmouth College Hanover, NH 03755 Tel: 617-669-0577 E-Mail: heidi.lie.williams@dartmouth.edu

Raising State Minimum Wages, Lowering Community College Enrollment - Schanzenbach, Diane Whitmore; Turner, Julia A; Turner, Sarah (National Bureau of Economic Research Working Paper Series, 2023)
While much research attention has focused on the direct labor market effect of minimum wage increases on employment, the impact of changes in the minimum wage on college enrollment may impact educational attainment. Using institutional data on college enrollment and program completion, we find that enrollment falls markedly among students at public two-year institutions in response to increases in the minimum wage. The largest enrollment effects are seen for those students who are enrolled part-time at community colleges. We find little evidence of negative effects on the attainment of certificates or degrees, suggesting that increases in the minimum wage are unlikely to divert students from degree attainment.
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 Julia A. Turner Northwestern University 2120 Campus Drive Evanston, IL 60208 E-Mail: juliaturner@u.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

The New Economics of Industrial Policy - Juhász, Réka; Lane, Nathan J; Rodrik, Dani (National Bureau of Economic Research Working Paper Series, 2023)
We discuss the considerable literature that has developed in recent years providing rigorous evidence on how industrial policies work. This literature is a significant improvement over the earlier generation of empirical work, which was largely correlational and marred by interpretational problems. On the whole, the recent crop of papers offers a more positive take on industrial policy. We review the standard rationales and critiques of industrial policy and provide a broad overview of new empirical approaches to measurement. We discuss how the recent literature, paying close attention to measurement, causal inference, and economic structure, is offering a nuanced and contextual understanding of the effects of industrial policy. We re-evaluate the East Asian experience with industrial policy in light of recent results. Finally, we conclude by reviewing how industrial policy is being reshaped by a new understanding of governance, a richer set of policy instruments beyond subsidies, and the reality of deindustrialization.
Author contact info: Réka Juhász Vancouver School of Economics University of British Colunbia 6000 Iona Driv Vancouver, BC V6T 1L4 E-Mail: reka.juhasz@ubc.ca Nathan J. Lane Department of Economics University of Oxford 10 Manor Rd Oxford OX1 3UQ United Kingdom E-Mail: Nathaniel.lane@economics.ox.ac.uk Dani Rodrik John F. Kennedy School of Government Harvard University 79 J.F. Kennedy Street Cambridge, MA 02138 E-Mail: dani_rodrik@harvard.edu

How do Financial Crises Redistribute Risk? - Mitchener, Kris James; Vossmeyer, Angela (National Bureau of Economic Research Working Paper Series, 2023)
We examine how financial crises redistribute risk, employing novel empirical methods and micro data from the largest financial crisis of the 20th century – the Great Depression. Using balance-sheet and systemic risk measures at the bank level, we build an econometric model with incidental truncation that jointly considers bank survival, the type of bank closure (consolidations, absorption, and failures), and changes to bank risk. Despite roughly 9,000 bank closures, risk did not leave the financial system; instead, it increased. We show that risk was redistributed to banks that were healthier prior to the financial crisis. A key mechanism driving the redistribution of risk was bank acquisition. Each acquisition increases the balance-sheet and systemic risk of the acquiring bank by 25%. Our findings suggest that financial crises do not quickly purge risk from the system, and that merger policies commonly used to deal with troubled financial institutions during crises have important implications for systemic risk.
Author contact info: Kris James Mitchener Department of Economics Leavey School of Business Santa Clara University Santa Clara, CA 95053 Tel: 408/554-4340 Fax: 408/554-2331 E-Mail: kmitchener@scu.edu Angela Vossmeyer Robert Day School of Economics and Finance Claremont McKenna College 500 E. Ninth Street Claremont, CA 91711 Tel: 909/607-0722 E-Mail: Angela.Vossmeyer@cmc.edu

Disadvantaging Rivals: Vertical Integration in the Pharmaceutical Market - Gray, Charles; Alpert, Abby E; Sood, Neeraj (National Bureau of Economic Research Working Paper Series, 2023)
The pharmaceutical market has experienced a massive wave of vertical integration between pharmacy benefit managers (PBMs) and health insurers in recent years. Using a unique dataset on insurer-PBM contracts, we document increasing vertical integration in Medicare Part D–vertically integrated insurers' market share increased from about 30% to 80% between 2010 and 2018. Next, we evaluate a large insurer-PBM merger in 2015 to assess the trade-offs of vertical integration–harms to competition due to input and customer foreclosure on the one hand and improved efficiency on the other. We find premium increases after the merger for insurers who bought PBM services from rivals, which is consistent with vertically integrated PBMs raising costs through input foreclosure.
Author contact info: Charles Gray The Wharton School University of Pennsylvania 3641 Locust Walk Philadelphia, PA 19104 United States E-Mail: chgray@wharton.upenn.edu Abby E. Alpert The Wharton School University of Pennsylvania 3641 Locust Walk Philadelphia, PA 19104 Tel: 215/746-3174 E-Mail: alpertab@wharton.upenn.edu 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

Youth Labor Force Participation, Education, and Human Capital in Asia, by Gender, 1990-2019 - Fraumeni, Barbara M (National Bureau of Economic Research Working Paper Series, 2023)
Of great importance to the future World economy is the future labor force of Asia, as Asia is by far the most populous region in the World. Expected future levels of education, very young and youth population, youth employment and unemployment, dependency rates, human capital per capita, and the sources of growth in the potential future labor force are described in this paper with an emphasis on differences by gender and differences across regions. Some comparisons between China and India and between Asia and selected other regions and aggregates are also included. Gini human capital coefficients are constructed for regions in Asia and the selected other regions and aggregates are constructed to reinforce the importance of recognizing gender in any analysis.
Author contact info: Barbara M. Fraumeni Central University of Finance and Economics 770 Middle Road Dresden, ME 04342 E-Mail: Barbara_Fraumeni@hotmail.com

Fear or Knowledge The Impact of Graphic Cigarette Warnings on Tobacco Product Choices - Kenkel, Donald S; Mathios, Alan D; Phillips, Grace N; Suryanarayana, Revathy; Wang, Hua; Zeng, Sen (National Bureau of Economic Research Working Paper Series, 2023)
Requiring graphic warning labels (GWLs) on cigarette packaging has become a highly contentious unresolved legal battle. The constitutionality depends, in part, on the likely impact of GWLs on smoking decisions, and whether they generate knowledge as opposed to emotional reactions against smoking. Using an online discrete choice stated preference experiment we compare tobacco choices (cigarettes, e-cigarettes, quitting) for those presented with a GWL versus the currently existing label. We find the fraction of individuals choosing cigarettes to be lower and quitting higher for the GWL group. Our findings reveal that the differences between groups were primarily driven by the evocation of fear and disgust rather than an improvement in health knowledge related to the GWL. The discrete choice experiment also provides new evidence on how cigarette prices, e-cigarette prices, and policy-manipulable e-cigarette attributes such as e-cigarette warning labels, and flavor availability influence tobacco product choices.
Author contact info: Donald S. Kenkel Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Rensselaer Hall Ithaca, NY 14853 E-Mail: dsk10@cornell.edu Alan D. Mathios Department of Economics Jeb E. Brooks School of Public Policy Cornell University Martha Van Renssellaer Hall Ithaca NY 14853 E-Mail: adm5@cornell.edu Grace N. Phillips E-Mail: gnphllp2@memphis.edu Revathy Suryanarayana Jeb E. Brooks School of Public Policy Cornell University Martha Van Renssellaer Hall Ithaca NY 14853 E-Mail: rs2452@cornell.edu Hua Wang Jeb E. Brooks School of Public Policy MVR Hall Cornell University Ithaca NY 14853 E-Mail: hw227@cornell.edu Sen Zeng Department of Economics Cornell University Ithaca, NY 14853 United States E-Mail: sz626@cornell.edu

Temperature, Adaptation, and Local Industry Concentration - Ponticelli, Jacopo; Xu, Qiping; Zeume, Stefan (National Bureau of Economic Research Working Paper Series, 2023)
We use plant-level data from the U.S. Census of Manufacturers to study the short- and long-run effects of temperature on manufacturing activity. We find that high-temperature shocks significantly increase energy costs and lower productivity for small plants, while large plants are mostly unaffected. Commuting zones with higher increases in average temperatures between the 1980s and the 2010s experience a decline in the number of small plants, reallocation of labor from small to large plants, and higher local labor market concentration. Differences in costs per unit of energy, managerial skills, and access to finance contribute to explaining our results.
Author contact info: 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 Qiping Xu University of Illinois Urbana Champaign E-Mail: qipingxu@illinois.edu Stefan Zeume E-Mail: zeume@illinois.edu

Trends in the Retirement Preparedness of Black and Hispanic Households in the US - Wolff, Edward N (National Bureau of Economic Research Working Paper Series, 2023)
Retirement income security refers to the ability of households to provide an adequate stream of income during the period of their retirement from the labor force. Expected retirement income is based of four components: (i) standard non-pension wealth holdings, (ii) defined contribution (DC) pension holdings, (iii) actual or expected defined benefit (DB) pension entitlements, and (iv) actual or expected Social Security benefits. The first two components are converted into an annuity. All the data (except rates of return) for these calculations are available from the Survey of Consumer Finances. Results indicate that both Black and Hispanic households made remarkable progress in terms of mean and median retirement income, poverty reduction, and replacement rates from 1989 to 2007 in both absolute terms and relative to whites. However, for Black households, this was followed by a reversal of fortune from 2007 to 2019, with expected median retirement income declining, the projected poverty rate rising, and the projected replacement rate falling, though expected mean retirement income does rise. Hispanics also experienced a setback in mean retirement income but continued progress in replacement rates and reducing poverty from 2007 to 2019.
Author contact info: Edward N. Wolff Department of Economics New York University 19 W. 4th Street, 6th Floor New York, NY 10012 Tel: 212/998-8917 Fax: 212/995-4186 E-Mail: edward.wolff@nyu.edu

The Impact of Violence during the Mexican Revolution on Migration to the United States - Escamilla-Guerrero, David; Kosack, Edward; Ward, Zachary (National Bureau of Economic Research Working Paper Series, 2023)
The number of individuals forcibly displaced by conflicts has been rising in the past few decades. However, we know little about the dynamics—magnitude, timing, and persistence—of conflict-induced migration in the short run. We use novel high-frequency data to estimate the dynamic migration response to conflict for the case of the Mexican Revolution (1910-1917), one of the deadliest conflicts in world history. We find that, on average, insurgency events led to a large increase in migration rates of about 60 percent that lasted for a few months: after five months, migration rates reverted back to pre-violence levels. This finding masks substantial heterogeneity in treatment effects, as we find larger and more persistent effects for women and children. We show that violence was the main treatment channel, with variation in the intensity and nature of violence explaining the magnitude and persistence of the migration response. While migration costs, migrant networks, and land ownership moderated the migration response to conflict, we show that these factors affect different aspects of the response.
Author contact info: David Escamilla-Guerrero University of St Andrews School of Economics and Finance Castlecliffe The Scores St Andrews KY16 9AZ United Kingdom E-Mail: drescamillag@gmail.com Edward Kosack Department of Economics Xavier University 3800 Victory Parkway Cincinnati, OH 45207 E-Mail: kosacke@xavier.edu Zachary Ward Department of Economics Baylor University One Bear Place Waco, TX 76798 E-Mail: zach.a.ward@gmail.com

Converting Brown Offices to Green Apartments - Gupta, Arpit; Martinez, Candy; Van Nieuwerburgh, Stijn (National Bureau of Economic Research Working Paper Series, 2023)
The conversion of brown office buildings to green apartments can contribute towards a solution to three pressing issues: oversupply of office in a hybrid-and-remote-work world, shortage of housing, and excessive greenhouse gas emissions. We propose a set of criteria to identify commercial office properties that are are physically suitable for conversion, yielding about 11% of all office buildings across the U.S. We present a pro-forma real estate model that identifies parameters under which these conversions are financially viable. We highlight several policy levers available to federal, state, and local governments that could accelerate the conversion, and that may be necessary should policymakers desire the creation of affordable housing. We highlight the role that the Inflation Reduction Act could play.
Author contact info: Arpit Gupta E-Mail: arpit.gupta@stern.nyu.edu Candy M. Martinez E-Mail: cm3920@gsb.columbia.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

Using Lotteries to Attract Deposits - Gertler, Paul; Higgins, Sean; Scott, Aisling; Seira, Enrique (National Bureau of Economic Research Working Paper Series, 2023)
Despite the importance of deposit financing for lending, banks in developing countries struggle to attract deposits. In a randomized experiment across 110 bank branches throughout Mexico, a lottery incentive based on net monthly deposits caused a 40% increase in the number of accounts opened and a 21% increase in the number of deposits during the lottery months. Nearly all new accounts (96%) were opened by households previously unbanked at any bank. The temporary two-month incentive had a persistent 2-3 year impact on the flow of deposits and stock of savings, and increased the present value of branch profits by 6%.
Author contact info: Paul Gertler Haas School of Business University of California, Berkeley Berkeley, CA 94720 Tel: 510/642-1418 E-Mail: gertler@haas.berkeley.edu Sean Higgins Kellogg School of Management Northwestern University 2211 Campus Drive Evanston, IL 60208 E-Mail: sean.higgins@kellogg.northwestern.edu Aisling Scott E-Mail: aisling scott@berkeley.edu Enrique Seira Michigan State University Department of Economics 486 W. Circle Drive 110 Marshall-Adams Hall E. Lansing, MI 48824 E-Mail: seiraenr@msu.edu

Sticky Wages on the Layoff Margin - Davis, Steven J; Krolikowski, Pawel M (National Bureau of Economic Research Working Paper Series, 2023)
We design and field an innovative survey of unemployment insurance (UI) recipients that yields new insights about wage stickiness on the layoff margin. Most UI recipients express a willingness to accept wage cuts of 5-10 percent to save their jobs, and one third would accept a 25 percent pay cut. Yet worker-employer discussions about cuts in pay, benefits or hours in lieu of layoffs are exceedingly rare. When asked why employers don’t propose job-saving pay cuts, four-in-ten UI recipients don’t know. Sixteen percent say cuts would undermine morale or lead the best workers to quit, and 39 percent don’t think wage cuts would save their jobs. For lost union jobs, 45 percent say contracts prevent wage cuts. Among those on permanent layoff who reject our hypothetical pay cuts, half say they have better outside options, and 38 percent regard the proposed pay cut as insulting. At least one-tenth of the layoffs in our sample violate the condition for bilaterally efficient separations in leading theories of job separations, frictional unemployment, and job ladders. We draw on our findings and other evidence to assess theories of wage stickiness and its role in layoffs.
Author contact info: 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 Pawel M. Krolikowski Federal Reserve Bank of Cleveland 1455 E 6th St. Cleveland, OH 44114 E-Mail: pawelk@umich.edu

The Disparate Impacts of College Admissions Policies on Asian American Applicants - Grossman, Joshua; Tomkins, Sabina; Page, Lindsay C; Goel, Sharad (National Bureau of Economic Research Working Paper Series, 2023)
There is debate over whether Asian American students are admitted to selective colleges and universities at lower rates than white students with similar academic qualifications. However, there have been few empirical investigations of this issue, in large part due to a dearth of data. Here we present the results from analyzing 685,709 applications from Asian American and white students to a subset of selective U.S. institutions over five application cycles, beginning with the 2015–2016 cycle. The dataset does not include admissions decisions, and so we construct a proxy based in part on enrollment choices. Based on this proxy, we estimate the odds that Asian American applicants were admitted to at least one of the schools we consider were 28% lower than the odds for white students with similar test scores, grade-point averages, and extracurricular activities. The gap was particularly pronounced for students of South Asian descent (49% lower odds). We trace this pattern in part to two factors. First, many selective colleges openly give preference to the children of alumni, and we find that white applicants were substantially more likely to have such legacy status than Asian applicants, especially South Asian applicants. Second, after adjusting for observed student characteristics, the institutions we consider appear less likely to admit students from geographic regions with relatively high shares of applicants who are Asian. We hope these results inform ongoing discussions on the equity of college admissions policies.
Author contact info: Joshua Grossman Stanford University Management Science and Engineering Huang Engineering Center 475 Via Ortega Stanford, CA 94305 E-Mail: jdgg@stanford.edu Sabina Tomkins University of Michigan School of Information 105 S. State Street Ann Arbor, MI 48109-1285 E-Mail: stomkins@umich.edu Lindsay C. Page Annenberg Institute for School Reform Brown University Box 1985 Providence, RI 02912 Tel: 401.863.7990 E-Mail: Lindsay_page@brown.edu Sharad Goel Harvard Kennedy School 79 John F. Kennedy St. Cambridge, MA 02138 E-Mail: sgoel@hks.harvard.edu

The Shadow Price of Capital: Accounting for Capital Displacement in Cost Benefit Analysis - Newell, Richard G; Pizer, William A; Prest, Brian C (National Bureau of Economic Research Working Paper Series, 2023)
Government analysts have long used discount rates based on investment rates of return to approximate the effect of capital displacement. However, we show how this approach is not well grounded in economic theory and produces highly biased results, particularly in the context of decisions involving long-lived impacts such as climate change. We demonstrate how analysts can use the conceptually correct shadow price of capital (SPC) approach in a straightforward manner to account for concerns about capital displacement in federal regulatory analysis. We derive a formula for the SPC as a function of four key parameters and propose a central SPC value of 1.1, with a reasonable range of 1.1 to 1.2. We then illustrate how the SPC approach could be easily implemented in practice using the example of the 2015 Clean Power Plan Regulatory Impact Analysis, showing that estimated net benefits are far less sensitive to capital displacement concerns under the analytically correct SPC approach as compared to the inappropriate approach of using a 7 percent investment rate or return. Our work is particularly important given the ongoing efforts to revise federal guidance for benefit-cost analysis and discounting.
Author contact info: Richard G. Newell 1616 P ST NW Washington, DC 20036 United States Tel: 2023285198 E-Mail: newell@rff.org William A. Pizer Sanford School of Public Policy Duke University Box 90312 Durham, NC 27708 E-Mail: pizer@rff.org Brian C. Prest Resources for the Future 1616 P Street NW, Suite 600 Washington, DC 20036 Tel: 3019383448 E-Mail: prest@rff.org

The Impact of Vaccines and Behavior on U.S. Cumulative Deaths from COVID-19 - Atkeson, Andrew (National Bureau of Economic Research Working Paper Series, 2023)
The CDC reports that 1.13 million Americans have died of COVID-19 through June of 2023. I use a model of the impact over the past three years of vaccines and private and public behavior to mitigate disease transmission during the COVID-19 pandemic in the United States to address two questions. First, holding the strength of the response of behavior to the level of daily deaths from COVID-19 fixed, what was the impact of vaccines on cumulative mortality from COVID-19 up through June 2023? And second, holding the pace of deployment of vaccinations fixed, what would have been the impact of stricter or looser behavioral responses to COVID-19 deaths on cumulative mortality from COVID-19 over this same time period? In answering the first question, I find that vaccines saved 748,600 lives through June 2023. That is, without vaccines, cumulative mortality from COVID-19 would have been closer to 1.91 million over this time period. In answering the second question, I find that behavioral efforts to slow the transmission of the virus before vaccines became widely administered were critical to this positive impact of vaccines on cumulative mortality. For example, with a complete relaxation of these mitigation efforts, vaccines would have come too late to have saved a significant number of lives. Earlier deployment of vaccines would have saved many lives. I find that marginal changes in the strength of the behavioral response to COVID-19 deaths within the range of those responses estimated with the model have a significantly impact on cumulative COVID-19 mortality over this time period.
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

Risk Preferences Over Health: Empirical Estimates and Implications for Healthcare Decision-Making - Mulligan, Karen; Baid, Drishti; Doctor, Jason N; Phelps, Charles E; Lakdawalla, Darius N (National Bureau of Economic Research Working Paper Series, 2023)
Recent research has documented a link between consumer risk preferences over health and the willingness to pay (WTP) for medical technologies. However, the absence of empirical health risk preference estimates so far limits the implementation of this generalized risk-adjusted cost-effectiveness (GRACE) theory, which addresses several limitations of traditional cost-effectiveness analysis (CEA). To address this gap, we elicit from a nationally representative U.S. sample individual risk preference parameters over health-related quality of life (HRQoL) that shed light on health risk attitudes and enable GRACE valuation of medical technology. We find individuals exhibit risk-seeking preferences at low levels of health, switch to risk-averse preferences at health equal to 0.485 (measured on a zero to one scale), and become most risk-averse when their health is perfect (coefficient of relative risk aversion = 4.36). The risk preference estimates imply an empirical premium for disease severity: each unit of health is worth three times more to patients with serious health conditions (health equals 0.5) than those who are perfectly healthy. They also imply that traditional CEA overvalues treatments for the mildest diseases by more than a factor of two. Use of traditional CEA both overstimulates mild disease treatment innovation and underprovides severe disease treatment innovation.
Author contact info: Karen Mulligan Leonard D. Schaeffer Center for Health Policy & Economics 635 Downey Way Verna & Peter Dauterive Hall (VPD) Los Angeles, CA 90089 E-Mail: karenmul@usc.edu Drishti Baid 1180 W 29TH ST Apartment #202 Verna & Peter Dauterive Hall (VPD) LOS ANGELES, CA 90007-3176 United States Tel: 4158390103 E-Mail: dbaid@usc.edu Jason N. Doctor Schaeffer Center For Health Policy and Economics University of Southern California 635 Downey Way Los Angeles, CA 90089-3333 E-Mail: jdoctor@usc.edu Charles E. Phelps University of Rochester 7 Millay Circle Pittsford, NY 14534 Tel: (585)310-7644 E-Mail: charles.phelps@rochester.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 the Impact of the Age of Criminal Majority: Decomposing Multiple Treatments in a Regression Discontinuity Framework - Mueller-Smith, Michael G; Pyle, Benjamin; Walker, Caroline (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the impact of adult prosecution on recidivism and employment trajectories for adolescent, first-time felony defendants. We use extensive linked Criminal Justice Admin- istrative Record System and socio-economic data from Wayne County, Michigan (Detroit). Using the discrete age of majority rule and a regression discontinuity design, we find that adult prosecution reduces future criminal charges over 5 years by 0.48 felony cases (↓ 20%) while also worsening labor market outcomes: 0.76 fewer employers (↓ 19%) and $674 fewer earnings (↓ 21%) per year. We develop a novel econometric framework that combines standard regression discontinuity methods with predictive machine learning models to identify mechanism-specific treatment effects that underpin the overall impact of adult prosecution. We leverage these estimates to consider four policy counterfactuals: (1) raising the age of majority, (2) increasing adult dismissals to match the juvenile disposition rates, (3) eliminating adult incarceration, and (4) expanding juvenile record sealing opportunities to teenage adult defendants. All four scenarios generate positive returns for government budgets. When accounting for impacts to defendants as well as victim costs borne by society stemming from increases in recidivism, we find positive social returns for juvenile record sealing expansions and dismissing marginal adult charges; raising the age of majority breaks even. Eliminating prison for first-time adult felony defendants, however, increases net social costs. Policymakers may still find this attractive if they are willing to value beneficiaries (taxpayers and defendants) slightly higher (124%) than potential victims.
Author contact info: Michael G. Mueller-Smith Department of Economics University of Michigan 365C Lorch Hall 611 Tappan Ave. Ann Arbor, MI 48109-1220 Tel: 410/218-3189 E-Mail: mgms@umich.edu Benjamin Pyle E-Mail: ben.d.pyle@gmail.com Caroline Walker U.S. Census Bureau E-Mail: caroline.walker@census.gov

Temperature and Maltreatment of Young Children - Evans, Mary F; Gazze, Ludovica; Schaller, Jessamyn (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the impacts of temperature on alleged and substantiated child maltreatment among young children using administrative data from state child protective service agencies. Leveraging short-term weather variation, we find increases in maltreatment of young children during hot periods. We rule out that our results are solely due to changes in reporting at high temperatures. Additional analysis identifies neglect as the temperature-sensitive maltreatment type, and we find limited evidence that adaptation via air conditioning mitigates this relationship. Given that climate change will increase exposure to extreme temperatures, our findings speak to additional costs of climate change among the most vulnerable.
Author contact info: Mary F. Evans LBJ School of Public Affairs The University of Texas at Austin PO Box Y Austin, TX 78713 United States Tel: 5124717630 E-Mail: mary.evans@austin.utexas.edu Ludovica Gazze Department of Economics University of Warwick United Kingdom E-Mail: Ludovica.Gazze@warwick.ac.uk 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

Research and/or Development? Financial Frictions and Innovation Investment - Mezzanotti, Filippo; Simcoe, Timothy (National Bureau of Economic Research Working Paper Series, 2023)
Abstract U.S. firms have reduced their investment in scientific research (“R”) compared to product development (“D”), raising questions about the returns to each type of investment, and about the reasons for this shift. We use Census data that disaggregates “R” from “D” to study how US firms adjust their innovation investments in response to an external increase in funding cost. Companies with greater demand for refinancing during the 2008 financial crisis made larger cuts to R&D investment. This reduction in R&D is achieved almost entirely by reducing investments in basic and applied research. Development remains essentially unchanged. Although patenting is more strongly correlated with development than research investments, the impact of the crisis appears in citation-weighted patent output after 3 to 5 years. Finally, we show that if other firms patenting similar technologies are exposed to the crisis, then a focal firm's Development investment declines. We consider several mechanisms that could explain these results, and without ruling out every alternative, conclude that the overall pattern is consistent with an important role for technological competition in R&D financing decisions.
Author contact info: Filippo Mezzanotti Kellogg School of Management Northwestern University 4389 Global Hub 2211 Campus Drive Evanston, IL 60201 E-Mail: filippo.mezzanotti@kellogg.northwestern.edu Timothy Simcoe Boston University Questrom School of Business 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/358-5725 E-Mail: tsimcoe@bu.edu

US Monetary Policy and the Return to Price Stability - Clarida, Richard H (National Bureau of Economic Research Working Paper Series, 2023)
This paper assesses the proximate causes of the post pandemic surge in US inflation, the Federal Reserve's real time reaction to and interpretation of incoming data in 2021, and the pivot to raising rates and shrinking the balance sheet that commenced in 2022 and continues in 2023. Particular attention is devoted to the role, if any, that Fed's August 2020 revisions to its monetary policy framework may have played in delaying lift - off relative to counterfactuals informed by simple policy rules, including a framework - consistent "shortfalls" policy rule featured in its semi - annual Monetary Policy Reports.
Author contact info: Richard H. Clarida Columbia University 420 West 118th Street Room 1209, IAB New York, NY 10027 Tel: 212/853-1857 E-Mail: rhc2@columbia.edu

Currency Areas, Labor Markets, and Regional Cyclical Sensitivity - Russ, Katheryn; Shambaugh, Jay C; Singh, Sanjay R (National Bureau of Economic Research Working Paper Series, 2023)
In his papers during the lead up to the birth of the European Monetary Union, Obstfeld considered whether the countries forming the EMU were sufficiently similar to survive a single monetary policy—and more importantly, whether they had the capacity to adjust to asymmetric shocks given a single monetary and exchange rate policy. The convention at the time was to take the United States as the baseline for a smoothly functioning currency union. We document the evolution of the literature on regional labor market adjustment within the United States, expanding on stylized facts illustrating how stratification in local labor market outcomes appears far more persistent today than 30 years ago in the context of what Obstfeld and Peri (1998) call non-adjustment in unemployment rates. We then extend the currency union literature by adding an additional consideration: differences in regional cyclical sensitivity. Using measures of cyclicality and Obstfeld-Peri-type non-adjustment, we explore the characteristics of places that can get left behind when local labor markets respond differently to national shocks and discuss implications for policy.
Author contact info: Katheryn Russ Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Fax: 530/752-9382 E-Mail: knruss@ucdavis.edu Jay C. Shambaugh George Washington University Elliot School for International Affairs 1957 E Street, N.W. Suite 502D Washington, D.C. 20052 E-Mail: jshambaugh@gwu.edu Sanjay R. Singh Department of Economics University of California, Davis 1122 SSH Building One Shields Avenue E-Mail: sjrsingh@ucdavis.edu

Is This Time Different? The Safety Net Response to the Pandemic Recession - Hembre, Erik A; Moffitt, Robert A; Ziliak, James P (National Bureau of Economic Research Working Paper Series, 2023)
The federal government enacted massive spending in the Pandemic Recession. But was this spending scaled to the magnitude of the economic downturn? We examine the responsiveness of the safety net to the Pandemic Recession and compare it to that in the Great Recession. Using monthly state-level administrative caseload data from five large transfer programs–SNAP, TANF, Medicaid, SSI, and UI–and measuring responsiveness in the conventional way as the state-level caseload response to cross-state variation in measures of the business cycle–we find that the safety net response during the Pandemic Recession was greater than occurred during the Great Recession for the most important recessionary-relief programs–UI and SNAP. But we find that the two smaller programs, TANF and SSI, were less responsive during the Pandemic, and we find that Medicaid caseloads are generally unresponsive to the business cycle. We also consider the role of Pandemic state-level policies, such as school and business closures, on caseloads, finding that states with more strict government Pandemic policies had greater caseload increases.
Author contact info: Erik A. Hembre University of Illinois at Chicago Dept. of Economics 720 University Hall (m/c 144) 601 S Morgan St Chicago, Illi 60607 E-Mail: ehembre@uic.edu Robert A. Moffitt Department of Economics Johns Hopkins University 3400 North Charles Street Baltimore, MD 21218 Tel: 410/516-7611 Fax: 410/516-7600 E-Mail: moffitt@jhu.edu 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

Measuring Economic Growth with a Fully Identified Three-Signal Model - Civelli, Andrea; Gaduh, Arya; Yousuf, Ahmed Sadek (National Bureau of Economic Research Working Paper Series, 2023)
We augment Henderson et al. (2012)’s two-signal model of true GDP growth with a third signal to overcome its under-identification problem. The additional moment conditions from the third signal help fully identify all model parameters without ad-hoc calibrations of the GDP’s signal-to-noise ratio. We characterize the necessary properties of the third signal. Using the model, we recover the optimal weight of official GDP in the composite true GDP growth estimates, which varies with the quality of the national statistics. The model improves on existing methodologies that use signals to measure true income.
Author contact info: Andrea Civelli University of Arkansas Fayetteville, AR 72701 Tel: 479-575-6354 E-Mail: acivelli@uark.edu Arya Gaduh Department of Economics University of Arkansas 402 Business Building Fayatteville, AR 72701 Tel: 479/575-8776 E-Mail: AGaduh@walton.uark.edu Ahmed Sadek Yousuf E-Mail: ahmed-sadek.yousuf@univ-amu.fr

Understanding Rationality and Disagreement in House Price Expectations - Li, Zigang; Van Nieuwerburgh, Stijn; Renxuan, Wang (National Bureau of Economic Research Working Paper Series, 2023)
Professional house price forecast data are consistent with a rational model where agents must learn about the parameters of the house price growth process and the underlying state of the housing market. Slow learning about the long-run mean can generate forecast bias, a response of forecasts to lagged realizations, sluggish response of forecasts to contemporaneous realizations, and over-reaction to forecast revisions. Introducing behavioral biases, either over-confidence or diagnostic expectations, helps the model further improve its predictions for short-horizon over-reaction and dispersion. Using panel data for a cross-section of forecasters and a term structure of forecasts are important for generating these results.
Author contact info: Zigang Li 105 St. George Street Toronto, ON M5S 3E6 Canada E-Mail: zigang.li@rotman.utoronto.ca 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 Wang Renxuan CEIBS 699 Hongfeng Rd, Faculty Building 303 Pudong, Shanghai, China, 201203 E-Mail: rxwang@ceibs.edu

Working from Home, Worker Sorting and Development - Atkin, David; Schoar, Antoinette; Shinde, Sumit (National Bureau of Economic Research Working Paper Series, 2023)
Differences in the productivity of home-based versus office-based work may arise due to a treatment effect of the office or from workers with different abilities sorting into these locations. We conduct an RCT in the data entry sector in India that exogenously allocates workers to work from home (WFH) or from the office. We first find that the productivity of workers randomly assigned to WFH is 18% lower than those in the office. Two-thirds of the effect manifests itself from the first day of work with the remainder due to quicker learning in the office. Second, there is a negative selection effect into the office, since workers who prefer home-based work are 12% faster and more accurate at baseline. Finally, we find negative selection on treatment effects: workers who prefer WFH are substantially less productive at home than the office (27% less compared to 13% less for workers who prefer the office). These negative selection effects are partially explained by subgroups that face bigger constraints on selecting into office work and additional demands on their attention when at home, such as those with children or other home care responsibilities.
Author contact info: David Atkin Department of Economics, E52-550 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 203/936-9367 E-Mail: atkin@mit.edu Antoinette Schoar MIT Sloan School of Management 100 Main Street, E62-638 Cambridge, MA 02142 Tel: 617/253-3763 Fax: 617/258-6855 E-Mail: aschoar@mit.edu Sumit Shinde 8276 Bunche Hall 315 Portola Plaza Los Angeles, CA 90095 E-Mail: sumitshinde@ucla.edu

Information Dynamics and Macro Fluctuations - Chousakos, Kyriakos T; Gorton, Gary B; Ordoñez, Guillermo (National Bureau of Economic Research Working Paper Series, 2023)
The amount of information produced about firms’ productivities and about the quality of collateral backing their loans varies over time. These information dynamics determine the evolution of credit, output and productivity, which feeds back into incentives to produce information. We characterize this intricate dynamic relation. A credit boom happens when information about collateral depreciates. A financial crisis happens when information about collateral is suddenly generated. Information about firms’ individual productivities over credit booms can prevent or tame the crisis, acting as an endogenous macroprudential force.
Author contact info: Kyriakos T. Chousakos Bank of America One Bryant Park NY1-100-05-00 New York, NY 10035 E-Mail: kchousakos@gmail.com 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 Guillermo Ordoñez University of Pennsylvania Department of Economics PCPSE - Room 505 133 South 36th Street Philadelphia, PA 19104 Tel: (215) 898-1875 Fax: (215) 573-2057 E-Mail: ordonez@econ.upenn.edu

Global Transportation Decarbonization - Rapson, David S; Muehlegger, Erich (National Bureau of Economic Research Working Paper Series, 2023)
A number of policy proposals call for replacing fossil fuels in the name of decarbonization, but these fuels will be difficult to replace due to to their as-yet unrivaled bundle of attributes: abundance, ubiquity, energy density, transportability and cost. There is a growing commitment to electrification as the dominant decarbonization pathway for transportation. While deep electrification is promising for road vehicles in wealthy countries, it will face steep obstacles. In other sectors and in the developing world, it’s not even in pole position. Global transportation decarbonization will require decoupling emissions from economic growth, and decoupling emissions from growth will require not only new technologies, but cooperation in governance. The menu of policy options is replete with tradeoffs, particularly as the primacy of energy security and reliability (over emissions abatement) has once again been demonstrated in Europe and elsewhere.
Author contact info: David S. Rapson Department of Economics University of California, Davis One Shields Avenue Davis, CA 95616 Tel: 530-302-1024 Fax: 530-752-9382 E-Mail: dsrapson@ucdavis.edu Erich Muehlegger University of California,Davis Economics Department One Shields Ave Davis, CA 95616 E-Mail: emuehlegger@ucdavis.edu

The (Lack of) Anticipatory Effects of the Social Safety Net on Human Capital Investment - Deshpande, Manasi; Dizon-Ross, Rebecca (National Bureau of Economic Research Working Paper Series, 2023)
How does the expectation that a child will receive government benefits in adulthood affect parental investments in the child's human capital? Most parents whose children receive Supplemental Security Income (SSI) benefits overestimate the likelihood that their child will receive SSI benefits in adulthood. We present randomly-selected families with the predicted likelihood that their child will receive SSI benefits in adulthood. Reducing parents' expectations that children will receive benefits in adulthood does not increase investments in children's human capital. This zero effect is precisely estimated. Likely explanations include parents working more themselves, non-financial goals influencing investment, and families facing investment constraints.
Author contact info: Manasi Deshpande Department of Economics University of Chicago 1126 E 59th St. Chicago, IL 60637 E-Mail: mdeshpande@uchicago.edu Rebecca Dizon-Ross Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-3265 E-Mail: rdr@chicagobooth.edu

Scenario Sampling for Large Supermodular Games - Graham, Bryan S; Pelican, Andrin (National Bureau of Economic Research Working Paper Series, 2023)
This paper introduces a simulation algorithm for evaluating the log-likelihood function of a large supermodular binary-action game. Covered examples include (certain types of) peer effect, technology adoption, strategic network formation, and multi-market entry games. More generally, the algorithm facilitates simulated maximum likelihood (SML) estimation of games with large numbers of players, T, and/or many binary actions per player, M (e.g., games with tens of thousands of strategic actions, TM=O(10⁴)). In such cases the likelihood of the observed pure strategy combination is typically (i) very small and (ii) a TM-fold integral who region of integration has a complicated geometry. Direct numerical integration, as well as accept-reject Monte Carlo integration, are computationally impractical in such settings. In contrast, we introduce a novel importance sampling algorithm which allows for accurate likelihood simulation with modest numbers of simulation draws.
Author contact info: Bryan S. Graham University of California - Berkeley 530 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: (510) 642 4752 E-Mail: bgraham@econ.berkeley.edu Andrin Pelican Rofna 7418 Domleschg Switzerland E-Mail: pelicanandrin@gmail.com

Information Aggregation in Stratified Societies - Agranov, Marina; Eilat, Ran; Sonin, Konstantin (National Bureau of Economic Research Working Paper Series, 2023)
We analyze a model of political competition in which the elite forms endogenously to aggregate information and advise the uninformed median voter which candidate to choose. The median voter knows whether or not the endorsed candidate is biased toward the elites, but might still prefer the biased candidate if the elite’s endorsement provides sufficient information about her competence. The elite size and the degree of information aggregation by the elite depend on the extent to which the median voter follows the elite’s advice. A higher cost of redistribution minimizes the elite’s information advantage, hinders information transmission, and decreases the expected competence of the elected politician.
Author contact info: Marina Agranov Division of Humanities and Social Sciences California Institute of Technology 228-77 Caltech Pasadena, CA 91125 Tel: 626/395-3559 E-Mail: magranov@hss.caltech.edu Ran Eilat E-Mail: eilatr@bgu.ac.il Konstantin Sonin Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: ksonin@uchicago.edu

The Pervasive Influence of Ideology at the Federal Circuit Courts - Cohen, Alma (National Bureau of Economic Research Working Paper Series, 2023)
This paper seeks to contribute to the long-standing debate on the extent to which the ideology of federal circuit court judges, as proxied by the party of the president nominating them, can help to predict case outcomes. To this end, I combine and analyze a novel dataset containing about 670,000 circuit court cases from 1985 to 2020. I show that the political affiliation of judges is associated with outcomes, and thus can help to predict them, throughout the vast universe of circuit court cases – and not only in the ideologically contested cases on which prior empirical research has focused. In particular, I find an association between political affiliation and outcomes in each of six categories of cases in which the two litigating parties could be perceived by judges to have unequal power. In each of these six case categories, which together add up to more than 550,000 cases, the more Democratic judges a panel has, the higher the odds of the panel siding with the seemingly weaker party. Furthermore, I identify evidence of polarization over time in circuit court decisions. Consistent with such growing polarization, in the important subset of published cases, the identified patterns are more pronounced in the last two decades of the examined period than earlier. Going beyond the very large sample of cases with parties of seemingly of unequal power, I identify how political affiliation can help to predict outcomes in most of the cases outside this sample. In particular, I show that panels with more Democratic judges are less likely than panels with less Democratic judges to defer to the lower-court decision in civil cases between private parties that seem to be of equal power. Altogether, my analysis shows that political affiliation can help to predict outcomes in over 90% of circuit court cases. Overall, my results highlight the pervasiveness with which – and the array of ways through which – the political affiliation of judges can help to predict the outcome of circuit court cases.
Author contact info: Alma Cohen Harvard Law School 1525 Massachusetts Avenue Cambridge, MA 02138 E-Mail: alcohen@law.harvard.edu

Optimal Monetary Policy with r*<0 - Billi, Roberto M; Galí, Jordi; Nakov, Anton (National Bureau of Economic Research Working Paper Series, 2023)
We study the optimal monetary policy problem in a New Keynesian economy with a zero lower bound (ZLB) on the nominal interest rate, when the steady state natural rate (r*) becomes permanently negative. We show that the optimal policy aims to approach gradually a new steady state with positive average inflation. Around that steady state, the optimal policy implies well defined (second-best) paths for inflation and output in response to shocks to the natural rate. Under plausible calibrations, the optimal policy implies that the nominal rate remains at its ZLB most of the time. Despite the latter feature, the central bank can implement the optimal outcome as a unique equilibrium by means of an appropriate nonlinear interest rate rule. In order to establish that result, we derive sufficient conditions for local determinacy in a general model with endogenous regime switches.
Author contact info: Roberto M. Billi Sveriges Riksbank Stockholm Sweden E-Mail: roberto.billi@riksbank.se 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 Anton Nakov DIV Monetary Policy Research Sonnenmannstrasse 20 60314 Frankfurt am Main Europe Tel: +49 69 1344 8032 Fax: +49 69 1344 6575 E-Mail: anton.nakov@gmail.com

Information and the Formation of Inflation Expectations by Firms: Evidence from a Survey of Israeli Firms - Gorodnichenko, Yuriy; Melnick, Rafi; Kutai, Ari (National Bureau of Economic Research Working Paper Series, 2023)
This study analyzes how firms form their inflation expectations during a regime change in monetary policy and a transition to a low-inflation environment. Using the Bank of Israel survey of firms, we document the basic properties of firms’ inflation expectations and examine how Israeli firms update their inflation expectations after receiving new information about inflation or monetary policy. We find that even after successful de-dollarization and disinflation a positive inflation surprise leads to a sizable upward adjustment in inflation expectations for the next year and quarter. A surprise hike in the monetary interest rate leads to a downward adjustment in inflation expectations.
Author contact info: 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 Rafi Melnick E-Mail: melnick@idc.ac.il Ari Kutai Bank of Israel Bazel 6 Tel-Aviv Israel Tel: 972-54-6412452 E-Mail: ari.kutai@gmail.com

Strategyproofness-Exposing Mechanism Descriptions - Gonczarowski, Yannai A; Heffetz, Ori; Thomas, Clayton (National Bureau of Economic Research Working Paper Series, 2023)
A menu description presents a mechanism to player i in two steps. Step (1) uses the reports of other players to describe i’s menu: the set of i’s potential outcomes. Step (2) uses i’s report to select i’s favorite outcome from her menu. Can menu descriptions better expose strategyproofness, without sacrificing simplicity? We propose a new, simple menu description of Deferred Acceptance. We prove that—in contrast with other common matching mechanisms—this menu description must differ substantially from the corresponding traditional description. We demonstrate, with a lab experiment on two elementary mechanisms, the promise and challenges of menu descriptions.
Author contact info: Yannai A. Gonczarowski Harvard University Department of Economics and Department of Computer Science Cambridge, MA E-Mail: yannai@gonch.name Ori Heffetz S.C. Johnson Graduate School of Management Cornell University 324 Sage Hall Ithaca, NY 14853 Tel: 607/255-4668 E-Mail: oh33@cornell.edu Clayton Thomas E-Mail: claytont@princeton.edu

Measuring Financial Integration: More Data, More Countries, More Expectations - Chinn, Menzie D; Ito, Hiro (National Bureau of Economic Research Working Paper Series, 2023)
We assess market mediated financial integration over the last fifty years. We first systematically lay out several definitions of financial integration, and then review the evidence regarding whether covered interest parity, uncovered interest parity, and real interest parity hold across industrial and non-industrial countries. Finally we examine what the determinants of real interest differentials are.
Author contact info: Menzie D. Chinn Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-7397 Fax: 608/262-2033 E-Mail: mchinn@lafollette.wisc.edu Hiro Ito Portland State University 15787 NW Hackney Dr. Portland, OR 97229 Tel: 5039613168 E-Mail: ito@pdx.edu

Learning and Expectations in Dynamic Spatial Economies - Fan, Jingting; Hong, Sungwan; Parro, Fernando (National Bureau of Economic Research Working Paper Series, 2023)
The impact of shocks in dynamic environments depends on how forward-looking agents anticipate the path of future fundamentals that shape their decisions. We incorporate ﬂexible beliefs about future fundamentals into a general class of dynamic spatial models, allowing beliefs to be evolving, uncertain, and heterogeneous across groups of agents. We show how to implement our methodology to study both ex-ante and ex-post shocks to fundamentals. We apply our method to two settings: an ex-ante study of the economic impacts of climate change, and an ex-post evaluation of the China productivity shock on the U.S. economy. In both cases, we study the impact of deviations from perfect foresight on different outcomes.
Author contact info: Jingting Fan Department of Economics, Pennsylvania State University University Park, PA 16801 E-Mail: jxf524@psu.edu Sungwan Hong E-Mail: sph5642@psu.edu Fernando Parro Pennsylvania State University Department of Economics University Park, PA 16801 Tel: 202/812-5314 E-Mail: fxp5102@psu.edu

Keep your Enemies Closer: Strategic Platform Adjustments during U.S. and French Elections - Di Tella, Rafael; Kotti, Randy; Le Pennec, Caroline; Pons, Vincent (National Bureau of Economic Research Working Paper Series, 2023)
We study changes in political discourse during campaigns, using a novel dataset of candidate websites for U.S. House elections, 2002-2016, and manifestos for French parliamentary and local elections, 1958-2022. We find that candidates move to the center in ideology and rhetorical complexity between the first round (or primary) and the second round (or general election). This convergence reflects candidates’ strategic adjustment to their competitor, as predicted by the median voter theorem: Using an RDD, we show that candidates converge to the platform of opponents who narrowly qualified for the last round, as opposed to those who narrowly failed to qualify.
Author contact info: Rafael Di Tella Harvard Business School Soldiers Field Rd Boston, MA 02163 Tel: 617/495-6000 E-Mail: rditella@hbs.edu Randy Kotti Boulevard des Marechaux Palaiseau 91120 France E-Mail: kotti.randy@gmail.com Caroline Le Pennec HEC Montreal 3000 Chemin De La Cote-Sainte-Catherine Montreal, Quebec H3T 2A7 Canada E-Mail: caroline.le-pennec@hec.ca Vincent Pons Harvard Business School Morgan Hall 289 Soldiers Field Boston, MA 02163 Tel: 617/495-9329 E-Mail: vpons@hbs.edu

Financial Machine Learning - Kelly, Bryan T; Xiu, Dacheng (National Bureau of Economic Research Working Paper Series, 2023)
We survey the nascent literature on machine learning in the study of financial markets. We highlight the best examples of what this line of research has to offer and recommend promising directions for future research. This survey is designed for both financial economists interested in grasping machine learning tools, as well as for statisticians and machine learners seeking interesting financial contexts where advanced methods may be deployed.
Author contact info: Bryan T. Kelly Yale School of Management 165 Whitney Ave. New Haven, CT 06511 Tel: 203-432-2221 E-Mail: bryan.kelly@yale.edu Dacheng Xiu E-Mail: dacheng.xiu@chicagobooth.edu

Constitutions and Order: A Theory and Evidence from Colombia and the United States - Fergusson, Leopoldo; Mejia, Javier; Robinson, James A; Torres, Santiago (National Bureau of Economic Research Working Paper Series, 2023)
We propose a framework to explain why some societies may end up with different constitutional solutions to the problem of maintaining order in the face of self-interested behavior. Though the salient intellectual tradition since Hobbes has focused on how institutional design is used to eradicate violence, our framework illustrates that equilibrium constitutions may in fact have to deliberately allow for violence. This arises because some societies are unable to use institutions to influence income distribution. In this case, a constitutional tolerance of violence emerges as a credible way for an incumbent to meet the participation constraint of a challenger. We illustrate the results with the comparative constitutional history of the US and Colombia.
Author contact info: Leopoldo Fergusson Universidad de los Andes Department of Economics Cra 1 No 18A - 12 Bogotá, Colombia E-Mail: lfergusson@uniandes.edu.co Javier Mejia Department of Political Science 616 Jane Stanford Way Stanford, CA 94305 USA E-Mail: mejiaj@stanford.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 Santiago Torres Harris School of Public Policy 1307 East 60th Street Chicago, IL 60637-9900 United States E-Mail: storresp@uchicago.edu

Policy Decentralization in the Post-Prohibition Era - Arnold, Andrew; Sieg, Holger (National Bureau of Economic Research Working Paper Series, 2023)
We study the decentralization of liquor policies in the Post-Prohibition Era, which is the most famous natural experiment ever conducted with respect to policy decentralization in the U.S. Our empirical analysis exploits a unique feature of this policy change, namely that we observe votes of citizens in public referenda as well as roll call votes of the state legislators affecting the same policy. Our analysis is based on a probabilistic voting model. We show how to identify and estimate a model with a multi-dimensional policy space. These estimates then allow us to map the policy space into an alcohol consumption space. We find that this mapping is highly non-linear. Hence, differences in estimated bliss points in the ideological policy space tend to exaggerate differences in preferences over alcohol consumption. Nevertheless, decentralized policies offer the opportunity to account for heterogeneity in preferences and increase welfare. The optimal decentralized policy increases aggregate welfare by up to 79 percent compared to the optimal uniform policy.
Author contact info: Andrew Arnold Department of Justice 950 Pennsylvania Avenue NW Washington, DC 20530 E-Mail: ajarnold@sas.upenn.edu Holger Sieg Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 215 898 7194 Fax: 215-573-2057 E-Mail: holgers@econ.upenn.edu

Social Security Claiming Intentions: Psychological Ownership, Loss Aversion, and Information Displays - Shu, Suzanne; Payne, John W (National Bureau of Economic Research Working Paper Series, 2023)
For many Americans the question of when to claim Social Security benefits is one of the most consequential financial decisions they will ever face. While acknowledging that individuals differ in terms of optimal timing for starting Social Security benefits, many economists argue that an average person would benefit from delaying claiming as long as they could. Yet this is not what average Americans do. Many more Americans claim as soon as possible, at age 62, rather than as late as possible, at age 70. Why? This paper focuses on individual differences in beliefs and values that influence Social Security claiming intentions. As expected from economic theory, individual differences in life expectations and degree of patience for later larger payouts relate to claiming intentions. In addition, however, we also find that individual differences in psychological ownership of one’s Social Security benefits and individual differences in degree of loss aversion are both significant predictors of Social Security claiming intentions. Further, we find that an “enriched” information display manipulation (nudge) that emphasizes longer-term consequences of late claiming leads to earlier, not later, claiming intentions, and that the size of this effect is related to individual differences in the degree of loss aversion.
Author contact info: Suzanne Shu SC Johnson College of Business Cornell University 475H Warren Hall Ithaca, NY 14853 Tel: 310/825-4818 E-Mail: suzanne.shu@cornell.edu John W. Payne Duke University Fuqua School of Business Durham, NC 27708-0120 E-Mail: jpayne@duke.edu

Selection-Neglect in the NFT Bubble - Huang, Dong; Goetzmann, William N (National Bureau of Economic Research Working Paper Series, 2023)
Using transaction data from a large non-fungible token (NFT) trading platform, this paper examines how the behavioral bias of selection-neglect interacts with extrapolative beliefs, accelerating the boom and delaying the crash in the recent NFT bubble. We show that the price-volume relationship is consistent with extrapolative beliefs about increasing prices which were plausibly triggered by a macroeconomic shock. We test the hypothesis that agents prone to selection-neglect formed even more optimistic beliefs and traded more aggressively than their counterparts during the boom. When liquidity for NFTs declined, observed NFT prices were subject to severe selection bias due in part to seller loss aversion delaying the onset of the crash. Finally, we show that market participants with sophisticated bidding behavior were less subject to selection bias and performed better.
Author contact info: Dong Huang Yale School of Management 165 Whitney Ave. New Haven, CT 06511 USA E-Mail: dong.huang@yale.edu William N. Goetzmann School of Management Yale University Box 208200 New Haven, CT 06520-8200 Tel: 203/432-5950 Fax: 203/432-3003 E-Mail: william.goetzmann@yale.edu

Were COVID and the Great Recession Well-being Reducing? - Blanchflower, David G; Bryson, Alex (National Bureau of Economic Research Working Paper Series, 2023)
We show individuals’ reports of subjective well being in Europe did decline in the Great Recession and during the Covid pandemic on most measures and on four bordering countries to Ukraine after the Russian invasion in 2022. However, the movements are not large and are not apparent everywhere. We also used data from the European Commission's Business and Consumer Surveys on people’s expectations of life in general, their financial situation and the economic and employment situation in the country, all of which dropped markedly in the Great Recession and during Covid, but bounced back quickly, as did firms’ expectations of the economy and the labor market. Neither the UN’s Human Development Index (HDI) nor data used in the World Happiness Report from the Gallup World Poll shifted much in response to negative shocks. The HDI has been rising in the last decade or so reflecting overall improvements in economic and social wellbeing, captured in part by real earnings growth, although it fell slightly after 2020 as life expectancy dipped. This secular improvement is mirrored in life satisfaction which has been rising in the last decade. However, so too have negative affect in Europe and despair in the USA
Author contact info: David G. Blanchflower Bruce V. Rauner Professor of Economics 6106 Rockefeller Hall Dartmouth College Hanover, NH 03755-3514 Tel: 603/646-2536 Fax: 603/646-2122 E-Mail: blanchflower@dartmouth.edu Alex Bryson Professor of Quantitative Social Science UCL Social Research Institute University College London 20 Bedford Way London WC1H 0AL London United Kingdom Tel: +44 7969179755 E-Mail: a.bryson@ucl.ac.uk

Pandemic, War, Inflation: Oil Markets at a Crossroads? - Baumeister, Christiane (National Bureau of Economic Research Working Paper Series, 2023)
The COVID-19 pandemic as well as the Russian invasion of Ukraine have had profound effects on the global energy landscape, with some of the longer-lasting effects still unfolding. This paper discusses how these events have reshaped the supply side of the global oil market by focusing on structural changes in each of the three main oil-producing countries. The demand side has responded to geopolitical developments by devising a set of policy tools to stabilize oil markets and counter inflationary pressures. In particular, the price cap policy was introduced to supplement the EU embargo on seaborne Russian oil exports, and record volumes of oil were released from government-controlled emergency stockpiles. The sources of oil price fluctuations associated with these events are also discussed, as is their role in the recent surge of inflation, with a particular focus on the heterogeneity in the pass-through of oil supply shocks within the Euro area.
Author contact info: Christiane Baumeister Department of Economics University of Notre Dame 3028 Jenkins Nanovic Hall Notre Dame, IN 46556 Tel: 574/631-8450 E-Mail: cbaumeis@nd.edu

Conservation Priorities and Environmental Offsets: Markets for Florida Wetlands - Aronoff, Daniel; Rafey, Will (National Bureau of Economic Research Working Paper Series, 2023)
We introduce an empirical framework for valuing markets in environmental offsets. Using newly-collected data on wetland conservation and offsets, we apply this framework to evaluate a set of decentralized markets in Florida, where land developers purchase offsets from a small number of long-lived producers that restore wetlands over time. We find that offsets led to substantial private gains from trade, creating about $2.2 billion of net surplus from 1995–2018 relative to a historical conservation mandate. Offset trading also led to large differences in hydrological outcomes, driven by significant differences between restored and existing wetlands in terms of area and location. A locally differentiated Pigouvian tax on offset transactions would have prevented $1.3 billion of new flood damage while preserving more than two-thirds of the private gains from trade.
Author contact info: Daniel Aronoff MIT Media Lab Massachusetts Institute of Technology 75 Amherst St. Cambridge, MA 02139 E-Mail: daronoff@mit.edu Will Rafey Department of Economics UCLA 8367 Bunche Hall Los Angeles, CA 90095 E-Mail: rafey@ucla.edu

Remote Work and City Structure - Monte, Ferdinando; Porcher, Charly; Rossi-Hansberg, Esteban (National Bureau of Economic Research Working Paper Series, 2023)
We study the adoption of remote work within cities and its effect on city structure and welfare. We develop a dynamic model of a city in which workers can decide to work in the central business district (CBD) or partly at home. Working in the CBD allows them to interact with other commuters, which enhances their productivity through a standard production externality, but entails commuting costs. Switching between modes of labor delivery is costly, and workers face idiosyncratic preference shocks for remote work. We characterize the parameter set in which the city exhibits multiple stationary equilibria. Within this set, a coordination mechanism can lead to stationary equilibria in which most workers commute or most of them work partially from home. In these cases, large shocks in the number of commuters, like the recent lockdowns and self-isolation generated by the COVID-19 pandemic, can result in dynamic paths that make cities converge to a stationary equilibrium with large fractions of remote workers. Using cell-phone-based mobility data for the U.S., we document that although most cities experienced similar reductions in CBD trips during the pandemic, trips in the largest cities have stabilized at levels that are only about 60% of pre-pandemic levels. In contrast, smaller cities have, on average, returned to pre-pandemic levels. House price panel data by city show consistent changes in house price CBD-distance gradients. We estimate the model for 274 U.S. cities and show that cities that have stabilized at a large fraction of remote work are much more likely to have parameters that result in multiple stationary equilibria. Our results imply welfare losses in these cities that average 2.7%.
Author contact info: Ferdinando Monte McDonough School of Business Georgetown University 37th & O Street, NW Washington, DC 20057 E-Mail: ferdinando.monte@georgetown.edu Charly Porcher McDonough School of Business Georgetown University 37th & O Street, NW Washington, DC 20057 E-Mail: cp1105@georgetown.edu Esteban Rossi-Hansberg The Kenneth C. Griffin Department of Economics University of Chicago 5757 S. University Avenue Chicago, IL 60637 Tel: (650) 714 2093 E-Mail: rossihansberg@uchicago.edu

To What Extent are Trends in Teen Mental Health Driven by Changes in Reporting? The Example of Suicide-Related Hospital Visits - Corredor-Waldron, Adriana; Currie, Janet (National Bureau of Economic Research Working Paper Series, 2023)
Rising reports of suicidal behaviors in children and adolescents have led to the recognition of a youth mental health crisis. However, reported rates can be influenced by access to screening and changes in reporting conventions, as well as by changes in social stigma. Using data on all hospital visits in New Jersey from 2008-2019, we investigate two inflection points in adolescent suicide-related visits and show that a rise in 2012 followed changes in screening recommendations, while a sharp rise in 2016-2017 followed changes in the coding of suicidal ideation. Rates of other suicidal behaviors including self-harm, attempted suicides, and completed suicides were essentially flat over this period. These results suggest that underlying suicide-related behaviors among children, while alarmingly high, may not have risen as sharply as reported rates suggest. Hence, researchers should approach reported trends cautiously.
Author contact info: Adriana Corredor-Waldron 2801 Founders Dr. Raleigh, NC 27607 E-Mail: amcorred@ncsu.edu Janet Currie Department of Economics Center for Health and Wellbeing 185A Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 Tel: 609-258-7393 E-Mail: jcurrie@princeton.edu

Diversifying Society’s Leaders? The Determinants and Causal Effects of Admission to Highly Selective Private Colleges - Chetty, Raj; Deming, David J; Friedman, John N (National Bureau of Economic Research Working Paper Series, 2023)
Leadership positions in the U.S. are disproportionately held by graduates of a few highly selective private colleges. Could such colleges — which currently have many more students from high-income families than low-income families — increase the socioeconomic diversity of America’s leaders by changing their admissions policies? We use anonymized admissions data from several private and public colleges linked to income tax records and SAT and ACT test scores to study this question. Children from families in the top 1% are more than twice as likely to attend an Ivy-Plus college (Ivy League, Stanford, MIT, Duke, and Chicago) as those from middle-class families with comparable SAT/ACT scores. Two-thirds of this gap is due to higher admissions rates for students with comparable test scores from high-income families; the remaining third is due to differences in rates of application and matriculation. In contrast, children from high-income families have no admissions advantage at flagship public colleges. The high-income admissions advantage at private colleges is driven by three factors: (1) preferences for children of alumni, (2) weight placed on non-academic credentials, which tend to be stronger for students applying from private high schools that have affluent student bodies, and (3) recruitment of athletes, who tend to come from higher-income families. Using a new research design that isolates idiosyncratic variation in admissions decisions for waitlisted applicants, we show that attending an Ivy-Plus college instead of the average highly selective public flagship institution increases students’ chances of reaching the top 1% of the earnings distribution by 60%, nearly doubles their chances of attending an elite graduate school, and triples their chances of working at a prestigious firm. Ivy-Plus colleges have much smaller causal effects on average earnings, reconciling our findings with prior work that found smaller causal effects using variation in matriculation decisions conditional on admission. Adjusting for the value-added of the colleges that students attend, the three key factors that give children from high-income families an admissions advantage are uncorrelated or negatively correlated with post-college outcomes, whereas SAT/ACT scores and academic credentials are highly predictive of post-college success. We conclude that highly selective private colleges currently amplify the persistence of privilege across generations, but could diversify the socioeconomic backgrounds of America’s leaders by changing their admissions practices.
Author contact info: Raj Chetty Department of Economics Harvard University Littauer 321 Cambridge, MA 02138 Tel: 617/744-9492 E-Mail: chetty79@gmail.com David J. Deming Harvard Kennedy School Malcolm Wiener Center for Social Policy 79 JFK St Cambridge, MA 02138 Tel: 617/496-4702 E-Mail: david_deming@harvard.edu John N. Friedman Department of Economis Robinson Hall Brown University Providence, RI 02912 E-Mail: john_friedman@brown.edu

Under the Same Umbrella: Public Health Insurance Expansions and the Uniformity of Insurance for Families - Hamersma, Sarah; Grossman, Daniel S; Tello-Trillo, Sebastian (National Bureau of Economic Research Working Paper Series, 2023)
Evaluating insurance coverage at the individual level abstracts away from the family-level decision making behind healthcare utilization. While traditional private insurance tends to be offered to either adult individuals or whole families, public insurance eligibility is determined person-by-person. Income eligibility thresholds for public coverage can differ for parents and children, and even among children in different age groups. Having different insurance sources, or a mix of insured and uninsured members of a family, may be disruptive to consistent medical care. In this paper we investigate how changes in eligibility thresholds for adults and children are associated with mismatched patterns of insurance coverage. Using the Current Population Survey and the Survey of Income and Program Participation, we document the patterns of insurance mismatch over time and their relationship to Medicaid and State Children’s Health Insurance Program income eligibility thresholds. We find that expansions of parent thresholds can promote uniform insurance coverage for families. These results are driven by families led by single mothers, who are more likely to be affected by Medicaid expansions for parents. Treating a family as the main unit of observation provides important insights and details potential unintended consequences of individual-level public insurance policy.
Author contact info: Sarah Hamersma Syracuse University Maxwell School of Citizenship and Public Affairs 200 Eggers Hall Syracuse, NY 13244-1020 E-Mail: sehamers@maxwell.syr.edu 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

Discrimination in Multi-Phase Systems: Evidence from Child Protection - Baron, E. Jason; Doyle, Joseph J, Jr.; Emanuel, Natalia; Hull, Peter; Ryan, Joseph P (National Bureau of Economic Research Working Paper Series, 2023)
We develop empirical tools for studying discrimination in multi-phase systems, and apply them to the setting of foster care placement by child protective services. Leveraging the quasi-random assignment of two sets of decision-makers—initial hotline call screeners and subsequent investigators—we study how unwarranted racial disparities arise and propagate through this system. Using a sample of over 200,000 maltreatment allegations, we find that calls involving Black children are 55% more likely to result in foster care placement than calls involving white children with the same potential for future maltreatment in the home. Call screeners account for up to 19% of this unwarranted disparity, with the remainder due to investigators. Unwarranted disparity is concentrated in cases with potential for future maltreatment, suggesting that white children may be harmed by “under-placement” in high-risk situations.
Author contact info: E. Jason Baron Economics Department Duke University 228B Social Sciences Building Durham, NC 27708 E-Mail: jason.baron@duke.edu Joseph J. Doyle Jr. MIT Sloan School of Management 100 Main Street, E62-516 Cambridge, MA 02142 Tel: 617/452-3761 Fax: 617/258-6855 E-Mail: jjdoyle@mit.edu Natalia Emanuel 33 Liberty Street New York, NY 10045 USA E-Mail: natalia@nataliaemanuel.com Peter Hull Department of Economics Box B, Brown University Providence RI 02912 E-Mail: peter_hull@brown.edu Joseph P. Ryan School of Social Work University of Michigan 1080 South University Avenue Ann Arbor, MI 48109 E-Mail: joryan@umich.edu

Housing, Household Debt, and the Business Cycle: An Application to China and Korea - Sufi, Amir (National Bureau of Economic Research Working Paper Series, 2023)
China and South Korea both experienced substantial increases in household debt through 2021, and now both countries face a weakening economy. This essay gleans lessons from the “credit-driven household demand channel” (e.g., Mian and Sufi 2018) to explore how the two economies will fare in the years ahead. On the positive side, neither country is at risk of a severe financial crisis, and both countries have a strong current account position. On the negative side, consumer spending in both countries could be quite weak in the years ahead. For China, the biggest risk is that distortions in the production sector aimed at boosting the property market were a major driver of growth during the boom, and it is unclear how growth can continue to be sustained with the property market stumbling.
Author contact info: 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

Exporting, Global Sourcing, and Multinational Activity: Theory and Evidence from the United States - Antràs, Pol; Fadeev, Evgenii; Fort, Teresa C; Tintelnot, Felix (National Bureau of Economic Research Working Paper Series, 2023)
Multinational firms (MNEs) dominate trade flows, yet their global production decisions are often ignored in firm-level studies of exporting and importing. Using newly merged data on US firms' trade and multinational activity by country, we show that MNEs are more likely to trade not only with countries in which they have affiliates, but also with other countries within their affiliates' region. We rationalize these patterns with a new source of firm-level scale economies that arises when country-specific fixed costs to source from, or sell in, a market are shared across all the MNE's plants. These shared fixed costs create interdependencies between a firm's production and trade locations that generate third-market responses to bilateral trade policy changes.
Author contact info: Pol Antràs Department of Economics Harvard University 1805 Cambridge Street Littauer Center 210 Cambridge, MA 02138 Tel: 617/495-1236 Fax: 617/495-8570 E-Mail: pantras@fas.harvard.edu Evgenii Fadeev Fuqua School of Business 100 Fuqua Drive Durham, NC 27708 E-Mail: evgenii.fadeev@duke.edu Teresa C. Fort Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755 Tel: 603/646-8963 E-Mail: teresa.fort@tuck.dartmouth.edu Felix Tintelnot Kenneth C. Griffin Department of Economics University of Chicago 5757 South University Avenue Chicago, IL 60637 Tel: 773/702-5403 E-Mail: felix.tintelnot@gmail.com

Innovation and the Enforceability of Noncompete Agreements - Johnson, Matthew S; Lipsitz, Michael; Pei, Alison (National Bureau of Economic Research Working Paper Series, 2023)
Worker mobility across firms can enhance innovation by spreading knowledge, but such mobility may also hinder innovation by making firms reluctant to invest in R&D. A common way that firms limit workers' mobility is with noncompete agreements (NCAs). We examine how the legal enforceability of NCAs affects innovation, as measured by patenting, using data on every state-level NCA enforceability change between 1991–2014. We find that making NCAs easier to enforce (“stricter” enforceability) substantially reduces the rate of patenting: an average-sized increase in NCA enforceability leads a state to have 16-19% fewer citation-weighted patents over the following 10 years. This effect reflects a true loss in innovation rather than a reduction in useless or strategic patents. We then reconcile these findings with contrasting theoretical predictions. Stricter NCA enforceability reduces job mobility and new business formation in innovative industries, suggesting slower knowledge spread. Within publicly-traded firms, stricter NCA enforceability increases investment, but still leads to less innovation, suggesting that any gains from enhanced incentives to invest are more than offset by other ways that NCAs slow down innovation. Finally, using variation in technology classes’ exposure to NCA enforceability changes, we show that the economy-wide losses to innovation from strict enforceability are even larger than what our state-level estimates imply.
Author contact info: Matthew S. Johnson Sanford School of Public Policy Duke University Box #90312 Durham, NC 27708 E-Mail: matthew.johnson@duke.edu Michael Lipsitz Federal Trade Commission E-Mail: mlipsitz@ftc.gov Alison Pei 201 Science Drive Box 90315 Durham, NC 27708 E-Mail: xinyue.pei@duke.edu

More Unequal We Stand? Inequality Dynamics in the United States 1967–2021 - Heathcote, Jonathan; Perri, Fabrizio; Violante, Giovanni L; Zhang, Lichen (National Bureau of Economic Research Working Paper Series, 2023)
Heathcote et al. (2010) conducted an empirical analysis of several dimensions of inequality in the United States over the years 1967-2006, using publicly-available survey data. This paper expands the analysis, and extends it to 2021. We find that since the early 2000s, the college wage premium has stopped growing, and the race wage gap has stalled. However, the gender wage gap has kept shrinking. Both individual- and household-level income inequality have continued to rise at the top, while the cyclical component of inequality dominates dynamics below the median. Inequality in consumption expenditures has remained remarkably stable over time. Income pooling within the family and redistribution by the government have enormous impacts on the dynamics of household-level inequality, with the role of the family diminishing and that of the government growing over time. In particular, largely due to generous government transfers, the COVID recession has been the first downturn in fifty years in which inequality in disposable income and consumption actually declined.
Author contact info: 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 Giovanni L. Violante Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08540 E-Mail: violante@princeton.edu Lichen Zhang HKU Business School University of Hong Kong Hong Kong E-Mail: lichenz@hku.hk

Tell Me Something I Don’t Already Know: Learning in Low and High-Inflation Settings - Weber, Michael; Candia, Bernardo; Afrouzi, Hassan; Ropele, Tiziano; Lluberas, Rodrigo; Frache, Serafin; Meyer, Brent H; Kumar, Saten; Gorodnichenko, Yuriy; Georgarakos, Dimitris; Coibion, Olivier; Kenny, Geoff; et al. (National Bureau of Economic Research Working Paper Series, 2023)
Using randomized control trials (RCTs) applied over time in different countries, we study whether the economic environment affects how agents learn from new information. We show that as inflation rose in advanced economies, both households and firms became more attentive and informed about publicly available news about inflation, leading them to respond less to exogenously provided information about inflation and monetary policy. We also study the effects of RCTs in countries where inflation has been consistently high (Uruguay) and low (New Zealand) as well as what happens when the same agents are repeatedly provided information in both low- and high-inflation environments (Italy). Our results broadly support models in which inattention is an endogenous outcome that depends on the economic environment.
Author contact info: Michael Weber Booth School of Business University of Chicago 5807 South Woodlawn Avenue Chicago, IL 60637 Tel: 773/702-1241 E-Mail: michael.weber@chicagobooth.edu Bernardo Candia University of California, Berkeley E-Mail: bernardo_candia@berkeley.edu Hassan Afrouzi Department of Economics Columbia University 420 W 118th Street New York, NY 10027 E-Mail: ha2475@columbia.edu Tiziano Ropele Bank of Italy Economic Outlook and Monetary Policy Department Via Nazione, 91 00184 Roma Italy E-Mail: tiziano.ropele@bancaditalia.it Rodrigo Lluberas E-Mail: lluberas@ort.edu.uy Serafin Frache Universidad de Montevideo Uruguay E-Mail: sfrache@um.edu.uy Brent H. Meyer Research Department Federal Reserve Bank of Atlanta 1100 Peachtree Street NE Atlanta, Geor 30309 United States Tel: 4044988852 E-Mail: brent.meyer@atl.frb.org Saten Kumar Auckland University of Technology School of Economics 55 Wellesley St Auckland, 1010, New Zealand E-Mail: saten.kumar@aut.ac.nz 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 Dimitris Georgarakos Sonnemannstrasse 20 (Main Building) 60314 Frankfurt am Main Europe Tel: +49 (0) 69 1344 4843 E-Mail: dimitris.georgarakos@ecb.int Olivier Coibion Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 E-Mail: ocoibion@gmail.com Geoff Kenny Sonnenmannstrasse 20 60314 Frankfurt Europe E-Mail: geoff.kenny@ecb.int Jorge Ponce E-Mail: jponce@bcu.gub.uy

Aggregate Lending and Modern Financial Intermediation: Why Bank Balance Sheet Models are Miscalibrated - Buchak, Greg; Matvos, Gregor; Piskorski, Tomasz; Seru, Amit (National Bureau of Economic Research Working Paper Series, 2023)
Existing macroeconomic models focused on bank balance sheet lending are deficient because they do not account for the modern industrial organization of financial intermediation. Utilizing publicly available micro-level lending data, we investigate two increasingly significant margins of adjustment in credit markets: banks’ ability to sell loans and shadow bank activity. These adjustment margins are substantial and vary across time and regions with different incomes. We examine these margins in a parsimonious dynamic quantitative model featuring banks with balance sheet adjustment through loan sales and shadow banks. Using the calibrated model, we illustrate that these margins significantly dampen the immediate contraction following bank capital shock. Recovery is also faster, because profitable loan sales (e.g., securitization) allow banks to build capital faster and because shadow banks pick up lending slack. Failure to account for adjustment margins leads to significant errors when studying policies which rely on financial intermediation pass-through in the level of aggregate lending, its direction, and composition. Our model highlights the tension between bank balance sheet models and data. The model, which forces total lending to depend strongly on bank balance sheet health, must reconcile the weak correlation between bank capital and aggregate lending. These issues can be reconciled with now available data from bank balance sheets, overall bank lending, and aggregate lending, in conjunction with a model of modern financial intermediation.
Author contact info: Greg Buchak Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305b E-Mail: buchak@stanford.edu Gregor Matvos Kellogg School of Management Northwestern University 2211 Campus Drive Global Hub 4361 Evanston IL, 60208 E-Mail: gregor.matvos@kellogg.northwestern.edu Tomasz Piskorski Columbia Business School 3022 Broadway Uris Hall 810 New York, NY 10027 Tel: 212/854-4655 E-Mail: tp2252@columbia.edu Amit Seru Stanford Graduate School of Business Stanford University 655 Knight Way Tel: 650/736-0223 E-Mail: aseru@stanford.edu

The Expansionary and Contractionary Supply-Side Effects of Health Insurance - Geddes, Eilidh; Schnell, Molly (National Bureau of Economic Research Working Paper Series, 2023)
We examine how health insurance expansions affect the entry and location decisions of health care clinics. Exploiting county-level changes in insurance coverage following the Affordable Care Act and 1,721 retail clinic entries and exits, we find that local increases in insurance coverage do not lead to growth in the concentration of clinics on average using two-way fixed effects and instrumental variable designs. However, this null effect masks important heterogeneity by insurance type: growth in private insurance leads to large growth in clinic entry, whereas clinic penetration is dampened by increases in Medicaid coverage. Consistent with a model in which firms face demand from markets with both administered and market-based pricing, we find that the positive (negative) supply-side effects of private insurance (Medicaid) coverage are concentrated in states with low provider reimbursements under Medicaid. We further show that similar location patterns are observed among other types of health care clinics, including urgent care centers. While it has long been accepted that reductions in the prices paid by consumers following insurance expansions should lead the supply side to expand to meet increased demand (Arrow, 1963), our results demonstrate that whether health insurance expansions cause the supply side to expand or contract further depends on how the prices received by providers are affected.
Author contact info: Eilidh Geddes Department of Economics Terry College of Business B408 Amos Hall 620 South Lumpkin Street Athens, GA 30602 E-Mail: geddes@uga.edu Molly Schnell Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208 Tel: 651/253-3367 E-Mail: schnell@northwestern.edu

Minimum Tax Rates and Tax Competition: Evidence from Property Tax Limits in Finland - Lyytikäinen, Teemu (National Bureau of Economic Research Working Paper Series, 2023)
This paper analyzes how minimum local property tax rates affect local tax policy choice. In Finland, central government has raised the limits on property tax rates several times in the past 30 years. I construct a measure of forced tax rate increases caused by these reforms and examine how municipalities respond to forced increases in nearby municipalities. Results for the property tax on business properties indicate that neighbors' forced tax rate increases lead to higher tax rates, after a reform of the tax base equalization system which increased incentives to compete for the tax base. Before the equalization reform, the tax rates on business properties were unaffected by neighbors' forced tax rate increases. I find some indications that forced increases in the residential property tax rate lead to lower tax rates in neighboring municipalities four years later. Analysis of government bills shows that the introduction of minimum tax rates was partly motivated by concerns regarding horizontal and vertical tax competition. Forced property tax rate increases have a clear and lasting effect on tax revenue in affected municipalities, implying that the tax capacity of central government as regards other tax bases likely increased.
Author contact info: Teemu Lyytikäinen VATT Institute for Economic Research Arkadiankatu 7 PL 1279 00101 Helsinki Finland Tel: +358 295 519 431 E-Mail: teemu.lyytikainen@vatt.fi

The Impact of Money in Politics on Labor and Capital: Evidence from Citizens United v. FEC - Akey, Pat; Babina, Tania; Buchak, Greg; Tenekedjieva, Ana-Maria (National Bureau of Economic Research Working Paper Series, 2023)
We examine whether corporate money in politics benefits or hurts labor using the 2010 Supreme Court ruling Citizens United, which rendered bans on political election spending unconstitutional. In difference-in-difference analyses, affected states experience increases in both capital and labor income relative to unaffected states. We find evidence consistent with increased political spending spurring political competition and the adoption of pro-growth policies. These policies benefit a broader set of constituents as we find a broad-based increase in labor income. Affected states see increased political turnover and reduced regulatory burdens. The economic effects are stronger among ex-ante politically inactive and younger firms.
Author contact info: Pat Akey 375 King St West Apt 2503 105 St George Street Toronto, Onta M5v1k5 Canada Tel: 5185695533 E-Mail: pat.akey@gmail.com Tania Babina Columbia Business School Kravis Hall 742 665 W 130th St New York, NY 10027 E-Mail: tania.babina@gsb.columbia.edu Greg Buchak Graduate School of Business Stanford University 655 Knight Way Stanford, CA 94305b E-Mail: buchak@stanford.edu Ana-Maria Tenekedjieva 2051 Constitution Avenue NW Unit 609 Washington, Dist 20418 United States Tel: 9193235317 E-Mail: ana-maria.k.tenekedjieva@frb.gov

Household Mobility, Networks, and Gentrification of Minority Neighborhoods in the US - Ferreira, Fernando V; Kenney, Jeanna H; Smith, Benjamin (National Bureau of Economic Research Working Paper Series, 2023)
We study how recent gentrification shocks impact Black and Hispanic neighborhoods, including where minority households move to after a shock and if the subsequent spatial distribution of households within a labor market area affects segregation. We first report that household moves from a given neighborhood are concentrated to a few destinations. For minority neighborhoods, destinations tend to have similar minority shares but are farther away from downtown. Those mobility patterns are partially explained by neighborhood networks. We then use Bartik-style labor market income shocks to show that gentrification has many effects. In Black neighborhoods, gentrification increases house prices and reduces the share of Black households while increasing the share of White households. For movers from Black neighborhoods, gentrification increases the share of movers going to top 1 and 2 destinations based on neighborhood networks and increases the share of households moving out of the MSA, but does not change the pattern of households moving to neighborhoods with similar Black shares that are farther away from downtown areas. Hispanic neighborhoods have negligible effects from gentrification. Finally, our model reveals that overall labor market area segregation decreases after a gentrification shock because highly Black neighborhoods become less segregated.
Author contact info: Fernando V. Ferreira Wharton Real Estate University of Pennsylvania 430 Vance Hall 3733 Spruce Street Philadelphia, PA 19104-6301 Tel: 215/898-7181 E-Mail: fferreir@wharton.upenn.edu Jeanna H. Kenney 419E Vance Hall 3733 Spruce Street Philadelphia, PA 19104-6301 E-Mail: jhkenney@wharton.upenn.edu Benjamin R. Smith 419C Vance Hall 3733 Spruce Street Philadelphia, PA 19104 E-Mail: Benjamrs@wharton.upenn.edu

Consequences of a Shortage and Rationing: Evidence from a Pediatric Vaccine - Liebman, Eli B; Lawler, Emily C; Dunn, Abe; Ridley, David B (National Bureau of Economic Research Working Paper Series, 2023)
Shortages and rationing are common in health care, yet we know little about the consequences. We examine an 18-month shortage of the pediatric Haemophilus Influenzae Type B (Hib) vaccine. Using insurance claims data and variation in shortage exposure across birth cohorts, we find that the shortage reduced uptake of high-value primary doses by 4 percentage points and low-value booster doses by 26 percentage points. This suggests providers largely complied with rationing recommendations. In the long-run, catch-up vaccination occurred but was incomplete: shortage-exposed cohorts were 4 percentage points less likely to have received their booster dose years later. We also find that the shortage and rationing caused provider switches, extra provider visits, and negative spillovers to other care.
Author contact info: Eli B. Liebman B428 Amos Hall 620 South Lumpkin Street Athens, GA 30602 E-Mail: eli.liebman@uga.edu Emily C. Lawler Department of Public Administration and Policy University of Georgia 355 S. Jackson Street Athens, GA 30602 Tel: 859/229-8005 E-Mail: emily.lawler@uga.edu Abe Dunn Bureau of Economic Analysis 4600 Silver Hill Rd Suitland, MD 20746 United States Tel: 3012191851 Fax: Economist E-Mail: abe.dunn@bea.gov David B. Ridley Duke University Fuqua School of Business Durham, NC 27708-0120 Tel: 919-660-3784 E-Mail: david.ridley@duke.edu

An Analysis of Benefit Distribution Options Selected by Individuals Covered by the PBGC - Clark, Robert L; Pelletier, Denis; Ritter, Beth (National Bureau of Economic Research Working Paper Series, 2023)
The Pension Benefit Guarantee Corporation becomes the trustee for private defined benefit plans that have defaulted. The PBGC pays retirement benefits as provided by the plan and that are consistent with federal guidelines concerning the type and amounts of distributions. In response to a Freedom of Information Request, the PBGC provided us with relevant information on all individuals who received a retirement benefit from the PBGC in the last 10 years, over 250,000 retirees. We examine the PBGC distributions chosen over the last decade and how they vary by age at retirement, sex, months of service, and other relevant variables. Key findings indicate that men are much more likely to choose a joint and survivor annuity compared to female claimants and the difference increases with age. Conditional on selecting a J&S annuity, men are more likely to select a 100% survivor’s annuity while women tend to choose a 50% survivor’s benefit.
Author contact info: Robert L. Clark Poole College of Management Box 7229 North Carolina State University Raleigh, NC 27695 Tel: 919/515-4568 Fax: 919/515-6943 E-Mail: robert_clark@ncsu.edu Denis Pelletier Dept of Economics North Carolina State University Raleigh, NC 27695-8110 E-Mail: denis_pelletier@ncsu.edu Beth Ritter Professor of Practice, Department of Management, Innovation, and Entrepreneurship Poole College of Management North Carolina State University Raleigh, Nort 27695 USA E-Mail: bmritte2@ncsu.edu

Entrepreneurship in China's Structural Transitions: Network Expansion and Overhang - Dai, Ruochen; Mookherjee, Dilip; Munshi, Kaivan; Zhang, Xiaobo (National Bureau of Economic Research Working Paper Series, 2023)
This research examines the determinants of entrepreneurship in the initial transition from agriculture to industrial production and the subsequent transition to higher value exporting in China. Using data covering the universe of registered firms over the 1994-2009 period, we find that individuals born in rural counties with higher agricultural productivity and population density had a greater propensity to enter domestic production in the first transition, but that this association was reversed in the second transition to exporting. This is despite the fact that revenues (and productivity) were increasing more steeply over time for firms drawn from denser birth counties in both activities. The model that we develop to reconcile these facts incorporates a productivity enhancing role for hometown (birth county) networks. We provide causal evidence, using shift-share instruments, that these networks of firms were active and that more densely populated rural counties gave rise to networks that were more effective at increasing the revenues of their members, both in domestic production and exporting. While this generated faster transition in the first stage, the incumbent (more successful) domestic networks drawn from denser counties created a disincentive to subsequently enter exporting. Our analysis identifies a novel dynamic inefficiency that could arise in any developing economy where (overlapping) networks are active.
Author contact info: Ruochen Dai School of Economics Central University of Finance and Economics Shahe, Changping District Beijing, 10026 China E-Mail: r.dai@cufe.edu.cn Dilip Mookherjee Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4392 Fax: 617/353-4143 E-Mail: dilipm@bu.edu Kaivan Munshi Department of Economics Yale University 87 Trumbull Street New Haven, CT 06511 E-Mail: kaivan.munshi@yale.edu Xiaobo Zhang Guanghua School of Management Peking University and International Food Policy Research Institute 2033 K Street, NW Washington, DC 20006 Tel: 202-862-8149 Fax: 202-467-4439 E-Mail: x.zhang@gsm.pku.edu.cn

Dollar Rivals - Frankel, Jeffrey A (National Bureau of Economic Research Working Paper Series, 2023)
Written on the 50th anniversary of floating exchange rates, this paper deals with possible alternatives to a unipolar dollar-based system. It considers (1) measures of international currency use; (2) potential challengers to the dollar; (3) network externalities; and (4) the plausibility of gold and digital currencies, as alternatives to regular currencies. On the one hand, network externalities operate in favor of the status quo: the dollar as the single leading international currency. On the other hand, the danger of abuse of exorbitant privilege – for example, by debasing the currency or repeated use of sanctions – operates in favor of challengers. A good guess is that the dollar will continue to lose market share slowly to others, but will remain in the lead.
Author contact info: Jeffrey A. Frankel Harvard Kennedy School 79 JFK Street Cambridge, MA 02138 Tel: 617/496-3834 Fax: 617/496-5747 E-Mail: jeffrey_frankel@harvard.edu

Distributional Weights in Economic Analysis. - Hahn, Robert W; Muller, Nicholas Z (National Bureau of Economic Research Working Paper Series, 2023)
The use of distributional weights in economic analysis is receiving increasing attention in both research and policy circles. This paper examines the extent to which distributional weights affect economic analysis of public good provision. We make two contributions. First, we present a model with distributional weights that allows for marginal benefits and costs of the public good to differ across regions and individual characteristics, such as income or race. Samuelson’s analysis of pure public goods is a special case, as are other cases in which marginal benefits and costs may differ by region when the distributional weights are unity. We show how the provision of a pure public good varies with distributional weights different from unity. Second, we analyze distributional weights in conjunction with the value of a statistical life (VSL). We compare the use of an average VSL with differentiated VSLs. We show when using an average VSL will increase or decrease optimal public goods provision relative to differentiated VSLs for given distributional weights. We also identify conditions under which a low-income group prefers using an average VSL to true VSLs. This depends on the fraction of the costs that the low-income group bears in the provision of the public good.
Author contact info: Robert W. Hahn University of Oxford E-Mail: robert.hahn@smithschool.ox.ac.uk Nicholas Z. Muller Department of Engineering, and Public Policy Tepper School of Business Carnegie Mellon University 4215 Tepper Quad 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 412-268-8121 E-Mail: nicholas.muller74@gmail.com

Electoral College and Election Fraud - Egorov, Georgy; Sonin, Konstantin (National Bureau of Economic Research Working Paper Series, 2023)
One frequently overlooked aspect of the U.S.-style electoral college system is that it discourages election fraud. In a presidential election based on the popular vote, competing political parties are motivated to manipulate votes in areas where they hold the most significant influence, such as states where they control local executive offices, legislatures, and the judiciary. However, with the electoral college system in place, the incentives for fraud shift to swing states where the local government is politically divided, and fraud is therefore more difficult and costly. Our theoretical model elucidates why the electoral college system provides more effective protection against election fraud compared to the popular vote system. While polarization makes fraud more likely, it does not affect the superiority of the electoral college system.
Author contact info: 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 Konstantin Sonin Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: ksonin@uchicago.edu

"Zero Cost'' Majority Attacks on Permissionless Blockchains - Gans, Joshua S; Halaburda, Hanna (National Bureau of Economic Research Working Paper Series, 2023)
The core premise of permissionless blockchains is their reliable and secure operation without the need to trust any individual agent. At the heart of blockchain consensus mechanisms is an explicit cost (whether work or stake) for participation in the network and the opportunity to add blocks to the blockchain. A key rationale for that cost is to make attacks on the network, which could be theoretically carried out if a majority of nodes were controlled by a single entity, too expensive to be worthwhile. We demonstrate that a majority attacker can successfully attack with a negative cost, which shows that the protocol mechanisms are insufficient to create a secure network, and emphasizes the importance of socially driven mechanisms external to the protocol. At the same time, negative cost enables a new type of majority attack that is more likely to elude external scrutiny.
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 Hanna Halaburda Stern School of Business New York University 44 W 4th St. New York, NY 10012 E-Mail: hhalaburda@gmail.com

Education and Later-life Mortality: Evidence from a School Reform in Japan - Masuda, Kazuya; Shigeoka, Hitoshi (National Bureau of Economic Research Working Paper Series, 2023)
We examine the mortality effects of a 1947 school reform in Japan, which extended compulsory schooling from primary to secondary school by as much as 3 years. The abolition of secondary school fees also indicates that those affected by the reform likely came from disadvantaged families who could have benefited the most from schooling. Even in this relatively favorable setting, we fail to find that the reform improved later-life mortality up to the age of 87 years, although it significantly increased years of schooling. This finding suggests limited health returns to schooling at the lower level of educational attainment.
Author contact info: Kazuya Masuda Department of Economics Gakushuin University Mejiro 1-5-1, Toshima, Tokyo, Japan E-Mail: kazuya.masuda@gakushuin.ac.jp Hitoshi Shigeoka Department of Economics Simon Fraser University 8888 University Drive, WMC 4653 Burnaby, BC V5A 1S6 Tel: 778/782-5348 E-Mail: hitoshi_shigeoka@sfu.ca

Moonshot: Public R&D and Growth - Kantor, Shawn; Whalley, Alexander T (National Bureau of Economic Research Working Paper Series, 2023)
We estimate the long-term effect of public R&D on growth in manufacturing by analyzing new data from the Cold War era Space Race. We develop a novel empirical strategy that leverages US-Soviet rivalry in space technology to isolate windfall R&D spending. Our results demonstrate that public R&D conducted by NASA contractors increased manufacturing value added, employment, and capital accumulation in space related sectors. While migration responses were important, they were not sufficient to generate a wedge between local and national effects. The iconic Moonshot R&D program had only modest economic effects for both the local and national space-related sectors.
Author contact info: Shawn Kantor Department of Economics Florida State University Tallahassee, FL 32306 Tel: 850-644-1650 E-Mail: skantor@fsu.edu Alexander T. Whalley Department of Economics University of Calgary 2500 University Drive Calgary, AB T2N 1N4 Canada Tel: 209/228-4027 E-Mail: awhalley@gmail.com

Relationship between Social Security Programs and Elderly Employment in Japan - Oshio, Takashi; Shimizutani, Satoshi; Oishi, Akiko S (National Bureau of Economic Research Working Paper Series, 2023)
This study examines how elderly employment is associated with social security programs and how it responds to recent reforms in Japan. To this end, we employed a rich and longitudinal dataset of middle-aged and older individuals collected between 2005 and 2018. By incorporating various factors related to social security incentives into a single index of implicit tax (ITAX), we confirmed that the index successfully captured the incentives and their changes incorporated in recent social security reforms. We further estimated the association of ITAX with an individual’s decisions concerning retirement and pension benefit claims. Lastly, we conducted counterfactual simulations to assess the effect of recent social security forms on retirement based on the estimated regression parameters. The results showed that a higher ITAX drove individuals, especially men, to retire and claim benefits earlier.
Author contact info: Takashi Oshio Institute of Economic Research Hitotsubashi University 2-1 Naka, Kunitachi Tokyo 186-8603 Japan E-Mail: oshio@ier.hit-u.ac.jp Satoshi Shimizutani Graduate School of Economics University of Tokyo 7-3-1 Hongo, Bunkyo-ku Tokyo 113-0033 Japan E-Mail: sshimizutani@gmail.com Akiko S. Oishi Graduate School of Social Sciences Chiba University 1-33 Yayoi-cho , Inage-ku Chiba 263-8522 Japan E-Mail: akiko.s.o@gmail.com

Who Values Human Capitalists' Human Capital? The Earnings and Labor Supply of U.S. Physicians - Gottlieb, Joshua D; Polyakova, Maria; Rinz, Kevin; Shiplett, Hugh; Udalova, Victoria (National Bureau of Economic Research Working Paper Series, 2023)
Is government guiding the invisible hand at the top of the labor market? We use new administrative data to measure physicians' earnings and estimate the influence of healthcare policies on these earnings, physicians' labor supply, and allocation of talent. Combining the administrative registry of U.S.~physicians with tax data, Medicare billing records, and survey responses, we find that physicians' annual earnings average $350,000 and comprise 8.6% of national healthcare spending. The age-earnings profile is steep; business income comprises one-quarter of earnings and is systematically underreported in survey data. There are major differences in earnings across specialties, regions, and firm sizes, with an unusual geographic pattern compared with other workers. We show that health policy has a major impact on the margin: 25% of physician fee revenue driven by Medicare reimbursements accrues to physicians personally. Physicians earn 6% of public money spent on insurance expansions. We find that these policies in turn affect the type and quantity of medical care physicians supply in the short run; retirement timing in the medium run; and earnings affect specialty choice in the long run.
Author contact info: Joshua D. Gottlieb University of Chicago Harris School of Public Policy 1307 E. 60th St. Chicago, IL 60637 E-Mail: jgottlieb@uchicago.edu Maria Polyakova Center for Health Policy Stanford School of Medicine Encina Commons, Room 182 615 Crothers Way Stanford, CA 94305 Tel: 650/498-7528 E-Mail: maria.polyakova@stanford.edu Kevin Rinz 740 15th St NW 8th Floor Washington, DC 20005 E-Mail: krinz@equitablegrowth.org Hugh Shiplett 162 Westmorland St Fredericton, NB E3B3L7 Canada E-Mail: hugh.shiplett@unb.ca Victoria Udalova U.S. Census Bureau 4600 Silver Hill Road Washingon, DC 20233 E-Mail: victoria.m.udalova@census.gov

The Electric Telegraph, News Coverage and Political Participation - Wang, Tianyi (National Bureau of Economic Research Working Paper Series, 2023)
Using newly digitized data on the growth of the telegraph network in America during 1840-1852, the paper studies the impacts of the electric telegraph on national elections. I use proximity to daily newspapers with telegraphic connections to Washington to generate plausibly exogenous variation in access to telegraphed news from Washington. I find that access to Washington news with less delay had a robust positive effect on voter turnout in national elections. For mechanisms, I provide evidence that newspapers facilitated the dissemination of national news to local areas. In addition, text analysis on more than a hundred small-town weekly newspapers from the 1840s shows that the improved access to news from Washington led newspapers to cover more national political news, including coverage of Congress, the presidency, and sectional divisions involving slavery. The results suggest that the telegraph made newspapers less parochial, facilitated a national conversation and increased political participation. I find little evidence that access to telegraphed news from Washington affected party vote shares or Congressmen's roll call votes.
Author contact info: Tianyi Wang University of Toronto Department of Economics Toronto, Ontario M5S 3G7 Canada E-Mail: tianyiwang.wang@utoronto.ca

Corporate Tax Disclosure - Hoopes, Jeffrey L; Robinson, Leslie; Slemrod, Joel (National Bureau of Economic Research Working Paper Series, 2023)
Policies that require, or recommend, disclosure of corporate tax information are becoming more common throughout the world, as are examples of tax-related information increasingly influencing public policy and perceptions. In addition, companies are increasing the voluntary provision of tax-related information. We describe those trends and place them within a taxonomy of public and private tax disclosure. We then review the academic literature on corporate tax disclosures and discuss what is known about their effects. One key takeaway is the paucity of evidence that many tax disclosures mandated with the aim of increasing tax revenue have produced additional revenue. We highlight many crucial unanswered questions, answers to which would inform future tax legislation and financial accounting rule making.
Author contact info: Jeffrey L. Hoopes Kenan-Flagler Business School University of North Carolina 300 Kenan Center Drive Chapel Hill, NC 27599 E-Mail: hoopes@unc.edu Leslie Robinson Dartmouth College Tuck School of Business E-Mail: leslie.a.robinson@tuck.dartmouth.edu Joel Slemrod University of Michigan 701 Tappan Street Room R5396 Ann Arbor, MI 48109-1234 Tel: 734/936-3914 Fax: 734-615-4323 E-Mail: jslemrod@umich.edu

The Job Ladder: Inflation vs. Reallocation - Moscarini, Giuseppe; Postel-Vinay, Fabien (National Bureau of Economic Research Working Paper Series, 2023)
We introduce on-the-job search frictions in an otherwise standard monetary DSGE New-Keynesian model. Heterogeneity in productivity across jobs gives rise to a job ladder. Firms Bertrand-compete for employed workers according to the Sequential Auctions protocol of Postel-Vinay and Robin (2002). Outside job offers to employed workers, when accepted, reallocate employment up the productivity ladder; when declined, because matched by the current employer, they raise production costs and, due to nominal price rigidities, compress mark-ups, building inflationary pressure. When employment is concentrated at the bottom of the job ladder, typically after recessions, the reallocation effect prevails, aggregate supply expands, moderating marginal costs and inflation. As workers climb the job ladder, reducing slack in the employment pool, the inflation effect takes over. The model generates endogenous cyclical movements in the Neo Classical labor wedge and in the New Keynesian wage mark-up. The economy takes time to absorb cyclical misallocation and features propagation in the response of job creation, unemployment and inflation to aggregate shocks. The ratio between job-finding probabilities from job-to-job and from unemployment, a measure of the “Acceptance rate” of job offers to employed workers, predicts negatively inflation, independently of the unemployment rate.
Author contact info: Giuseppe Moscarini Yale University Department of Economics PO Box 208268 New Haven, CT 06520-8268 Tel: 203/432-3596 Fax: 203/436-2626 E-Mail: giuseppe.moscarini@yale.edu Fabien Postel-Vinay Department of Economics University College London 30 Gordon Street London WC1H 0AX United Kingdom E-Mail: f.postel-vinay@ucl.ac.uk

The Linear Algebra of Economic Geography Models - Kleinman, Benny; Liu, Ernest; Redding, Stephen J (National Bureau of Economic Research Working Paper Series, 2023)
We provide sufficient statistics for nominal and real wage exposure to productivity shocks in a constant elasticity economic geography model. These exposure measures summarize the first-order general equilibrium elasticity of nominal and real wages in each location with respect to productivity shocks in all locations. They are readily computed using commonly-available trade data and the values of trade and migration elasticities. They have an intuitive interpretation in terms of underlying economic mechanisms. Computing these measures for all bilateral pairs of locations involves a single matrix inversion and therefore remains computational efficient even with an extremely high-dimensional state space. These sufficient statistics provide theory-consistent measures of locations’ exposure to productivity shocks for use in further economic and statistical analysis.
Author contact info: Benny Kleinman Becker Friedman Institute University of Chicago 5757 S University Ave Chicago, IL 60610 United States Tel: 609-510-6056 E-Mail: bennykleinman@uchicago.edu Ernest Liu Department of Economics Princeton University 20 Washington Road Princeton, NJ 08540 E-Mail: ernestliu@princeton.edu Stephen J. Redding Department of Economics & School of Public and International Affairs Princeton University Princeton, NJ 08544 Tel: 609/258-4016 Fax: 609/258-6419 E-Mail: reddings@princeton.edu

The Credit Supply Channel of Monetary Policy Tightening and its Distributional Impacts - Bosshardt, Joshua; Di Maggio, Marco; Kakhbod, Ali; Kermani, Amir (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies how tightening monetary policy transmits to the economy through the mortgage market and sheds new light on the distributional consequences at both individual and regional levels. We find that credit supply factors, specifically restrictions on the debt-to-income (DTI) ratio, account for most of the decline in mortgages. These effects are even more pronounced for minority and middle-income borrowers, who find themselves excluded from the credit market. Additionally, regions with historically high DTI ratios exhibit greater reductions in mortgage originations, house prices, and consumption.
Author contact info: Joshua Bosshardt Federal Housing Finance Agency Constitution Center 400 7th Street SW Washington, DC 20219 E-Mail: joshua.bosshardt@fhfa.gov Marco Di Maggio Harvard Business School Baker Library 265 Soldiers Field Boston, MA 02163 Tel: 617/495-6152 E-Mail: mdimaggio@hbs.edu Ali Kakhbod Haas School of Business University of California, Berkeley 2220 Piedmont Ave Berkeley, CA 94720 E-Mail: akakhbod@berkeley.edu Amir Kermani Haas School of Business University of California, Berkeley 545 Student Services Building #1900 Berkeley, CA 94720 Tel: 510/664-4139 E-Mail: kermani@berkeley.edu

Firms with Benefits? Nonwage Compensation and Implications for Firms and Labor Markets - Ouimet, Paige; Tate, Geoffrey (National Bureau of Economic Research Working Paper Series, 2023)
Using administrative data on health insurance, retirement, and leave benefits, we find within-firm variation accounts for a dramatically lower percentage of total variation in benefits than in wages. We also document sharply higher between-firm variation in nonwage benefits than in wages. We argue that this pattern can be a consequence of nondiscrimination regulations, fairness concerns, and the high administrative burden of managing too many or complex plans. Consistent with this mechanism, we show that the presence of high-wage workers in unrelated divisions of a firm as well as workers hired in high-benefit local labor markets positively predicts their colleagues’ benefits, controlling for occupation, wages, state, and industry. We find that the resulting high benefits reduce turnover, particularly among low-wage workers, for whom the benefits comprise a larger percentage of total compensation. Moreover, firms with more generous benefits attract and retain more high-wage workers, but also reduce their reliance on low-wage workers more than low-benefit peers. Our results suggest that benefits disproportionately matter for worker-firm matching and, hence, compensation inequality.
Author contact info: Paige Ouimet Kenan-Flagler Business School University of North Carolina at Chapel Hill E-Mail: Paige_Ouimet@kenan-flagler.unc.edu Geoffrey Tate Robert H Smith School of Business University of Maryland 4417 Van Munching Hall College Park, MD 20742 E-Mail: gtate@rhsmith.umd.edu

Bank Branch Density and Bank Runs - Benmelech, Efraim; Yang, Jun; Zator, Michal (National Bureau of Economic Research Working Paper Series, 2023)
Bank branch density, defined as the number of bank branches to total deposits, has significantly declined over the past decade, fueled by a confluence of branch closings and the almost doubling of deposits between 2016 and 2022. During this period, banks with low branch density benefited from large deposits inflows, leading to even lower density. But the virtuous cycle of deposits growth in these banks stopped spinning when investors became wary about their financial health. Stock prices of banks with low branch density plummeted during the 2023 Banking Crisis as these banks experienced larger outflows of uninsured deposits. Our results suggest that digital banking enabled banks to grow faster and attract uninsured deposits, but those large deposits inflows took the form of “hot money” that changed its course when economic conditions worsened.
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 Jun Yang Mendoza College of Business University of Notre Dame Notre Dame, IN 46556 E-Mail: jyang23@nd.edu Michal Zator Mendoza College of Business University of Notre Dame Notre Dame, IN 46556 E-Mail: mzator@nd.edu

Regulating Transformative Technologies - Acemoglu, Daron; Lensman, Todd (National Bureau of Economic Research Working Paper Series, 2023)
Transformative technologies like generative artificial intelligence promise to accelerate productivity growth across many sectors, but they also present new risks from potential misuse. We develop a multi-sector technology adoption model to study the optimal regulation of transformative technologies when society can learn about these risks over time. Socially optimal adoption is gradual and convex. If social damages are proportional to the productivity gains from the new technology, a higher growth rate leads to slower optimal adoption. Equilibrium adoption is inefficient when firms do not internalize all social damages, and sector-independent regulation is helpful but generally not sufficient to restore optimality.
Author contact info: Daron Acemoglu Department of Economics, E52-446 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-1927 Fax: 617/253-1330 E-Mail: daron@mit.edu Todd Lensman Department of Economics Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: tlensman@mit.edu

Mega Firms and Recent Trends in the U.S. Innovation: Empirical Evidence from the U.S. Patent Data - Braguinsky, Serguey; Choi, Joonkyu; Ding, Yuheng; Jo, Karam; Kim, Seula (National Bureau of Economic Research Working Paper Series, 2023)
We use the U.S. patent data merged with firm-level datasets to establish new facts about the role of mega firms in generating “novel patents”—innovations that introduce new combinations of technology components for the first time. While the importance of mega firms in novel patents had been declining until about 2000, it has strongly rebounded since then. The timing of this turnaround coincided with the ascendance of firms that newly became mega firms in the 2000s, and a shift in the technological contents, characterized by increasing integration of Information and Communication Technology (ICT) and non-ICT components. Mega firms also generate a disproportionately large number of “hits”—novel patents that lead to the largest numbers of follow-on patents (subsequent patents that use the same combinations of technology components as the first novel patent)—and their hits tend to generate more follow-on patents assigned to other firms when compared to hits generated by non-mega firms. Overall, our findings suggest that mega firms play an increasingly important role in generating new technological trajectories in recent years, especially in combining ICT with non-ICT components.
Author contact info: Serguey Braguinsky University of Maryland Robert H. Smith School of Business and Department of Economics 4558 Van Munching Hall College Park, MD 20742 E-Mail: sbraguinsky@rhsmith.umd.edu Joonkyu Choi 20th ST & Constitution Avenue N.W. Washington, DC 20551 United States E-Mail: joonkyu.choi@frb.gov Yuheng Ding 1818 H St NW Washington, DC 20006 USA E-Mail: yding4@worldbank.org Karam Jo Korea Development Institute 263, Namsejong-ro Sejong-si 30149 South Korea E-Mail: karamjo@gmail.com Seula Kim Julis Romo Rabinowitz Building Princeton, NJ 08540 E-Mail: sk6285@princeton.edu

Globalization and Inequality in Latin America - Dix-Carneiro, Rafael; Kovak, Brian K (National Bureau of Economic Research Working Paper Series, 2023)
We survey the recent literature studying the effects of globalization on inequality in Latin America. Our focus is on research emerging from the late 2000s onward, with an emphasis on empirical work considering new mechanisms, studying new dimensions of inequality, and developing new methodologies to capture the many facets of globalization's relationship to inequality. After summarizing both design-based and quantitative work in this area, we propose directions for future work. Our overarching recommendation is that researchers develop unifying frameworks to help synthesize the results of individual studies that focus on distinct aspects of globalization's relationship to inequality.
Author contact info: Rafael Dix-Carneiro Department of Economics Duke University 210A Social Sciences Building Durham, NC 27708 E-Mail: rafael.dix.carneiro@duke.edu Brian K. Kovak H. John Heinz III College Carnegie Mellon University 4800 Forbes Avenue, HBH 3012 Pittsburgh, PA 15213 Tel: 412/268-5223 Fax: 412/268-4487 E-Mail: bkovak@cmu.edu

Is the Emphasis on Cofinancing Good for Environmental Multilateral Funds? - Kotchen, Matthew; Vogt, Andrew (National Bureau of Economic Research Working Paper Series, 2023)
International environment and development agencies increasingly emphasize external cofinancing when selecting projects to fund. This paper considers whether the emphasis on cofinancing helps promote institutional objectives, or creates perverse and inefficient incentives. We present a model of project selection that can apply to any funding agency, but focus on environmental multilateral funds and climate change. We show that introducing cofinancing objectives to a fund that seeks to maximize its immediate environmental impact is redundant as best, and more likely counterproductive. We test implications of our model using project-level data from two of the leading environmental multilateral funds, the Global Environment Facility (GEF) and the Green Climate Fund (GCF). While tradeoffs exist between emission reductions and cofinancing, we find that they are not strong enough to imply that current cofinancing preferences are diminishing the environmental benefits that funds can claim. However, we also find that the emphasis on cofinancing in project selection is likely to be globally inefficient, as projects with greater cofinancing ratios tend to yield smaller emission reductions per gross dollar spent. This finding should sound a note of caution given the overall scarcity of financial resources available to achieve global climate goals.
Author contact info: Matthew Kotchen School of the Environment, School of Management, and Department of Economics Yale University 195 Prospect Street New Haven, CT 06511 Tel: 203/432-9533 Fax: 203/436-9150 E-Mail: matthew.kotchen@yale.edu Andrew Vogt School of the Environment Yale University 195 Prospect Street New Haven, CT 06511 E-Mail: andrew.vogt@yale.edu

Monopsony, Efficiency, and the Regularization of Undocumented Immigrants - Borjas, George J; Edo, Anthony (National Bureau of Economic Research Working Paper Series, 2023)
In May 1981, President François Mitterrand regularized the status of undocumented immigrant workers in France. The newly legalized immigrants represented 12 percent of the non-French workforce and about 1 percent of all workers. Employers have monopsony power over undocumented workers because the undocumented may find it costly to participate in the open labor market and have restricted economic opportunities. By alleviating this labor market imperfection, a regularization program can move the market closer to the efficient competitive equilibrium and potentially increase employment and wages for both the newly legalized and the authorized workforce. Our empirical analysis reveals that the Mitterrand regularization program particularly increased employment and wages for low-skill native and immigrant men, and raised French GDP by over 1 percent.
Author contact info: George J. Borjas Harvard Kennedy School 79 JFK Street Cambridge, MA 02138 Tel: 617/495-1393 Fax: 617/495-9532 E-Mail: gborjas@harvard.edu Anthony Edo CEPII 20 avenue de Ségur 75007 Paris France E-Mail: anthony.edo@cepii.fr

Credible Social Planning under Uncertainty - Manski, Charles F (National Bureau of Economic Research Working Paper Series, 2023)
Economists have long studied policy choice by a social planner who aims to maximize welfare in democracies or other political systems where, in some sense, welfare is intended to express the well-being of a society rather than the personal preferences of a dictator. The motivation for studying planning is most transparent when actual planners face specific decision problems. Welfare economics has also sought to shed light on noncooperative societal decision processes, where no actual planner exists. Researchers have generally assumed that the actual or hypothetical planner knows enough about the choice environment to be able to determine an optimal action. However, the consequences of decisions are often highly uncertain. Addressing the failure of research to come to grips with uncertainty has motivated my program of study of credible social planning under uncertainty. This paper describes the main themes and summarizes several applications. I first discuss practices that have promoted planning with incredible certitude, using specific cases to illustrate. I next describe and contrast the conceptions of uncertainty in consequentialist and axiomatic decision theory. I then summarize my studies of five problems of planning under uncertainty.
Author contact info: Charles F. Manski Department of Economics Northwestern University 2211 Campus Drive Evanston, IL 60208-2600 Tel: 847/491-8223 Fax: 847/491-7001 E-Mail: cfmanski@northwestern.edu

The Rise in American Pain: The Importance of the Great Recession - Lamba, Sneha; Moffitt, Robert A (National Bureau of Economic Research Working Paper Series, 2023)
A significant literature has documented trend increases in pain among Americans over the last two or three decades. There is no single explanation seeming to work well for the increase. We show that, rather than resulting from a smooth upward trend, the increase was almost entirely concentrated in the 2007-2010 period, the time of the Great Recession, a result not uncovered in prior work. The disproportionate increase in pain among the less educated is also shown to have occurred primarily at the time of the Recession, with either little or no trend before or after. The Recession jump occurred only at older ages and, by cohort, primarily only at the ages when they experienced the Recession. However, the jump is difficult to explain, for while there was a temporary decline in employment during the Recession, it is unclear why there it should be followed by a permanent increase in pain. We assess a number of explanations related to family structure, the deterioration of family life, hysteresis, and biopsychosocial channels. While some factors have potential explanatory power, the rise in pain continues to be mysterious and deserves further research in light of our new findings.
Author contact info: Sneha Lamba Waldweg 26, Göttingen Germany E-Mail: snehalamba88@gmail.com Robert A. Moffitt Department of Economics Johns Hopkins University 3400 North Charles Street Baltimore, MD 21218 Tel: 410/516-7611 Fax: 410/516-7600 E-Mail: moffitt@jhu.edu

The Model T - Eli, Shari; Hausman, Joshua K; Rhode, Paul (National Bureau of Economic Research Working Paper Series, 2023)
We ask (1) why the United States adopted the car more quickly than other countries before 1929, and (2) why in the United States the car changed from a luxury to a mass market good between 1909 and 1919. We argue that the answer is in part the success of the Model T in the United States and its relative lack of success abroad. Mass production of the Model T began in 1913; by 1917, more than 40 percent of cars on the road were Model Ts. Cross-state and cross-county evidence suggest that the Model T opened up a new market for cars among farmers and in poorer areas of the country. Tariffs and difficulties producing outside Detroit made the U.S. success of the Model T difficult to replicate abroad, even in Canada.
Author contact info: Shari Eli Department of Economics University of Toronto 150 St. George Street Toronto, ON M5S 3G7 Tel: 416/946-7630 E-Mail: shari.eli@utoronto.ca Joshua K. Hausman Gerald R. Ford School of Public Policy University of Michigan 735 South State Street, #3309 Ann Arbor, MI 48109 Tel: 734/763-3479 E-Mail: hausmanj@umich.edu Paul Rhode Economics Department University of Michigan 205 Lorch Hall 611 Tappan St. Ann Arbor, MI 48109-1220 Tel: 734/647-5603 Fax: 734/764-2769 E-Mail: pwrhode@umich.edu

Everything in Moderation: Separating State Dependence from Unobserved Heterogeneity Between Alcohol and Employment - Deza, Monica (National Bureau of Economic Research Working Paper Series, 2023)
Previous literature presents mixed evidence on the effect of alcohol consumption on labor market outcomes. Due to limitations of available structural methods that model state dependence and unobserved heterogeneity, previous literature has not separately identified the causal pathways linking moderate versus heavy alcohol use to employment. This study develops a multiple-equation dynamic discrete choice ordered logit model, separately identifying the contribution of state dependence (within and between outcomes) and unobserved heterogeneity. Using this newly-developed methodology, this study finds that moderate alcohol use increases employment, indicating that policies that target alcohol consumption separately by dosage level may be beneficial to employment.
Author contact info: Monica Deza Department of Economics Syracuse University Maxwell School of Citizenship and Public Affairs 426 Eggers Hall Syracuse, NY 13244 E-Mail: mdeza@syr.edu

Tax Losses and Ex-Ante Offshore Transfer of Intellectual Property - Sharma, Rishi; Slemrod, Joel; Stimmelmayr, Michael (National Bureau of Economic Research Working Paper Series, 2023)
We develop a positive model of multinational firm behavior and analyze a firm’s incentive to transfer an intellectual property (IP) right of uncertain value offshore ex ante, i.e. before its success or failure is realized. Our analysis highlights two major aspects of this decision. First, an asymmetric treatment of project gains and losses in the home country creates an incentive to transfer IP to a foreign lowtax country to avoid potentially negative profits at home. These incentives exist even when IP is priced at a fair arms-length price and are further strengthened in the presence of R&D tax incentives. Second, when multinationals have private information about the probability of project success, they have an incentive to transfer their most promising IP ex ante.
Author contact info: Rishi Sharma 13 Oak Drive Hamilton, NY 13346 United States E-Mail: rsharma1@colgate.edu Joel Slemrod University of Michigan 701 Tappan Street Room R5396 Ann Arbor, MI 48109-1234 Tel: 734/936-3914 Fax: 734-615-4323 E-Mail: jslemrod@umich.edu Michael Stimmelmayr Claverton Down Department of Economics 3 East Bath BA2 7AY United Kingdom E-Mail: ms3127@bath.ac.uk

Later-life Mortality and the Repeal of Federal Prohibition - Jacks, David S; Pendakur, Krishna; Shigeoka, Hitoshi; Wray, Anthony (National Bureau of Economic Research Working Paper Series, 2023)
Despite a recent and dramatic re-evaluation of the health consequences of alcohol consumption, very little is known about the effects of in utero exposure to alcohol on long-run outcomes such as later-life mortality. Here, we investigate how state by year variation in alcohol control arising from the repeal of federal prohibition affects mortality for cohorts born in the 1930s. We find that individuals born in wet states experienced higher later-life mortality than individuals born in dry states, translating into a 3.3% increase in mortality rates between 1990 and 2004 for affected cohorts.
Author contact info: David S. Jacks 117 Clementi Road #16-11 Singapore 129800 Singapore Singapore Tel: 65/84542637 E-Mail: dsjacks@gmail.com Krishna Pendakur Department of Economics Simon Fraser University 8888 University Drive Burnaby, BC V5A 1S6 Canada E-Mail: pendakur@sfu.ca Hitoshi Shigeoka Department of Economics Simon Fraser University 8888 University Drive, WMC 4653 Burnaby, BC V5A 1S6 Tel: 778/782-5348 E-Mail: hitoshi_shigeoka@sfu.ca Anthony Wray Department of Economics University of Southern Denmark Campusvej 55 Odense M DK-5230 Denmark E-Mail: wray@sam.sdu.dk

Caregiving and Labor Supply: New Evidence from Administrative Data - Maestas, Nicole; Messel, Matt; Truskinovsky, Yulya (National Bureau of Economic Research Working Paper Series, 2023)
A significant share of the rapidly growing demand for long-term care is met by family members, many of whom also work, and family caregiving has been shown to affect labor market outcomes. We use survey responses about family caregiving roles linked to administrative earnings records to estimate the employment trajectories of family caregivers over a 25 year period around the reported start of a caregiving episode. These trajectories vary significantly by gender. Relative to a matched comparison group, caregiving precipitates a drop in both earnings and employment for women, while men only enter caregiving after experiencing significant labor supply disruptions.
Author contact info: 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 Matt Messel E-Mail: matthew.r.messel@gmail.com Yulya Truskinovsky Wayne State University 2137 Faculty Administration Building 656 W. Kirby St. Detroit, MI 48202 E-Mail: yulya.truskinovsky@wayne.edu

War and Science in Ukraine - Ganguli, Ina; Waldinger, Fabian (National Bureau of Economic Research Working Paper Series, 2023)
We discuss the impacts of the Russian invasion on Ukrainian science. Using newly collected data, we show that the war has already had significant effects on science in Ukraine: research papers produced by Ukrainian scientists declined by about 10%, approximately 5% of the most prolific scientists are publishing with a foreign affiliation, 22% of top universities have faced destruction of physical capital, and international collaborations with Russian scientists have declined by more than 40%. Drawing upon the economics of science and innovation literature, we highlight three primary channels through which wars impact science: (1) the loss of human capital, (2) the destruction of physical capital, and (3) reductions in international scientific cooperation. The evidence from the literature on the long-run effects of losing human or physical capital indicates that shocks to physical capital can be remedied more easily than shocks to human capital. Our new data also suggests that human capital shocks are the main drivers of the reduction in Ukrainian research output that has occurred since the beginning of the war. Hence, reconstruction efforts that focus on supporting scientists to continue in the research sector, and return to Ukraine after the war has ended, are likely to have the greatest impact on long-run scientific productivity in Ukraine.
Author contact info: Ina Ganguli Department of Economics Crotty Hall 304 412 N. Pleasant Street University of Massachusetts Amherst Amherst, MA 01002 Tel: 413-545-6230 Fax: 413- 545-2921 E-Mail: iganguli@econs.umass.edu Fabian Waldinger University of Munich Department of Economics Schackstr. 4 80539 Munich Germany E-Mail: fabian.waldinger@econ.lmu.de

The Age of Mass Migration in Argentina: Social Mobility, Effects on Growth, and Selection Patterns - Droller, Federico; Fiszbein, Martin; Pérez, Santiago (National Bureau of Economic Research Working Paper Series, 2023)
Argentina was the second largest destination country during the Age of Mass Migration, receiving nearly six million migrants. In this article, we first summarize recent findings characterizing migrants’ long-term economic assimilation and their contributions to local economic development. The reviewed evidence shows that Europeans experienced rapid upward mobility in Argentina and immigration contributed positively to the process of economic development. We then turn our focus to the selection patterns of Italian migrants to Argentina—the largest migratory group to this destination. Our analysis of this initial stage of the migrants’ history shows that Italians who moved to Argentina were positively selected on the basis of literacy, complementing existing evidence of rapid upward mobility and contribution to growth at destination.
Author contact info: Federico Droller Department of Economics Universidad de Santiago de Chile Av. Lib. B. O'Higgins 3363 Estacion Central, Santiago Chile E-Mail: federico.droller@usach.cl Martin Fiszbein Department of Economics Boston University 270 Bay State Road Boston, MA 02215 Tel: 617/353-4389 E-Mail: fiszbein@bu.edu Santiago Pérez Department of Economics University of California at Davis One Shields Avenue Davis, CA 95616 E-Mail: seperez@ucdavis.edu

How Replaceable Is a Low-Wage Job? - Rose, Evan K; Shem-Tov, Yotam (National Bureau of Economic Research Working Paper Series, 2023)
We study the long-run consequences of losing a low-wage job using linked employer-employee wage records and household surveys. For full-time workers earning $15 per hour or less, job loss due to an idiosyncratic, firm-wide contraction generates a 13% reduction in earnings six years later and over $40,000 cumulative lost earnings. Most of the long-run decrease stems from reductions in employment and hours as opposed to wage rates: job losers are twice as likely to report being unemployed and looking for work. By contrast, workers initially earning $15-$30 per hour see comparable long-run earnings losses driven primarily by reductions in hourly wages. Calibrating a dynamic job ladder model to the estimates implies that the rents from holding a full-time $15 per hour job relative to unemployment are worth about $20,000, more than seven times monthly earnings.
Author contact info: Evan K. Rose Department of Economics University of Chicago 1126 East 59th Street Chicago, IL 60637 E-Mail: ekrose@uchicago.edu Yotam Shem-Tov University of California, Los Angeles Department of Economics Box 951477 Los Angeles, CA 90095 E-Mail: shemtov@econ.ucla.edu

(Breaking) Intergenerational Transmission of Mental Health - Bütikofer, Aline; Ginja, Rita; Karbownik, Krzysztof; Landaud, Fanny (National Bureau of Economic Research Working Paper Series, 2023)
We estimate health associations across generations and dynasties using information on healthcare visits from administrative data for the entire Norwegian population. A parental mental health diagnosis is associated with a 9.3 percentage point (40%) higher probability of a mental health diagnosis of their adolescent child. Intensive margin physical and mental health associations are similar, and dynastic estimates account for about 40% of the intergenerational persistence. We also show that a policy targeting additional health resources for the young children of adults diagnosed with mental health conditions reduced the parent-child mental health association by about 40%.
Author contact info: Aline Bütikofer Department of Economics Norwegian School of Economics Hellev. 30, N-5035 Bergen Norway E-Mail: aline.buetikofer@nhh.no Rita Ginja University of Bergen Department of Economics Fosswinckelsgate 14 Bergen 5007 Norway E-Mail: rita.ginja@gmail.com Krzysztof Karbownik Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 E-Mail: krzysztof.karbownik@emory.edu Fanny Landaud CY Cergy Paris Université 33, boulevard du Port 95011 Cergy-Pontoise Cedex France E-Mail: fanny.landaud@cyu.fr

The Effects of Cryptocurrency Wealth on Household Consumption and Investment - Aiello, Darren; Baker, Scott R; Balyuk, Tetyana; Di Maggio, Marco; Johnson, Mark J; Kotter, Jason D (National Bureau of Economic Research Working Paper Series, 2023)
This paper uses transaction-level data across millions of accounts to identify cryptocurrency investors and evaluate how fluctuations in individual crypto wealth affect household consumption, equity investment, and local real estate markets. We estimate an MPC out of unrealized crypto gains that is more than double the MPC out of unrealized equity gains but smaller than the MPC from exogenous cash flow shocks. This MPC is mostly driven by increases in cash/check spending and mortgages. Moreover, households sell crypto to increase both discretionary as well as housing spending. As a result, crypto wealth causes house price appreciation—counties with higher crypto wealth see higher growth in home values following high crypto returns. Our results indicate that cryptocurrencies have substantial spillover effects on the real economy through consumption and investment into other asset classes.
Author contact info: Darren Aiello Brigham Young University 683 TNRB Provo, UT 84663 E-Mail: darren.aiello@gmail.com 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 Tetyana Balyuk Goizueta Business School Emory University 1300 Clifton Rd Atlanta, GA 30322 E-Mail: tetyana.balyuk@emory.edu Marco Di Maggio Harvard Business School Baker Library 265 Soldiers Field Boston, MA 02163 Tel: 617/495-6152 E-Mail: mdimaggio@hbs.edu Mark J. Johnson Brigham Young University Department of Finance Provo, UT 84602 E-Mail: markjjohnson@byu.edu Jason D. Kotter Brigham Young University Marriott School of Business Provo, UT 84602 E-Mail: jasonkotter@byu.edu

Getting the Right Tail Right: Modeling Tails of Health Expenditure Distributions - Karlsson, Martin; Wang, Yulong; Ziebarth, Nicolas R (National Bureau of Economic Research Working Paper Series, 2023)
Health expenditure data almost always include extreme values, implying that the underlying distribution has heavy tails. This may result in infinite variances as well as higher-order moments and bias the commonly used least squares methods. To accommodate extreme values, we propose an estimation method that recovers the right tail of health expenditure distributions. It extends the popular two-part model to develop a novel three-part model. We apply the proposed method to claims data from one of the biggest German private health insurers. Our findings show that the estimated age gradient in health care spending differs substantially from the standard least squares method.
Author contact info: Martin Karlsson CINCH, University of Duisburg-Essen Weststadttürme Berliner Platz 6-8 45127 Essen Germany E-Mail: martin.karlsson@uni-due.de Yulong Wang Syracuse University Maxwell School of Citizenship and Public Affairs Economics Department 127 Eggers Hall Syracuse, NY 13244 E-Mail: ywang402@syr.edu Nicolas R. Ziebarth ZEW Mannheim D-68161, Mannheim Germany E-Mail: nicolas.ziebarth@zew.de

Instrumental Variable Methods Reconcile Intention-to-Screen Effects Across Pragmatic Cancer Screening Trials - Angrist, Joshua; Hull, Peter (National Bureau of Economic Research Working Paper Series, 2023)
Pragmatic cancer screening trials mimic real-world scenarios in which patients and doctors are the ultimate arbiters of treatment. Intention-to-screen (ITS) analyses of such trials maintain randomization-based apples-to-apples comparisons, but differential adherence (the failure of subjects assigned to screening to actually get screened) makes ITS effects hard to compare across trials and sites. We show how instrumental variables (IV) methods address the nonadherence challenge in a comparison of estimates from 17 sites in five randomized trials measuring screening effects on colorectal cancer incidence. While adherence rates and ITS estimates vary widely across and within trials, IV estimates of per-protocol screening effects are remarkably consistent. An application of simple IV tools, including graphical analysis and formal statistical tests, shows how differential adherence explains variation in ITS impact. Screening compliers are also shown to have similar demographic characteristics to those of the full trial study sample. These findings argue for the clinical relevance of IV estimates of cancer screening effects.
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

Pack-Crack-Pack: Gerrymandering with Differential Turnout - Bouton, Laurent; Genicot, Garance; Castanheira, Micael; Stashko, Allison L (National Bureau of Economic Research Working Paper Series, 2023)
This paper studies the manipulation of electoral maps by political parties, known as gerrymandering. At the core of our analysis is the recognition that districts must have the same population size but only voters matter for electoral outcomes. We propose a model of gerrymandering that allows for heterogeneity in turnout rates across individuals. We show how this modifies the gerrymandering strategies: the novel pattern is to pack-crack-pack along the turnout dimension. That is, parties benefit from packing their supporters when they have too low turnout rate as well as their opponents when they have too high turnout rate. In between, they create cracked districts that mix moderate-to-high-turnout supporters with lower-turnout opponents. This produces testable empirical implications about the link between partisan support, turnout rates, and electoral maps. Using a novel empirical strategy that relies on the comparison of maps proposed by Democrats and Republicans during the 2020 redistricting cycle in the US, we bring such empirical implications to the data and find support for them.
Author contact info: Laurent Bouton Georgetown University Department of Economics 37th & O Streets, NW Washington,DC 20057 Tel: 202/687-6109 E-Mail: boutonllj@gmail.com Garance Genicot Georgetown University Department of Economics 37th & O Streets, NW Washington, DC 20057 Tel: 202/687-7144 Fax: 202/687-6102 E-Mail: gg58@georgetown.edu Micael Castanheira ECARES, ULB CP 114 50 Av. F.D. Roosevelt 1050 Brussels, Belgium E-Mail: micael.casta@gmail.com Allison Stashko Department of Quantitative Theory and Methods 36 Eagle Row Atlanta, GA 30322 E-Mail: allison.stashko@emory.edu

Policy Diffusion Through Elections - Shigeoka, Hitoshi; Watanabe, Yasutora (National Bureau of Economic Research Working Paper Series, 2023)
Staggered difference-in-differences designs are pervasive in policy evaluations but little is known about the mechanisms of policy diffusion: How and why do such policies spread across jurisdictions? In this study, we highlight the role of elections in policy diffusion in settings where municipal elections are asynchronous due to historical reasons. First, we empirically show the presence of policy diffusion using neighbors’ election cycles as instruments for neighbors’ policy adoption. Second, we further demonstrate interactions of municipalities’ election cycles with neighbors’ adoption and show that they follow neighbors’ policy only during their own election timing, indicating that policy diffuses through elections.
Author contact info: Hitoshi Shigeoka Department of Economics Simon Fraser University 8888 University Drive, WMC 4653 Burnaby, BC V5A 1S6 Tel: 778/782-5348 E-Mail: hitoshi_shigeoka@sfu.ca Yasutora Watanabe Department of Economics University of Tokyo Japan E-Mail: Yasutora.Watanabe@gmail.com

Law-Abiding Immigrants: The Incarceration Gap Between Immigrants and the US-born, 1870–2020 - Abramitzky, Ran; Boustan, Leah Platt; Jácome, Elisa; Pérez, Santiago; Torres, Juan David (National Bureau of Economic Research Working Paper Series, 2023)
We provide the first nationally representative long-run series (1870–2020) of incarceration rates for immigrants and the US-born. As a group, immigrants have had lower incarceration rates than the US-born for 150 years. Moreover, relative to the US-born, immigrants’ incarceration rates have declined since 1960: immigrants today are 60% less likely to be incarcerated (30% relative to US-born whites). This relative decline occurred among immigrants from all regions and cannot be explained by changes in immigrants’ observable characteristics or immigration policy. Instead, the decline is part of a broader divergence of outcomes between less-educated immigrants and their US-born counterparts.
Author contact info: Ran Abramitzky Department of Economics Stanford University 579 Jane Stanford Way Stanford, CA 94305 Tel: 650/723-9276 Fax: 650/725-5702 E-Mail: ranabr@stanford.edu Leah Platt Boustan Princeton University Industrial Relations Section Louis A. Simpson International Bldg. Princeton, NJ 08544 Tel: 609-258-7116 E-Mail: lboustan@princeton.edu Elisa Jácome Department of Economics Northwestern University Kellogg Global Hub 2211 Campus Drive Evanston, IL 60208 E-Mail: ejacome@northwestern.edu Santiago Pérez Department of Economics University of California at Davis One Shields Avenue Davis, CA 95616 E-Mail: seperez@ucdavis.edu Juan David Torres Stanford University Department of Economics 579 Jane Stanford Way Stanford, CA 94305 E-Mail: jdtorres@stanford.edu

Time Use, College Attainment, and The Working-from-Home Revolution - Cowan, Benjamin W (National Bureau of Economic Research Working Paper Series, 2023)
I demonstrate that the profound change in working from home (WFH) in the wake of the COVID-19 pandemic is concentrated among individuals with college degrees. Relative to 2015-19, the number of minutes worked from home on “post-pandemic” (August 2021-December 2022) weekdays increased by 78 minutes for college graduates; for non-graduates, it was 22 minutes. The share of work done at home (for those who worked at all) increased by 22% for graduates and 7% for non-graduates. Average minutes worked changed little for either group. Daily time spent traveling (e.g., commuting) fell by 21 minutes for college graduates and 6 minutes for non-graduates. I examine how time-use patterns change for college graduates relative to non-graduates over the same period. College graduates experience a relative shift from eating out to eating at home, an increase in free time, and an increase in time spent with children, with the latter effect being concentrated among fathers. Thus, while the gender gap in childcare among college graduates may be diminished by the WFH revolution, gaps in children’s outcomes by parents’ college attainment may be exacerbated by it.
Author contact info: 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

Political Preferences and the Spatial Distribution of Infrastructure: Evidence from California's High-Speed Rail - Fajgelbaum, Pablo D; Gaubert, Cecile; Gorton, Nicole; Morales, Eduardo; Schaal, Edouard (National Bureau of Economic Research Working Paper Series, 2023)
How do political preferences shape transportation policy? We study this question in the context of California's High-Speed Rail (CHSR). Combining geographic data on votes in a referendum on the CHSR with a model of its expected economic benefits, we estimate the weight of economic and non-economic considerations in voters' preferences. Then, comparing the proposed distribution of CHSR stations with alternative placements, we use a revealed-preference approach to estimate policymakers' preferences for redistribution and popular approval. While voters did respond to expected real-income benefits, non-economic factors were a more important driver of the spatial distribution of voters' preferences for the CHSR. While the voter-approved CHSR would have led to modest income gains, proposals with net income losses also would have been approved due to political preferences. For the planner, we identify strong preferences for popular approval. A politically-blind planner would have placed the stations closer to dense metro areas in California.
Author contact info: Pablo D. Fajgelbaum Department of Economics University of California, Los Angeles 8283 Bunche Hall Mail Stop: 147703 Los Angeles, CA 90095 E-Mail: pfajgelbaum@gmail.com Cecile Gaubert Department of Economics University of California, Berkeley 687 Evans Hall Berkeley, CA 94720 Tel: 510/643-5397 Fax: 510/642-0822 E-Mail: cecile.gaubert@berkeley.edu Nicole Gorton E-Mail: nicolegorton@g.ucla.edu Eduardo Morales Department of Economics Princeton University 291 Julis Romo Rabinowitz Building Princeton, NJ 08544 Tel: 617/308-7662 E-Mail: ecmorale@princeton.edu Edouard Schaal Centre de Recerca en Economia Internacional Universitat Pompeu Fabra Ramon Trias Fargas, 23-25 08005 Barcelona Spain E-Mail: eschaal@crei.cat

Certification and Recertification in Welfare Programs: What Happens When Automation Goes Wrong? - Wu, Derek; Meyer, Bruce D (National Bureau of Economic Research Working Paper Series, 2023)
How do administrative burdens influence enrollment in different welfare programs? Who is screened out at a given stage? This paper studies the impacts of increased administrative burdens associated with the automation of welfare caseworker assistance, leveraging a unique natural experiment in Indiana in which the IBM Corporation remotely processed applications for two-thirds of all counties. Using linked administrative records covering nearly 3 million program recipients, the results show that SNAP, TANF, and Medicaid enrollments fell by 15%, 24%, and 4% one year after automation, with these heterogeneous declines largely attributable to cross-program differences in recertification costs. Earlier-treated and higher-poverty counties experienced larger declines in welfare receipt. More needy individuals were screened out at exit while less needy individuals were screened out at entry, a novel distinction that would be missed by typical measures of targeting which focus on average changes overall. The decline in Medicaid enrollment exhibited considerable permanence after IBM's automated system was disbanded, suggesting potential long-term consequences of increased administrative burdens.
Author contact info: Derek Wu Frank Batten School of Leadership and Public Policy University of Virginia 235 McCormick Road Charlottesville, VA 22904 E-Mail: derek.wu@virginia.edu 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

Access and Exposure to Local News Media in the Digital Era: Evidence from U.S. Media Markets - Bang, Minji; L'Heude, Lucie; Postlewaite, Andrew; Sieg, Holger (National Bureau of Economic Research Working Paper Series, 2023)
Using a new comprehensive survey of adults in large U.S. media markets we show that minority and low-skill individuals, who are heavily exposed to shocks to the local economy, typically have stronger preferences for and stronger ex- posure to local news than high-skill and white individuals. At the same time, these disadvantaged individuals have been negatively affected by the impact of the digital revolution on news provision. In particular, high-skill and white indi- viduals have more rapidly embraced online and social media while low-skill and minority individuals still heavily rely on local television and other traditional news providers. These differences in provider choices are important because the digital revolution has reduced the quality of traditional news providers while the quality and quantity of online and social media have substantially in- creased. To gain additional insights into the welfare consequence of the digital revolution and assess potential policy interventions, we develop and estimate a model of news production and demand for local news. Our model is based on a time-allocation, discrete bundle-choice framework. Our findings suggest that the loss of the local newspaper (television) reduces welfare on average by $923 ($1064) which is well above the annual subscription costs in most markets. Finally, we study policies that subsidize online or social media to offset the loss of the local newspaper or television station.
Author contact info: Minji Bang City University of Hong Kong Department of Economics and Finance Hong Kong China E-Mail: minjbang@cityu.edu.hk Lucie L'Heude E-Mail: lucielhd@sas.upenn.edu Andrew Postlewaite University of Pennsylvania Holger Sieg Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104 Tel: 215 898 7194 Fax: 215-573-2057 E-Mail: holgers@econ.upenn.edu

The Incidence of Adverse Selection: Theory and Evidence from Health Insurance Choices - Geruso, Michael; Layton, Timothy; Leive, Adam (National Bureau of Economic Research Working Paper Series, 2023)
Existing research on selection in insurance markets focuses on how adverse selection distorts prices and misallocates products across people. This ignores the distributional consequences of who pays the higher prices. In this paper, we show that the distributional incidence depends on the correlations between income, expected costs, and insurance demand. We discuss the general implications for the design of subsidies and mandates when policymakers value both equity and efficiency. Then, in an empirical case study of a large employer, we show that the incidence of selection falls on higher-income employees, who are more likely to choose generous health insurance plans.
Author contact info: Michael Geruso University of Texas at Austin Department of Economics 1 University Station C3100 Austin, TX 78712 Tel: 512/475-8704 E-Mail: mike.geruso@utexas.edu Timothy Layton Harvard Medical School Department of Health Care Policy 180 Longwood Avenue Boston, MA 02115 Tel: 617/432-4465 E-Mail: layton@hcp.med.harvard.edu Adam Leive University of California, Berkeley Goldman School of Public Policy 2607 Hearst Avenue #308 Berkeley, CA 94720 E-Mail: leive@berkeley.edu

White Flight from Asian Immigration: Evidence from California Public Schools - Boustan, Leah Platt; Cai, Christine; Tseng, Tammy (National Bureau of Economic Research Working Paper Series, 2023)
Asian Americans are the fastest-growing racial group in the US but we know little about how Asian immigration has affected cities, neighborhoods and schools. This paper studies white flight from Asian arrivals in high-socioeconomic-status Californian school districts from 2000-2016 using initial settlement patterns and national immigrant flows to instrument for entry. We find that, as Asian students arrive, white student enrollment declines in higher-income suburbs. These patterns cannot be fully explained by racial animus, housing prices, or correlations with Black/Hispanic arrivals. Parental fears of academic competition may play a role.
Author contact info: Leah Platt Boustan Princeton University Industrial Relations Section Louis A. Simpson International Bldg. Princeton, NJ 08544 Tel: 609-258-7116 E-Mail: lboustan@princeton.edu Christine Cai E-Mail: christine.cai2706@gmail.com Tammy Tseng E-Mail: ttseng@alumni.princeton.edu

Price Level and Inflation Dynamics in Heterogeneous Agent Economies - Kaplan, Greg; Nikolakoudis, Georgios; Violante, Giovanni L (National Bureau of Economic Research Working Paper Series, 2023)
We study equilibria in a heterogeneous-agent incomplete-market economy with nominal government debt and flexible prices. Unlike in representative agent economies, steady-state equilibria exist when the government runs persistent deficits, provided that the level of deficits is not too large. In these equilibria, the real interest rate is below the growth rate of the economy. We quantify the maximum sustainable deficit for the US and show that it is lower under more redistributive tax and transfer systems. With constant primary deficits, there exist two steady-states, and the price level and inflation are not uniquely determined. We describe alternative policy settings that deliver uniqueness. We conduct quantitative experiments to illustrate how redistribution and precautionary saving amplify price level increases in response to fiscal helicopter drops, deficit expansions, and loose monetary policy. We show that rising primary deficits can account for a decline in the long-run real interest rate, leading to higher inflation for any given monetary policy. Our work highlights the role of household heterogeneity and market incompleteness in determining inflation.
Author contact info: Greg Kaplan Department of Economics University of Chicago 1126 E 59th St Chicago, IL 60637 E-Mail: gkaplan@uchicago.edu Georgios Nikolakoudis E-Mail: gn3@princeton.edu Giovanni L. Violante Department of Economics Princeton University Julis Romo Rabinowitz Building Princeton, NJ 08540 E-Mail: violante@princeton.edu

What Did UWE Do for Economics? - Avilova, Tatyana; Goldin, Claudia (National Bureau of Economic Research Working Paper Series, 2023)
Economics is among the most popular undergraduate majors. However, even at the best research universities and liberal arts colleges men outnumber women by two to one, and overall there are about 2.5 males to every female economics major. The Undergraduate Women in Economics (UWE) Challenge was begun in 2015 for one year as a randomized controlled trial with 20 treatment and 68 control schools to evaluate the impact of light-touch interventions to recruit and retain female economics majors. Treatment schools received funding, guidance, and access to networking with other treatment schools to implement programs such as providing better information about the application of economics, exposing students to role models, and updating course content and pedagogy. Using 2001-2021 data from the Integrated Postsecondary Education Data System (IPEDS) on graduating BAs, we find that UWE was effective in increasing the fraction of female BAs who majored in economics relative to men in liberal arts colleges. Large universities did not show an impact of the treatment, although those that implemented their own RCTs showed moderate success in encouraging more women to major in economics. We speculate on the reasons for differential treatment impact.
Author contact info: Tatyana Avilova Bowdoin College Brunswick, ME E-Mail: t.avilova@bowdoin.edu Claudia Goldin Department of Economics 229 Littauer Harvard University Cambridge MA 02138 Tel: 617/613-1200 Fax: 617/613-1245 E-Mail: cgoldin@harvard.edu

Fiscal Procyclicality in Commodity Exporting Countries: How Much Does it Pour and Why? - Arroyo Marioli, Francisco; Vegh, Carlos A (National Bureau of Economic Research Working Paper Series, 2023)
A large literature has documented that fiscal policy is procyclical in emerging markets and developing economies and acyclical/countercyclical in advanced economies. This paper analyzes fiscal procyclicality in commodity-exporting countries. It first shows that the degree of fiscal procyclicality is twice as high in commodity exporters than in non-commodity exporters. Further, while fiscal procyclicality has been falling in commodity exporters over the past 15 years, it is still pervasive and has fallen slower than in non-commodity exporting countries. In addition to testing the main theories behind fiscal procyclicality in commodity exporters and the role of institutional variables, the paper makes two novel contributions. First, based on the idea of fiscal procyclicality as a "when it rains, it pours" phenomenon (that is, contractionary fiscal policy amplifies the effects of a fall in commodity prices), the paper shows that, on average, government spending amplifies the business cycle by 21 percent of the initial drop in output following a fall in commodity prices. Put differently, the pours component accounts for 17 percent of the total fall in output. Second, the paper estimates the welfare costs of fiscal procyclicality at 2.6 percent of the costs associated with the regular business cycle in commodity exporters.
Author contact info: Francisco Arroyo Marioli The World Bank 1818 H Street, NW Washington, DC 20433 E-Mail: farroyomarioli@worldbank.org Carlos A. Vegh School of Advanced International Studies (SAIS) Johns Hopkins University 1717 Massachusetts Avenue, NW Washington, DC 20036 Tel: 202-663-7787 E-Mail: cvegh1@jhu.edu

On the Importance of African Traditional Religion for Economic Behavior - Butinda, Lewis Dunia; Lameke, Aimable Amani; Nunn, Nathan; Posch, Max; Sánchez de la Sierra, Raúl (National Bureau of Economic Research Working Paper Series, 2023)
Within the field of economics, despite being widespread, African traditional religions tend to be perceived as unimportant and ignored when studying economic decision-making. This study tests whether this presumption is correct. Using daily data on business decisions and performance of beer sellers in the eastern Democratic Republic of the Congo, we study the importance of traditional religious beliefs for economic behavior and outcomes. Beer sellers perceive the risk of theft in their shops to be higher than it actually is, causing them to hold lower inventories, more frequent stock-outs, and reduced profits. We facilitate randomly-timed access to commonly-used, but typically prohibitively expensive rituals, which reduce the perceived risk of theft. We find that the rituals partially correct the beliefs about the risk of theft for sellers who report believing in the ritual’s efficacy. These sellers purchase more inventory, experience fewer stock-outs, and have larger sales, revenues, and profits. To distinguish the belief in the efficacy of the ritual from other incidental effects of participation, we analyze these outcomes for sellers who do not believe in the ritual. For these individuals, we find none of the observed effects. The findings provide evidence of the importance of African traditional religions, demonstrating that they can influence behavior and outcomes that are important for economic development.
Author contact info: Lewis Dunia Butinda Marakuja Kivu Research, Goma Democratic Republic of the Congo E-Mail: duniabutindalewis@gmail.com Aimable Amani Lameke Marakuja Kivu Research Bukavu, South Kivu Democratic Republic of the Congo E-Mail: amanilamek@gmail.com Nathan Nunn Vancouver School of Economics University of British Columbia 6000 Iona Drive Vancouver, BC V6T 2E8 Canada E-Mail: nathan.nunn@ubc.ca Max Posch Department of Economics University of Exeter Business School Rennes Dr Exeter EX4 4PU United Kingdom E-Mail: m.posch@exeter.ac.uk Raúl Sánchez de la Sierra Harris School of Public Policy University of Chicago 1307 E. 60th Street Chicago, IL 60637 E-Mail: raul@uchicago.edu

The Intergenerational Transmission of Poverty and Public Assistance: Evidence from the Earned Income Tax Credit - McInnis, Nicardo S; Michelmore, Katherine; Pilkauskas, Natasha (National Bureau of Economic Research Working Paper Series, 2023)
This paper examines the intergenerational effects of the Earned Income Tax Credit (EITC) on poverty and public assistance use. Using data from the PSID, we find that increased exposure to the EITC in childhood reduces the use of public assistance in adulthood (WIC and other public assistance) and reduces the likelihood of being in poverty (<100% of poverty) or near poor (<200% of poverty) by about 7 percentage points. These findings build on a growing literature that considers the intergenerational impacts of public policy and suggests that the economic benefits of policies in one generation may have long-term effects on the next generation.
Author contact info: Nicardo S. McInnis P.O. Box 2393 Princeton, NJ 08543-2393 United States E-Mail: nicardomcinnis@gmail.com Katherine Michelmore Gerald R. Ford School of Public Policy University of Michigan 735 S State St Ann Arbor, MI 48109 E-Mail: kmichelm@umich.edu Natasha Pilkauskas 735 S State St 48109-3091 Ann Arbor, MI 48109 E-Mail: npilkaus@umich.edu

Innovation and Appropriability: Revisiting the Role of Intellectual Property - Mezzanotti, Filippo; Simcoe, Timothy (National Bureau of Economic Research Working Paper Series, 2023)
It is more than 25 years since the authors of the Yale and Carnegie surveys studied how firms seek to protect the rents from innovation. In this paper, we revisit that question using a nationally representative sample of firms over the period 2008-2015, with the goal of updating and extending a set of stylized facts that has been influential for our understanding of the economics of innovation. There are five main findings. First, while patenting firms are relatively uncommon in the economy, they account for an overwhelming share of R&D spending. Second, firms consider utility patents less important on average than other forms of IP protection, like trade secrets, trademarks, and copyrights. Third, industry differences explain a great deal of the level of firms’ engagement with IP, with high-tech firms on average being more active on all forms of IP. Fourth, we find no significant differences in the use of IP strategies across firms at different points of their life cycle. Lastly, unlike age, firms of different size appear to manage IP significantly differently. On average, larger firms tend to engage much more extensively in the protection of IP, and this pattern cannot be easily explained by differences in the type of R&D or innovation produced by a firm. We also discuss the implications of these findings for innovation research and policy.
Author contact info: Filippo Mezzanotti Kellogg School of Management Northwestern University 4389 Global Hub 2211 Campus Drive Evanston, IL 60201 E-Mail: filippo.mezzanotti@kellogg.northwestern.edu Timothy Simcoe Boston University Questrom School of Business 595 Commonwealth Avenue Boston, MA 02215 Tel: 617/358-5725 E-Mail: tsimcoe@bu.edu

Bottlenecks: Sectoral Imbalances and the US Productivity Slowdown - Acemoglu, Daron; Autor, David; Patterson, Christina (National Bureau of Economic Research Working Paper Series, 2023)
Despite the rapid pace of innovation in information and communications technologies (ICT) and electronics, aggregate US productivity growth has been disappointing since the 1970s. We propose and empirically explore the hypothesis that slow growth stems in part from an unbalanced sectoral distribution of innovation over the last several decades. Because an industry's success in innovation depends on complementary innovations among its input suppliers, rapid productivity growth that is concentrated in a subset of sectors may create bottlenecks and consequently fail to translate into commensurate aggregate productivity gains. Using data on input-output linkages, citation linkages, industry productivity growth and patenting, we find evidence consistent with this hypothesis: the variance of suppliers' Total Factor Productivity growth or innovation adversely affects an industry's own TFP growth and innovation. Our estimates suggest that a substantial share of the productivity slowdown in the United States (and several other industrialized economies) can be accounted for by a sizable increase in cross-industry variance of TFP growth and innovation. For example, if TFP growth variance had remained at the 1977-1987 level, US manufacturing productivity would have grown twice as rapidly in 1997-2007 as it did—yielding a counterfactual growth rate that would have been close to that of 1977-1987 and 1987-1997.
Author contact info: Daron Acemoglu Department of Economics, E52-446 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-1927 Fax: 617/253-1330 E-Mail: daron@mit.edu 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 Christina Patterson Booth School of Business University of Chicago 5807 S. Woodlawn Avenue Chicago, IL 60637 E-Mail: christina.patterson@chicagobooth.edu

Institutions and Global Crop Yields - Wuepper, David; Wang, Haoyu; Schlenker, Wolfram; Jain, Meha; Finger, Robert (National Bureau of Economic Research Working Paper Series, 2023)
We estimate annual discontinuities in remotely-sensed crop yields at all international land borders and link them to changes in the economic freedom index by the Fraser Institute, a country-level measure of institutional quality. Each point of the ten-point index increases the discontinuity by 2.2% over the next five years, highlighting that institutional reforms have the potential to close some of the observed crop yield gap. Three subcategories are consistently significant: credit market regulation, inflation, and the top marginal tax rate. We present suggestive evidence that higher average yields are achieved through increased use of irrigation and mechanization. Yield variability remains unchanged, and reforms lead to cropland expansion through deforestation.
Author contact info: David Wuepper Land Economics Group University of Bonn Meckenheimer Allee 174 Bonn 53115 Germany E-Mail: wuepper@uni-bonn.de Haoyu Wang University of Texas at Austin Department of Geography & the Environment 305 E 23rd St Austin, TX 78712 E-Mail: hywong@utexas.edu Wolfram Schlenker School of International and Public Affairs (SIPA) Columbia University 420 West 118th St New York, NY 10027 Tel: 212/854-1806 Fax: 212/854-5765 E-Mail: wolfram.schlenker@columbia.edu Meha Jain School for Environment and Sustainability 3540 Dana Building 440 Church Street Ann Arbor, MI 48109 USA E-Mail: mehajain@umich.edu Robert Finger Sonneggstr. 33 Zurich 8092 Switzerland E-Mail: rofinger@ethz.ch

Black Empowerment and White Mobilization: The Effects of the Voting Rights Act - Bernini, Andrea; Facchini, Giovanni; Tabellini, Marco; Testa, Cecilia (National Bureau of Economic Research Working Paper Series, 2023)
The 1965 Voting Rights Act (VRA) paved the road to Black empowerment. How did southern whites respond? Leveraging newly digitized data on county-level voter registration rates by race between 1956 and 1980, and exploiting pre-determined variation in exposure to the federal intervention, we document that the VRA increases both Black and white political participation. Consistent with the VRA triggering counter-mobilization, the surge in white registrations is concentrated where Black political empowerment is more tangible and salient due to the election of African Americans in county commissions. Additional analysis suggests that the VRA has long-lasting negative effects on whites' racial attitudes.
Author contact info: Andrea Bernini Department of Economics University of Oxford Mansfield College Mansfield Road Oxford OX1 3TF United Kingdom Tel: +44 1865 270995 E-Mail: andrea.bernini@economics.ox.ac.uk Giovanni Facchini University of Nottingham E-Mail: Giovanni.Facchini@nottingham.ac.uk Marco Tabellini Harvard Business School 279 Morgan Hall Soldiers Field Boston, MA 02163 Tel: 617/496-4614 E-Mail: mtabellini@hbs.edu Cecilia Testa University of Nottingham E-Mail: cecilia.testa@nottingham.ac.uk

Sparse Modeling Under Grouped Heterogeneity with an Application to Asset Pricing - Cong, Lin William; Feng, Guanhao; He, Jingyu; Li, Junye (National Bureau of Economic Research Working Paper Series, 2023)
Sparse models, though long preferred and pursued by social scientists, can be ineffective or unstable relative to large models, for example, in economic predictions (Giannone et al., 2021). To achieve sparsity for economic interpretation while exploiting big data for superior empirical performance, we introduce a general framework that jointly clusters observations (via new decision trees) and locally selects variables (with Bayesian priors) for modeling panel data with potential grouped heterogeneity. We derive analytical marginal likelihoods as global split criteria in our Bayesian Clustering Model (BCM), to incorporate economic guidance, address parameter and model uncertainties, and prevent overfitting. We apply BCM to asset pricing and estimate uncommon-factor models for data-driven asset clusters and macroeconomic regimes. We find (i) cross-sectional heterogeneity linked to (non-linear interactions of) return volatility, size, and value, (ii) structural changes in factor relevance predicted by market volatility and valuation, and (iii) MKTRF and SMB as common factors and multiple uncommon factors across characteristics-managed-market-timed clusters. BCM helps explain volatility- or size-related anomalies, exploit within-group tests, and mitigate the “factor zoo” problem. Overall, BCM outperforms benchmark common-factor models in pricing and investments in U.S. equities, e.g., attaining out-of-sample cross-sectional R2s exceeding 25% for multiple clusters and Sharpe ratio of tangency portfolios tripling built from ME-B/M 5 × 5 portfolios.
Author contact info: Lin William Cong SC Johnson College of Business Cornell University Sage Hall Ithaca, NY 14853 Tel: 607/255-7859 E-Mail: will.cong@cornell.edu Guanhao Feng City University of Hong Kong 83 Tat Chee Avenue Hong Kong, China E-Mail: gavin.feng@cityu.edu.hk Jingyu He City University of Hong Kong 83 Tat Chee Avenue Kowloon Tong Hong Kong, China E-Mail: jingyuhe@cityu.edu.hk Junye Li 670 Guoshun Road Shanghai 200433 China E-Mail: li_junye@fudan.edu.cn

The Largest Insurance Expansion in History: Saving One Million Lives Per Year in China - Gruber, Jonathan; Lin, Mengyun; Yi, Junjian (National Bureau of Economic Research Working Paper Series, 2023)
The New Cooperative Medical Scheme (NCMS) rolled out in China from 2003-2008 provided insurance to 800 million rural Chinese. We combine aggregate mortality data with individual survey data, and identify the impact of the NCMS from program rollout and heterogeneity across areas in their rural share. We find that there was a significant decline in aggregate mortality, with the program saving more than one million lives per year at its peak, and explaining 78% of the entire increase in life expectancy in China over this period. We confirm these mortality effects using micro-data on mortality, other health outcomes, and utilization.
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 Mengyun M. Lin The Wang Yanan Institute for Studies in Economics Xiamen University E-Mail: lin.mengyun@xmu.edu.cn Junjian Yi National School of Development Peking University E-Mail: junjian@nsd.pku.edu.cn

Combining Human Expertise with Artificial Intelligence: Experimental Evidence from Radiology - Agarwal, Nikhil; Moehring, Alex; Rajpurkar, Pranav; Salz, Tobias (National Bureau of Economic Research Working Paper Series, 2023)
Full automation using Artificial Intelligence (AI) predictions may not be optimal if humans can access contextual information. We study human-AI collaboration using an information experiment with professional radiologists. Results show that providing (i) AI predictions does not always improve performance, whereas (ii) contextual information does. Radiologists do not realize the gains from AI assistance because of errors in belief updating – they underweight AI predictions and treat their own information and AI predictions as statistically independent. Unless these mistakes can be corrected, the optimal human-AI collaboration design delegates cases either to humans or to AI, but rarely to AI assisted humans.
Author contact info: Nikhil Agarwal Department of Economics, E52-440 MIT 77 Massachusetts Avenue Cambridge, MA 02139 E-Mail: agarwaln@mit.edu Alex Moehring 100 Main St E62-390 Cambridge, MA 02472 E-Mail: moehring@mit.edu Pranav Rajpurkar Harvard Medical School 10 Shattuck St Boston, MA 02115 United States E-Mail: pranav_rajpurkar@hms.harvard.edu Tobias Salz Department of Economics, E52-460 MIT Cambridge, MA 02139 Tel: 617/715-2266 E-Mail: tsalz@mit.edu

Think Globally, Act Globally: Opportunities to Mitigate Greenhouse Gas Emissions in Low- and Middle-Income Countries - Glennerster, Rachel; Jayachandran, Seema (National Bureau of Economic Research Working Paper Series, 2023)
Reductions in greenhouse gas emissions are a global public good, which makes it efficient to act globally when addressing this challenge. We lay out several reasons that high-income countries seeking to mitigate climate change might have greater impact if they invest their resources in opportunities in low- and middle-income countries. Specifically, some of the easiest and cheapest options have already been tapped in high-income countries, land and labor costs are lower in low- and middle-income countries, it is cheaper to build green than to retrofit green, and global targeting matters in integrated economies. We also discuss economic counterarguments such as the challenge of monitoring emissions levels in low- and middle-income countries, ethical considerations, the importance of not double-counting mitigation funding as development aid, and policy steps that might help to realize this opportunity.
Author contact info: Rachel Glennerster Saieh Hall for Economics, Office 432 University of Chicago 5757 S University Avenue Chicago, IL 60637 Tel: 773/705-1480 E-Mail: rglennerster@uchicago.edu Seema Jayachandran Department of Economics Julis Romo Rabinowitz Building Princeton University Princeton, NJ 08544 E-Mail: jayachandran@princeton.edu

Credit Allocation and Macroeconomic Fluctuations - Müller, Karsten; Verner, Emil (National Bureau of Economic Research Working Paper Series, 2023)
We study the relationship between credit expansions, macroeconomic fluctuations, and financial crises using a novel database on the sectoral distribution of private credit for 117 countries since 1940. We document that, during credit booms, credit flows disproportionately to the non-tradable sector. Credit expansions to the non-tradable sector, in turn, systematically predict subsequent growth slowdowns and financial crises. In contrast, credit expansions to the tradable sector are associated with sustained output and productivity growth without a higher risk of a financial crisis. To understand these patterns, we show that firms in the non-tradable sector tend to be smaller, more reliant on loans secured by real estate, and more likely to default during crises. Our findings are consistent with models in which credit booms to the non-tradable sector are driven by easy financing conditions and amplified by collateral feedbacks, contributing to increased financial fragility and a boom-bust cycle.
Author contact info: Karsten Müller National University of Singapore 15 Kent Ridge Dr Singapore, 119245 E-Mail: kmueller@nus.edu.sg Emil Verner MIT Sloan School of Management 100 Main Street, E62-635 Cambridge, MA 02142-1347 Tel: 617/253-2933 E-Mail: everner@mit.edu

Nowcasting World Trade with Machine Learning: a Three-Step Approach - Chinn, Menzie D; Meunier, Baptiste; Stumpner, Sebastian (National Bureau of Economic Research Working Paper Series, 2023)
We nowcast world trade using machine learning, distinguishing between tree-based methods (random forest, gradient boosting) and their regression-based counterparts (macroeconomic random forest, gradient linear boosting). While much less used in the literature, the latter are found to outperform not only the tree-based techniques, but also more “traditional” linear and non-linear techniques (OLS, Markov-switching, quantile regression). They do so significantly and consistently across different horizons and real-time datasets. To further improve performances when forecasting with machine learning, we propose a flexible three-step approach composed of (step 1) pre-selection, (step 2) factor extraction and (step 3) machine learning regression. We find that both pre-selection and factor extraction significantly improve the accuracy of machine-learning-based predictions. This three-step approach also outperforms workhorse benchmarks, such as a PCA-OLS model, an elastic net, or a dynamic factor model. Finally, on top of high accuracy, the approach is flexible and can be extended seamlessly beyond world trade.
Author contact info: Menzie D. Chinn Department of Economics University of Wisconsin-Madison 1180 Observatory Drive Madison, WI 53706 Tel: 608/262-7397 Fax: 608/262-2033 E-Mail: mchinn@lafollette.wisc.edu Baptiste Meunier European Central Bank 60640 Frankfurt am Main Germany E-Mail: Baptiste.Meunier@ecb.europa.eu Sebastian Stumpner Banque de France 31 Rue Croix des Petits Champs 75001 Paris France E-Mail: sebastian.stumpner@banque-france.fr

Currency Risk Premiums: A Multi-horizon Perspective - Chernov, Mikhail; Dahlquist, Magnus (National Bureau of Economic Research Working Paper Series, 2023)
We review the literature on multi-horizon currency risk premiums. We show how the multi-horizon implications arise from the classic present-value relationship. We further show how these implications manifest themselves in the interaction between bond and currency risk premiums. This link is strengthened by explicitly accounting for stochastic discount factors. Information about currency risk premiums at different horizons presents a wealth of new evidence and challenges for existing models.
Author contact info: Mikhail Chernov Anderson School of Management University of California, Los Angeles 110 Westwood Plaza, Suite C-417 Los Angeles, CA 90095 E-Mail: mikhail.chernov@anderson.ucla.edu Magnus Dahlquist Box 6501 SE-11383 Stockholm Sweden Tel: +4676962312 E-Mail: magnus.dahlquist@hhs.se

What Caused the US Pandemic-Era Inflation? - Blanchard, Olivier J; Bernanke, Ben S (National Bureau of Economic Research Working Paper Series, 2023)
We answer the question posed by the title by specifying and estimating a simple dynamic model of prices, wages, and short-run and long-run inflation expectations. The estimated model allows us to analyze the direct and indirect effects of product-market and labor-market shocks on prices and nominal wages and to quantify the sources of U.S. pandemic-era inflation and wage growth. We find that, contrary to early concerns that inflation would be spurred by overheated labor markets, most of the inflation surge that began in 2021 was the result of shocks to prices given wages. These shocks included sharp increases in commodity prices, reflecting strong aggregate demand, and sectoral price spikes, resulting from changes in the level and sectoral composition of demand together with constraints on sectoral supply. However, although tight labor markets have thus far not been the primary driver of inflation, we find that the effects of overheated labor markets on nominal wage growth and inflation are more persistent than the effects of product-market shocks. Controlling inflation will thus ultimately require achieving a better balance between labor demand and labor supply.
Author contact info: Olivier J. Blanchard Peterson Institute for International Economics 1750 Massachusetts Avenue, NW Washington, DC 20036 Tel: 202/328-9000 Fax: 202/659-3225 E-Mail: oblanchard@piie.com Ben S. Bernanke The Brookings Institution 1775 Massachusetts Avenue, NW Washington, DC 20036-2103 Tel: 202-797-6000 E-Mail: bensbernanke75@brookings.edu

Production, Trade, and Cross-Border Data Flows - Chang, Qing; Cong, Lin William; Wang, Liyong; Zhang, Longtian (National Bureau of Economic Research Working Paper Series, 2023)
We build a two-country general equilibrium model to analyze the effects of cross-border data flows and pre-existing development gaps in data economies on each country's production and international trade. Raw data as byproducts of consumption can be transformed into various types of working data (information) to be used by both domestic and foreign producers. Because data constitute a new production factor for intermediate goods, a large extant divide in data utilization can reduce or even freeze trade. Cross-border data flows mitigate the situation and improve welfare when added to international trade. Data-inefficient countries where data are less important in production enjoy a "latecomer's advantage'' with international trade and data flows, contributing more raw data from which the data-efficient countries generate knowledge for production. Furthermore, cross-border data flows can reverse the cyclicity of working data usage after productivity shocks, whereas shocks to data privacy or import costs have opposite effects on domestic and foreign data sectors. The insights inform future research and policy discussions concerning data divide, data flows, and their implications for trade liberalization, the data labor market, among others.
Author contact info: Qing Chang School of Statistics and Mathematics Central University of Finance and Economics Beijing 102206, China Tel: 12234232 E-Mail: changqing@email.cufe.edu.cn Lin William Cong SC Johnson College of Business Cornell University Sage Hall Ithaca, NY 14853 Tel: 607/255-7859 E-Mail: will.cong@cornell.edu Liyong Wang School of International Trade and Economics Central University of Finance and Economics Beijing 102206, China E-Mail: liyongecon@126.com Longtian Zhang School of International Trade and Economics Central University of Finance and Economics Beijing 102206, China Tel: 12234232 E-Mail: zhanglongtian@cufe.edu.cn

Concentration, Market Power, and Misallocation: The Role of Endogenous Customer Acquisition - Afrouzi, Hassan; Drenik, Andres; Kim, Ryan (National Bureau of Economic Research Working Paper Series, 2023)
This paper explores how different margins of market share are related to markups. Using merged microdata on producers and consumers, we document that a firm’s market share is mainly related to its number of customers, while its price-cost markup is associated only with its average sales per customer. We develop a new model that reflects this empirical evidence and the endogenous nature of customer acquisition. When calibrated, this model predicts a higher degree of markup dispersion, which suggests greater efficiency losses due to customer misallocation. An analysis of the efficient allocation in this model reveals that compared with the equilibrium, aggregate TFP and output are 10.8% and 14% higher, respectively.
Author contact info: Hassan Afrouzi Department of Economics Columbia University 420 W 118th Street New York, NY 10027 E-Mail: ha2475@columbia.edu Andres Drenik Department of Economics University of Texas at Austin 2225 Speedway Austin, TX 78712 Tel: 512-471-8600 E-Mail: andres.drenik@austin.utexas.edu Ryan Kim School of Advanced International Studies Johns Hopkins University 1717 Massachusetts Ave NW Washington, DC 20036 E-Mail: rkim59@jhu.edu

Competitive Capture of Public Opinion - Alonso, Ricardo; Padró I Miquel, Gerard (National Bureau of Economic Research Working Paper Series, 2023)
We propose a general equilibrium model where two special interest groups (SIGs) compete to influence public opinion. Citizens with heterogeneous priors over a binary state of the world receive reports drawn from a continuous message space by a variety of sources. The two opposite SIGs attempt to push their own agenda (one SIG to persuade citizens towards one state of the world, the other towards the alternative state of the world) by capturing the messages these sources convey. We characterize the equilibrium level of capture of each source by competing SIGs as well as the equilibrium level of information transmission. We show that capture increases the prevalence of the ex ante most informative messages. As a consequence, rational citizens discount such informative reports. Opposite capturing efforts do not cancel each other and result in a loss of social learning. We show that efforts to capture an information source are strategic substitutes: citizens' skepticism of messages favoring the view of the SIG that is expected to capture that source dampen the incentives of the opposite SIG. Strategic substitution exacerbates horizontal differentiation so the information landscape becomes more polarized. We finally show that increased demand for information when SIGs want to fire up the base can exacerbate differentiation, increase capture, and reduce information transmission in equilibrium.
Author contact info: Ricardo Alonso Department of Management London School of Economics Houghton Street LondonWC2A 2AE United Kingdom E-Mail: R.Alonso@lse.ac.uk Gerard Padró I Miquel Departments of Economics and Political Science Yale University Rosenkranz Hall 335 115 Prospect Street New Haven, CT 06520 E-Mail: gerard.padroimiquel@yale.edu

How Good Are Privacy Guarantees? Platform Architecture and Violation of User Privacy - Acemoglu, Daron; Fallah, Alireza; Makhdoumi, Ali; Malekian, Azarakhsh; Ozdaglar, Asuman (National Bureau of Economic Research Working Paper Series, 2023)
Many platforms deploy data collected from users for a multitude of purposes. While some are beneficial to users, others are costly to their privacy. The presence of these privacy costs means that platforms may need to provide guarantees about how and to what extent user data will be harvested for activities such as targeted ads, individualized pricing, and sales to third parties. In this paper, we build a multi-stage model in which users decide whether to share their data based on privacy guarantees. We first introduce a novel mask-shuffle mechanism and prove it is Pareto optimal—meaning that it leaks the least about the users’ data for any given leakage about the underlying common parameter. We then show that under any mask-shuffle mechanism, there exists a unique equilibrium in which privacy guarantees balance privacy costs and utility gains from the pooling of user data for purposes such as assessment of health risks or product development. Paradoxically, we show that as users’ value of pooled data increases, the equilibrium of the game leads to lower user welfare. This is because platforms take advantage of this change to reduce privacy guarantees so much that user utility declines (whereas it would have increased with a given mechanism). Even more strikingly, we show that platforms have incentives to choose data architectures that systematically differ from those that are optimal from the user’s point of view. In particular, we identify a class of pivot mechanisms, linking individual privacy to choices by others, which platforms prefer to implement and which make users significantly worse off.
Author contact info: Daron Acemoglu Department of Economics, E52-446 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/253-1927 Fax: 617/253-1330 E-Mail: daron@mit.edu Alireza Fallah E-Mail: afallah@mit.edu Ali Makhdoumi Duke University 100 Fuqua Drive Durham, NC 27708 United States E-Mail: ali.makhdoumi@duke.edu Azarakhsh Malekian Rotman School of Management University of Toronto E-Mail: azarakhsh.malekian@rotman.utoronto.ca Asuman Ozdaglar Department of Electrical Engineering and Computer Science Massachusetts Institute of Technology 77 Massachusetts Ave, E40-130 Cambridge, MA 02139 E-Mail: asuman@mit.edu

Effects of the Expanded Child Tax Credit on Household Spending: Estimates Based on U.S. Consumer Expenditure Survey Data - Schild, Jake; Collyer, Sophie M; Garner, Thesia; Kaushal, Neeraj; Lee, Jiwan; Waldfogel, Jane; Wimer, Christopher T (National Bureau of Economic Research Working Paper Series, 2023)
The Child Tax Credit (CTC) was substantially expanded through the American Rescue Plan Act of 2021, making the benefit more generous, fully refundable, and more periodic. Early studies documented the positive impact of the expanded CTC on reducing poverty and food insufficiency, but there is little research on the impact it had on household spending and, specifically, its impact on child-related spending. We use data from the Consumer Expenditure Interview Survey (CE) and impute CTC payments for all qualifying households to examine whether the expanded CTC increased spending overall, in major categories, and on specific items related to children's education and development. Our findings indicate that families utilized the CTC payments to enhance the well-being of both their children and the entire household. For each $100 of imputed CTC payment, our models show that families spent $75, mainly on food ($28), housing ($31), and child-related goods and services ($15). We also found that the spending response for low-income households, Hispanic households, and non-Hispanic Black households was larger than the spending response of the average household. By analyzing the variation in spending response by race and ethnicity, we are providing policy makers with valuable insights into the experience of marginalized communities.
Author contact info: 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 Sophie M. Collyer E-Mail: sophie.collyer@columbia.edu Thesia Garner Bureau of Labor Statistics U.S. Department of Labor 2 Massachusetts Avenue, NE Washington, DC 20212 Tel: 202 691 6576 E-Mail: garner.thesia@bls.gov Neeraj Kaushal Columbia University School of Social Work 1255 Amsterdam Avenue New York, NY 10027 Tel: 212/851-2235 Fax: 212/851-2204 E-Mail: nk464@columbia.edu Jiwan Lee E-Mail: jl6054@columbia.edu Jane Waldfogel Columbia University School of Social Work 1255 Amsterdam Avenue New York, NY 10027 E-Mail: jw205@columbia.edu Christopher Wimer Columbia University 1255 Amsterdam Avenue Office 735 New York, NY 10027 E-Mail: cw2727@columbia.edu

Praying for Rain - Espín-Sánchez, José-Antonio; Gil-Guirado, Salvador; Ryan, Nicholas (National Bureau of Economic Research Working Paper Series, 2023)
We study the climate as a determinant of religious belief. People believe in the divine when religious authorities (the “church”) can credibly intervene in nature on their behalf. We present a model in which nature sets the pattern of rainfall over time and the church chooses when optimally to pray in order to persuade people that it has caused the rain. We present evidence from prayers for rain in Murcia, Spain that the church follows such an optimal policy and that its prayers therefore predict rainfall. In our model, praying for rain can only persuade people to believe if the hazard of rainfall during a dry spell is increasing over time, so that the probability of rainfall is highest when people most want rain. We test this prediction in an original data set of whether ethnic groups around the world traditionally prayed for rain. We find that prayer for rain is more likely among ethnic groups dependent on intensive agriculture for subsistence and that ethnic groups facing an increasing rainfall hazard are 53% more likely to pray for rain, consistent with our model. We interpret these findings as evidence for the instrumentality of religious belief.
Author contact info: José-Antonio Espín-Sánchez Department of Economics Yale University Box 208269 New Haven, CT 06520-8269 E-Mail: jose-antonio.espin-sanchez@yale.edu Salvador Gil-Guirado Department of Geography University of Murcia Campus de la Merced 30001 Murcia Spain E-Mail: salvador.gil1@um.es Nicholas Ryan Department of Economics Yale University P. O. Box 208269 New Haven, CT 06520 Tel: 203/432-6227 E-Mail: nicholas.ryan@yale.edu

The Economics of Tropical Deforestation - Balboni, Clare A; Berman, Aaron; Burgess, Robin; Olken, Benjamin A (National Bureau of Economic Research Working Paper Series, 2023)
Two factors have elevated recent academic and policy interest in tropical deforestation: first, the realization that it is a major contributor to climate change; and second, a revolution in satellite-based measurement that has revealed that it is proceeding at a rapid rate. We begin by reviewing the methodological advances that have enabled measurement of forest loss at a fine spatial resolution across the globe. We then develop a simple benchmark model of deforestation based on classic models of natural resource extraction. Extending this approach to incorporate features that characterize deforestation in developing countries---pressure for land use change, significant local and global externalities, weak property rights, and political economy constraints---provides us with a framework for reviewing the fast-growing empirical literature on the economics of deforestation in the tropics. This combination of theory and empirics provides insights not only into the economic drivers and impacts of tropical deforestation but also into policies that may affect its progression. We conclude by identifying areas where more work is needed in this important body of research.
Author contact info: Clare A. Balboni London School of Economics Houghton Street London, WC2A 2AE E-Mail: c.a.balboni@lse.ac.uk Aaron Berman Department of Economics MIT 77 Massachusetts Avenue E52-300 Cambridge, MA 02139 E-Mail: bermana@mit.edu Robin Burgess Department of Economics, 32L.3.03 London School of Economics Houghton Street London WC2A 2AE United Kingdom E-Mail: r.burgess@lse.ac.uk Benjamin A. Olken Department of Economics, E52-542 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/588-1437 Fax: 617/868-2742 E-Mail: bolken@mit.edu

Choose Your Moments: Peer Review and Scientific Risk Taking - Carson, Richard T; Graff Zivin, Joshua S; Shrader, Jeffrey G (National Bureau of Economic Research Working Paper Series, 2023)
Science funding agencies such as the NIH, NSF, and their counterparts around the world are often criticized for being too conservative, funding incremental innovations over more radical but riskier projects. One explanation for their conservatism is the way the agencies use peer review of scientific proposals. Peer review is the cornerstone of research allocation decisions, but agencies typically base decisions on a simple average of peer review scores. More novel ideas are less likely to gain consistently high ratings across evaluators and are less likely to be funded. Using a discrete choice experiment conducted with a large sample of active biomedical researchers, we find that—in contrast to funding agencies—scientists systematically prefer to fund projects with more reviewer dissensus. Rather than purely focusing on the first moment of the distribution of reviewer scores, they also value the second moment. Further, scientists with the greatest domain expertise on a proposal are more enthusiastic about dissensus, and while appetite for dissensus shrinks as budgets become tighter, it does not disappear completely. Applying our estimates to prior studies mimicking NIH’s review process shows that incorporating expert scientists’ preferences for dissensus would change marginal funding decisions for ten percent of projects worth billions of dollars per year.
Author contact info: Richard T. Carson Department of Economics University of California, San Diego ECON 323 9500 Gilman Dr. #0508 La Jolla, CA 92093-0508 E-Mail: rcarson@ucsd.edu Joshua S. Graff Zivin University of California, San Diego 9500 Gilman Drive, MC 0519 La Jolla, CA 92093-0519 Tel: 858/822-6438 E-Mail: jgraffzivin@ucsd.edu Jeffrey G. Shrader 420 W 118th St. New York, NY 10027 E-Mail: jgs2103@columbia.edu

Energy and the Environment in Economic History - Clay, Karen (National Bureau of Economic Research Working Paper Series, 2023)
Both energy and the environment are inputs into production, influencing the economy and the overall welfare of the population. While the economy itself has been a central focus of economic history from its inception, energy and the environment have received more limited attention. On the energy side, the relative lack of attention reflects economic historians' focus on labor, capital, and technology. Two areas that have received attention are the effects of energy on the spatial location of economic activity and the importance of coal for the Industrial Revolution. On the environmental side, the relative lack of attention likely reflects the focus on the positive aspects of industrialization and the difficulty of finding data related to air, water, and land pollution. One environmental area that has received attention is water pollution from human waste, which had large mortality impacts, particularly in cities. This essay reviews long run trends in energy use and water and air pollution and then turns to the energy and environmental literatures in economic history. The conclusion offers some thoughts regarding opportunities for further research in energy and the environment.
Author contact info: Karen Clay Heinz College Carnegie Mellon University 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 412/268-4197 Fax: 412/268-7357 E-Mail: kclay@andrew.cmu.edu

Enhancing Human Capital in Children: A Case Study on Scaling - Agostinelli, Francesco; Avitabile, Ciro; Bobba, Matteo (National Bureau of Economic Research Working Paper Series, 2023)
This paper provides novel insights into the science of scaling by examining an educational mentoring program in Mexico. The analysis encompasses two independent field experiments, and seizes a unique opportunity to learn from the government's implementation of the same intervention. While the program originally implemented at scale demonstrates limited effectiveness, the introduction of a new modality with enhanced mentor training significantly improves children's outcomes. Mentor-parent interactions are found to stimulate parental engagement at the community-school level, which emerges as a critical factor for the scalability of the program. Our findings offer compelling evidence on the socially determined drivers of education interventions at scale.
Author contact info: Francesco Agostinelli University of Pennsylvania Perelman Center for Political Science and Economics 133 South 36th Street Philadelphia, PA 19104 E-Mail: fagostin@upenn.edu Ciro Avitabile The World Bank 1818 H St. N.W. Washington, DC 20433 E-Mail: cavitabile@worldbank.org Matteo Bobba Toulouse School of Economics University of Toulouse Capitole 1, Esplanade de l'Université Toulouse Cedex 06 31080 France E-Mail: matteo.bobba@tse-fr.eu

Sibling Spillovers May Enhance the Efficacy of Targeted School Policies - Figlio, David N; Karbownik, Krzysztof; Özek, Umut (National Bureau of Economic Research Working Paper Series, 2023)
Public policies often target individuals but within-family externalities of such interventions are understudied. Using a regression discontinuity design, we document how a third grade retention policy affects both the target children and their younger siblings. The policy improves test scores of both children while the spillover is up to 30% of the target child effect size. The effects are particularly pronounced in families where one of the children is disabled, for boys, and in immigrant families. Candidate mechanisms include improved classroom inputs and parental school choice.
Author contact info: David N. Figlio University of Rochester 220 Hutchinson Road Rochester, NY 14611 E-Mail: david.figlio@rochester.edu Krzysztof Karbownik Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322 E-Mail: krzysztof.karbownik@emory.edu Umut Özek RAND Corporation 1200 S Hayes Street Arlington, VA 22202 Tel: 7034131100x5155 E-Mail: uozek@rand.org

The Dollar in an Era of International Retrenchment - Chahrour, Ryan; Valchev, Rosen (National Bureau of Economic Research Working Paper Series, 2023)
Recent trends suggest the world economy may be tending towards an equilibrium with two distinct trading blocs, each internally integrated, but with significant isolation between the blocs. This paper uses a quantitative theory to explore how far this bifurcation would need to go to pose a threat to the special role of the dollar in international exchange. The theory emphasizes the joint determination of countries' portfolio choices and trading currency. We find that unilateral protectionism on the part of the US could modestly reinforce the dollar's dominant role, but that policies directly supporting the Chinese yuan's use in trade could end the dollar's continued dominance if implemented over a long-enough period. Tit-for-tat responses between just the US and China would likely leave the dollar's role essentially unchanged. If both countries coordinate protectionist policies within their trading blocs, however, a transition away from global dollar dominance becomes far more likely.
Author contact info: Ryan Chahrour 404 Uris Hall Ithaca, NY 14853 E-Mail: ryan.chahrour@cornell.edu Rosen Valchev Department of Economics Boston College 140 Commonwealth Avenue Chestnut Hill, MA 02467 E-Mail: valchevr@gmail.com

Who's on (the 1040) First? Determinants and Consequences of Spouses' Name Order on Joint Returns - Lin, Emily Y; Slemrod, Joel; Smith, Evelyn A; Yuskavage, Alexander (National Bureau of Economic Research Working Paper Series, 2023)
Married couples filing a joint return put the male name first 88.1% of the time in tax year 2020, down from 97.3% in 1996. The man’s name is more likely to go first the larger is the fraction of the couple’s allocable income that goes to him, and the older is the couple. Based on state averages, putting the man’s name first is strongly associated with conservative political attitudes, religiosity, and a survey-based measure of sexist attitudes. Risk-taking and tax noncompliance are both associated with the man’s name going first.
Author contact info: Emily Y. Lin E-Mail: Emily.Lin@treasury.gov Joel Slemrod University of Michigan 701 Tappan Street Room R5396 Ann Arbor, MI 48109-1234 Tel: 734/936-3914 Fax: 734-615-4323 E-Mail: jslemrod@umich.edu Evelyn A. Smith University of Michigan LSA Department of Economics E-Mail: eannes@umich.edu Alexander Yuskavage Office of Tax Analysis U.S. Treasury Department Washington, DC 20220 E-Mail: Alexander.Yuskavage@treasury.gov

Bridging the Gap: Mismatch Effects and Catch-Up Dynamics in a Brazilian College Affirmative Action - Oliveira, Rodrigo; Santos, Alei; Severnini, Edson R (National Bureau of Economic Research Working Paper Series, 2023)
Affirmative action in higher education can lead to mismatch, where students admitted through preferential treatment struggle academically due to inadequate preparation before college. Although some students may face initial challenges, by providing access to quality education for talented individuals who might have otherwise been overlooked due to systemic disadvantages, these programs may enable students to bridge the gap and catch up to their peers. In this study, we examine the effects of a quota-type affirmative action policy on gaps in college outcomes between potential beneficiaries and non-beneficiaries. Using comprehensive administrative data from a leading Brazilian university which implemented affirmative action in 2005, we find that compared to their non-quota peers, potential quota beneficiaries are less likely to progress smoothly through college and less likely to graduate, a result that is mostly driven by those who would not be admitted to the university otherwise. Notably, however, most of these differences shrink as the students progress through college, suggesting a catch-up effect between those groups. While potential quota students initially face challenges, resulting in a reduced course load in their early college years, they compensate by taking more credits in later years to ultimately graduate.
Author contact info: Rodrigo Oliveira UNU-WIDER Katajanokanlaituri 6 B FI-00160 Helsinki Finland E-Mail: oliveira@wider.unu.edu Alei Santos Getulio Vargas Foundation (FGV) Sao Paulo School of Economics E-Mail: santos.alei@gmail.com Edson R. Severnini H. John Heinz III College Carnegie Mellon University 4800 Forbes Ave #2114B Pittsburgh, PA 15213 Tel: 510/860-1808 E-Mail: ersevernini@gmail.com

Foreign Residents and the Future of Global Cities - Guerreiro, Joao; Rebelo, Sergio; Teles, Pedro (National Bureau of Economic Research Working Paper Series, 2023)
Global cities are attracting an increasing number of tourists and foreign residents. This surge generates capital gains for property owners but negatively impacts renters and creates potentially important production, congestion, and amenities externalities. We study the optimal policy toward local and foreign residents in a model with key features emphasized in policy debates. Using this model, we provide sufficient statistics to calculate the optimal tax/transfer policies. These policies involve implementing transfers to internalize agglomeration, congestion, and other potential externalities. Importantly, it is not optimal to restrict, tax, or subsidize home purchases by foreign residents.
Author contact info: Joao Guerreiro Department of Economics University of California Los Angeles Los Angeles, CA Tel: 8477307182 E-Mail: jguerreiro@econ.ucla.edu Sergio Rebelo Northwestern University Kellogg School of Management Department of Finance Leverone Hall Evanston, IL 60208-2001 Tel: 847/467-2329 Fax: 847/491-5719 E-Mail: s-rebelo@northwestern.edu Pedro Teles Banco de Portugal R. Francisco Ribeiro 2 1150 Lisboa Portugal E-Mail: pteles@ucp.pt

Policy Uncertainty Reduces Green Investment - Wang, Mengyu; Wurgler, Jeffrey; Zhang, Hong (National Bureau of Economic Research Working Paper Series, 2023)
Government subsidies are often used to stimulate environment-friendly investment. We find that Chinese firms reduce green investment as the uncertainty of subsidies rises. This effect is identified from weather-driven fluctuations in air pollution that lead to fluctuations in subsidy allocations: Firms in cities where weather-driven subsidy uncertainty is high engage in less green R&D investment, patent applications, and research staff. Industries that are heavy emitters and those focused on environmental technologies are more affected. The results suggest that policy uncertainty may originate not only from political and macroeconomic shocks but from behavioral mechanisms that link policy to salient recent conditions.
Author contact info: Mengyu Wang PBCSF Tsinghua Unversity 43 Chengfu Road, Haidian District Beijing 100083 China Tel: +8618600862368 E-Mail: wangmy@pbcsf.tsinghua.edu.cn Jeffrey Wurgler Stern School of Business, Suite 9-190 New York University 44 West 4th Street New York, NY 10012 Tel: 212/998-0367 Fax: 212/995-4233 E-Mail: jwurgler@stern.nyu.edu Hong Zhang Singapore Management University E-Mail: hongzhang@smu.edu.sg

Gender-Neutral Language and Gender Disparities - Cohen, Alma; Karelitz, Tzur; Kricheli-Katz, Tamar; Pumpian, Sephi; Regev, Tali (National Bureau of Economic Research Working Paper Series, 2023)
This study investigates empirically whether and how the use of gender-neutral language affects the performance of women and men in real high-stakes exams. We make use of a natural experiment in which the institute administering Israel’s standardized college admission tests amended the language used in its exams, making test language more gender neutral. We find that the change to a more gender-neutral language was associated with a significant improvement in the performance of women on quantitative questions, which meaningfully reduced the gender gap between male and female performance on these questions. However, the change did not affect female performance on verbal questions nor male performance on either quantitative or verbal questions. Our findings are consistent with the hypothesis that gendered language may introduce a "stereotype threat" that adversely affects women’s performance in tasks in which they are stereotypically perceived to underperform. Our findings have significant implications for the ongoing academic and policy discussions regarding the use and effects of gender-neutral language.
Author contact info: Alma Cohen Harvard Law School 1525 Massachusetts Avenue Cambridge, MA 02138 E-Mail: alcohen@law.harvard.edu Tzur Karelitz E-Mail: tzur@nite.org.il Tamar Kricheli-Katz E-Mail: tamarkk@tauex.tau.ac.il Sephi Pumpian E-Mail: sephi@nite.org.il Tali Regev Reichman University University St. Herzliya 4610101 Israel E-Mail: tali.regev@gmail.com

Exporting Ideology: The Right and Left of Foreign Influence - Antràs, Pol; Padró I Miquel, Gerard (National Bureau of Economic Research Working Paper Series, 2023)
We present an economic rationale for countries resorting to foreign influence to export their ideology to other nations. Our model incorporates two fundamental elements: redistribution of the tax burden between capital owners and workers, and international capital mobility. The model highlights the role of ideology in shaping both the taxes implemented by governments and the cross-border externalities of these policy choices. Pro-capital governments set lower capital taxes than pro-labor governments. Importantly, pro-capital governments benefit from other countries setting low capital taxes, while pro-labor governments' efforts to shift the tax burden onto capital owners are facilitated by higher capital taxes abroad. These cross-border externalities create strong incentives for engaging in foreign influence activities. We solve for a political equilibrium in which incumbent governments may exert costly actions that probabilistically affect the electoral outcome in other countries. In equilibrium, pro-capital parties exert influence aimed at promoting pro-capital parties and policies worldwide, while pro-labor governments carry out foreign influence activities aimed at boosting pro-labor parties and policies in other countries.
Author contact info: Pol Antràs Department of Economics Harvard University 1805 Cambridge Street Littauer Center 210 Cambridge, MA 02138 Tel: 617/495-1236 Fax: 617/495-8570 E-Mail: pantras@fas.harvard.edu Gerard Padró I Miquel Departments of Economics and Political Science Yale University Rosenkranz Hall 335 115 Prospect Street New Haven, CT 06520 E-Mail: gerard.padroimiquel@yale.edu

How Do Firms Respond to State Retirement Plan Mandates? - Bloomfield, Adam; Lee, Kyung Min; Philbrick, Jay; Slavov, Sita (National Bureau of Economic Research Working Paper Series, 2023)
This paper investigates the effect of state retirement plan mandates on the supply of employer-sponsored retirement plans (ESRPs) by firms. These policies require employers to either (1) offer ESRPs to workers or (2) facilitate automatic payroll deductions that are deposited into individual retirement accounts (IRAs) established for workers by the state. In this paper, we utilize individual-level data from the Current Population Survey (CPS) and firm-level data from Form 5500 filings to examine the effect of these automatic-enrollment IRA (“auto-IRA”) policies on employer decisions to offer, and worker inclusion in, ESRPs. We exploit variation in the timing of implementation across states and firm size categories and estimate that auto-IRA policies increase the probability that an individual works for a firm with an ESRP by roughly 3 percent, and the probability that the individual participates in that ESRP by around 7 percent. These policies also increase the number of ESRP participants at the average firm in our sample by 3-5 percent.
Author contact info: Adam Bloomfield U.S. Federal Deposit Insurance Corporation (FDIC) 550 17th St NW Washington, DC 20429 E-Mail: abloomfieldclagett@fdic.gov Kyung Min Lee The World Bank 1818 H St., NW Washington, DC 20433 E-Mail: klee12@worldbank.org Jay R. Philbrick Brown University 69 Brown St., Mail# 7657 Providence, RI 02912 E-Mail: jay_philbrick@brown.edu Sita Slavov Schar School of Policy and Government George Mason University 3351 Fairfax Drive, MS 3B1 Arlington, VA 22201 Tel: 703/993-3171 E-Mail: sslavov@gmu.edu

How Costs Limit Contraceptive Use among Low-Income Women in the U.S.: A Randomized Control Trial - Bailey, Martha J; Lang, Vanessa Wanner; Prettyman, Alexa; Vrioni, Iris; Bart, Lea J; Eisenberg, Daniel; Fomby, Paula; Barber, Jennifer; Dalton, Vanessa (National Bureau of Economic Research Working Paper Series, 2023)
The Affordable Care Act eliminated cost-sharing for contraception for Americans with health insurance, but substantial cost sharing remains for uninsured individuals who seek care through Title X—a national family planning program that provides patient-centered, subsidized contraception and reproductive health services in the U.S. This paper uses a randomized control trial (RCT) to examine how cost-sharing at Title X providers affects the choice of contraceptive method. The study randomizes vouchers that cover any contraceptive method up to the cost of 50% or 100% of a name-brand intra-uterine device (IUD). The results show that Title X clients are highly constrained by the out-of-pocket costs of contraception. The offer of free contraception is associated with a 40% increase in the use of any birth control method (ITT effect), a 94% increase in the value of birth control purchased, a 328-day (226%) increase in the period covered by contraceptives purchased, and a 324% increase in the likelihood of choosing a long-acting, reversible method (an IUD or implant). The results imply that eliminating the costs of contraception for Title X clients nationwide would reduce undesired pregnancies by 5.3%, birth rates by 3.9%, and abortions by 8.3%, and save $1.43 billion in the first year of the program.
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 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 Alexa Prettyman E-Mail: cprettyman@towson.edu Iris Vrioni Department of Economics 611 Tappan St. Ann Arbor, MI 48109 E-Mail: ivrioni@umich.edu Lea J. Bart University of Michigan Department of Economics 611 Tappan St Ann Arbor, MI 48109 E-Mail: leajbart@umich.edu Daniel Eisenberg Department of Health Policy and Management UCLA Fielding School of Public Health E-Mail: danieleisenberg@ucla.edu Paula Fomby Department of Sociology University of Pennsylvania 1380 Locust Walk Philadelphia, PA 19104 E-Mail: pfomby@sas.upenn.edu Jennifer Barber Indiana University Department of Sociology and Kinsey Institute Ballantine Hall 774 Bloomington, IN 47405-7103 E-Mail: jenbarb@iu.edu Vanessa Dalton E-Mail: daltonvk@med.umich.edu

The Impact of Monetary Policy on Bank Funding Composition: The Role of Deposit Market Regulation - Chen, Kaiji; Xiao, Yiqing; Zha, Tao (National Bureau of Economic Research Working Paper Series, 2023)
In well-developed financial markets, wholesale funding comoves negatively with retail deposits in response to interest rate changes, thereby weakening monetary policy transmission. By contrast, our study finds that in economies such as China where deposit rate ceilings are regulated, (i) retail deposits and wholesale funding comove positively as the policy rate changes, and (ii) wholesale funding strengthens the transmission of the policy rate to bank lending. We develop a theoretical model underscoring the role of deposit market regulation for the impact of monetary policy on bank funding composition in the context of the world's largest emerging market economy.
Author contact info: Kaiji Chen Emory University 1602 Fishburne Drive 1602 Fishburne Dr. Atlanta, GA 30322-0001 United States Tel: 4047272944 E-Mail: kaiji.chen@emory.edu Yiqing Xiao 5th Yiheyuan Road Haidian District Beijing China E-Mail: yiqingxiao@nsd.pku.edu.cn Tao Zha Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322-2240 E-Mail: tzha@emory.edu

China's Macroeconomic Development: The Role of Gradualist Reforms - Chen, Kaiji; Zha, Tao (National Bureau of Economic Research Working Paper Series, 2023)
This paper reviews recent literature on China's macroeconomic development, emphasizing the critical role of the gradualist approach over the past four decades. Beyond China's structural transformation, we explore various aspects such as high saving rates, the housing boom, an expanding current account surplus, and rising inequality. We propose a unifying framework that encapsulates key development stages, contrasting gradualism with a laissez-faire counterfactual. Our analysis illustrates how China's gradual policy reforms, amidst highly imperfect financial markets, have effectively helped spur GDP growth throughout its macroeconomic evolution. We highlight the tradeoffs between accelerating GDP growth and safeguarding China's long-term financial stability.
Author contact info: Kaiji Chen Emory University 1602 Fishburne Drive 1602 Fishburne Dr. Atlanta, GA 30322-0001 United States Tel: 4047272944 E-Mail: kaiji.chen@emory.edu Tao Zha Department of Economics Emory University Rich Memorial Building 1602 Fishburne Drive Atlanta, GA 30322-2240 E-Mail: tzha@emory.edu

In-Kind Welfare Benefits and Reincarceration Risk: Evidence from Medicaid - Burns, Marguerite; Dague, Laura (National Bureau of Economic Research Working Paper Series, 2023)
Most of the 600,000 adults returning to the community from state and federal prisons annually in the U.S. carry substantial debt, have low income and low education, and limited formal employment prior to entering prison. Upon reentry, they face financial hardship, high rates of morbidity and mortality, and high incidence of re-offense. Medicaid coverage, as a means-tested transfer program providing subsidized health insurance, may influence reincarceration through both financial and health channels. In this paper, we provide a comprehensive look at the effects of public health insurance coverage on post-release behavior of formerly incarcerated adults. We study a natural experiment in which two separate state policy changes resulted in a 60 percentage point increase in Medicaid enrollment at release. Using a series of linked individual level administrative datasets, we estimate the effects of this change in Medicaid enrollment, finding declines in reincarceration, increased employment, and higher health care use. Leveraging data on financial concerns and need for mental health and substance use treatment to examine mechanisms, we find support for a financial channel and mixed support for health channels. Policies that enhance access to healthcare and provide financial security for this population may have significant benefits for individuals and society.
Author contact info: Marguerite Burns Department of Population Health Sciences University of Wisconsin WARF Building Madison WI 53726 E-Mail: meburns@wisc.edu Laura Dague Bush School of Government and Public Service Texas A&M University 4220 TAMU College Station, TX 77843 Tel: 979/845-6591 E-Mail: dague@tamu.edu

Design-Based Identification with Formula Instruments: A Review - Borusyak, Kirill; Hull, Peter; Jaravel, Xavier (National Bureau of Economic Research Working Paper Series, 2023)
Many studies in economics use instruments or treatments which combine a set of exogenous shocks with other predetermined variables by a known formula. Examples include shift-share instruments and measures of social or spatial spillovers. We review recent econometric tools for this setting, which leverage the assignment process of the exogenous shocks and the structure of the formula for identification. We compare this design-based approach with conventional estimation strategies based on conditional unconfoundedness, and contrast it with alternative strategies that leverage a model for unobservables.
Author contact info: Kirill Borusyak Department of Agricultural and Resource Economics University of California, Berkeley 222 Giannini Hall Berkeley, CA 94720 Tel: 5106465784 E-Mail: k.borusyak@berkeley.edu Peter Hull Department of Economics Box B, Brown University Providence RI 02912 E-Mail: peter_hull@brown.edu Xavier Jaravel London School of Economics Houghton Street London WC2A 2AE UK E-Mail: x.jaravel@lse.ac.uk

The Impact of Fear on Police Behavior and Public Safety - Cho, Sungwoo; Gonçalves, Felipe; Weisburst, Emily (National Bureau of Economic Research Working Paper Series, 2023)
We examine how changes in the salience of workplace risk affect police behavior and public safety. Specifically, we investigate cases of police officer deaths while on duty. Officers respond to a peer death by decreasing arrest activity for one to two months, consistent with heightened fear. Reductions are largest for low-level arrests and are more pronounced in smaller cities. Crime does not increase on average during this period, nor do we observe crime spikes in cities with larger or longer arrest declines. While shocks in fatality risk generate substantial enforcement responses, officer fear is unlikely to harm public safety.
Author contact info: Sungwoo Cho Department of Economics University of California, Los Angeles 8283 Bunche Hall Los Angeles, CA 90095 E-Mail: chosw13@g.ucla.edu Felipe M. Gonçalves Department of Economics University of California, Los Angeles 8283 Bunche Hall Los Angeles, CA 90095 E-Mail: fgoncalves@econ.ucla.edu Emily K. Weisburst UCLA Luskin School of Public Affairs Department of Public Policy 337 Charles E Young Dr E Los Angeles, CA 90095 Tel: 860/335-8907 E-Mail: weisburst@ucla.edu

Treatment for Mental Health and Substance Use: Spillovers to Police Safety - Deza, Monica; Lu, Thanh; Maclean, Johanna Catherine; Ortega, Alberto (National Bureau of Economic Research Working Paper Series, 2023)
We study the effect of community access to mental health and substance use treatment on police officer safety, proxied with on-duty assaults on officers. Police officers often serve as first-responders to people experiencing mental health and substance use crises, which can place police officers at risk. Combining agency-level data on police officer on-duty assaults and county-level data on treatment centers that offer mental health and substance use care, we estimate panel fixed-effects regressions. An additional four centers per county (the average annual increase observed in our data) leads to a 1.3% reduction per police agency in on-duty police officers assaults.
Author contact info: Monica Deza Department of Economics Syracuse University Maxwell School of Citizenship and Public Affairs 426 Eggers Hall Syracuse, NY 13244 E-Mail: mdeza@syr.edu Thanh Lu Health Economics Program Center for Public Health Methods RTI International 3040 East Cornwallis Road Research Triangle Park, NC 27709 E-Mail: tlu@rti.org Johanna Catherine Maclean Schar School of Policy and Government George Mason University Mason Square Van Metre Hall 3351 Fairfax Drive Arlington, VA 22201 E-Mail: jmaclea@gmu.edu Alberto Ortega O'Neill School of Public and Environmental Affairs Indiana University 1315 E 10 St Bloomington, IN 47401 E-Mail: alorte@iu.edu