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Abhra Roy
April 8, 2021
Article number: 000010151520200226
Abstract
We analyze a model of media bias under government capture and a free press. The government wants citizens to invest in a project. Citizens gain from investing only if the state of the economy is good. The state is unobserved. The media firm receives a noisy signal about the actual state and makes a report about whether or not the state of the economy is good. Citizens read the report and decide whether or not to invest. In this context, we show that media bias under government capture may be smaller (greater) than that under free press if the cost of investment is sufficiently high (low) provided that the signal noise is below a certain threshold. Finally, we show that the difference between the bias under government capture and free press diverges (converges) when the cost of investment is sufficiently high (low) in response to a reduction in noise.
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Matti Hovi, Jani-Petri Laamanen
March 22, 2021
Article number: 20200204
Abstract
We examine the roles of macro-level adaptation — including social comparison effects becoming more important over time — and macroeconomic loss aversion in the time-series relationship between national income and subjective well-being. Models allowing for these phenomena are applied to cross-country panel data. We find evidence for macroeconomic loss aversion that becomes more important over time: the effects of economic growth become small and statistically insignificant in the long run, whereas the effects of contractions are large and long-lasting. The results are consistent with the Easterlin paradox and point to it being explained by macro-level adaptation to economic growth. Our results highlight the importance of allowing for both dynamics to distinguish long-run from short-run effects and asymmetries to recognize the important effects of contractions. Failing to do the former leads to a misleading impression of the long-run relationship between economic growth and well-being.
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Massimiliano Ferraresi
March 8, 2021
Article number: 20200380
Abstract
This paper exploits the political cycle of Italian municipalities to test for the presence of strategic interactions in the collection of local taxation. The revenue from the personal income tax surcharge—a tax tool of low salience—is (positively) plagued by political manipulation and is found to be a strategic complement, but only when mayors run for re-election, a finding consistent with the yardstick competition hypothesis. More salient fiscal tools, such as property tax and user fees and charges, are also (negatively) affected by budget cycles, but they do not appear to be spatially correlated.
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Marcello D’Amato, Christian Di Pietro, Mariafortuna Pietroluongo, Marco M. Sorge
February 22, 2021
Article number: 20200067
Abstract
Non-profit organizations (NPOs), such as financial cooperatives, have a longstanding tradition in advanced market economies. We develop a model of ‘mixed credit markets’ where pure for-profit institutions (e.g. commercial banks) can coexist with financial NPOs which feature a concern for inter-member surplus redistribution (e.g. credit cooperatives) and enjoy privileged borrower-specific information vis-à-vis their for-profit peers, while facing higher funding costs. We formally investigate market competition between the two alternative financial organizations both offering contracts whose terms entail cross subsidization. We argue that heterogeneity in organizational models can explain stable coexistence under competitive conditions, and also help us interpret the variety of market outcomes — in terms of e.g. overall coverage and market shares — as documented in modern financial systems. Importantly, the viability of redistribution-oriented NPOs is shown not to rest on under-investment issues or concerns about market power, for they can successfully operate in markets where credit rationing never arises.
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Sieuwerd Gaastra, Claudio Labanca
February 19, 2021
Article number: 20200269
Abstract
We study the peer effects of English Learners on the test scores of native English speaking students using a new instrument to account for the endogeneity of students’ English Learner status. Relative to what OLS estimates would suggest, we find smaller and insignificant peer effects of English Learners on native English speaking students in California elementary schools.
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David Carroll, Jaai Parasnis, Massimiliano Tani
January 22, 2021
Article number: 20200236
Abstract
Across countries, almost all primary and pre-primary teachers are women while few men in the occupation tend to specialise in secondary schooling and administration. We investigate the decision to become a teacher versus alternative occupations for graduates in Australia over the past 15 years. We find that this gender distribution reflects relative returns in the labour market: women with bachelor qualifications receive higher returns in teaching, while similarly educated men enjoy substantially higher returns in other occupations. We also find evidence that schools which can, and do, make higher wage offers successfully attract more male teachers as well as more female teachers with a degree in science, technology, engineering, and mathematics. These results are consistent with the predictions of theoretical models of self-selection of intrinsically motivated workers.
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Claudio Deiana, Ludovica Giua
January 22, 2021
Article number: 20200253
Abstract
In response to the opioid crisis, US states have implemented policies to reduce the dispensing of opioids and curb drug mortality. Exploiting a long panel of county-level data, we analyse the combination of demand- and supply-side state opioid policies and evaluate their effect on opioids per capita dispensed and their unintended fallouts on drug-related crime. We demonstrate that only laws targeting the supply for opioids reduce the volume of prescribed drugs, while demand-side policies are less effective. We also emphasize that within supply-side state regulations, Pain Management Clinics Laws are the most successful in reducing the dispensation of prescription opioids. Remarkably, the drop in opioids distributed due to supply-side regulations is accompanied by negative externalities in the local market for illicit drugs.
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Eliakim Kakpo
January 13, 2021
Article number: 20190245
Abstract
This paper evaluates a natural experiment which occurred in Ohio in 2005 when the state amended the tax system. The change sets up a dramatic corporate tax cut of 8.3 percentage points (p.p.) over the period 2006–2010 corresponding to a 96.9% reduction in the tax. Policymakers also reduced the personal income tax over the same period by 0.95 percentage point (p.p.). I investigate the incidence of the reform on wages in general and corporate wages in the short-run. To do so, I use a synthetic control method along with an event study design applied to individual records of the Current Population Survey (CPS). The results in this paper suggest that the corporate tax cut may have resulted in a one-time payment in corporate wages at the onset of the reform.
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Magda Tsaneva, Uttara Balakrishnan
December 31, 2020
Article number: 20200281
Abstract
This paper uses data from rural India to study the relationship between local labor market opportunities and child education outcomes. We construct a Bartik index as a measure of exogenous changes in district-level labor demand and find that an increase in predicted overall employment growth is associated with higher years of education and better test scores for both boys and girls of primary school age. The effects on test scores of older boys are smaller and less statistically significant. Older girls, however, do benefit from better labor market opportunities. We do not find evidence for changes in school quality or district-level investment. Instead, we find support for increases in household education spending, possibly because of overall higher wages, or re-allocation of resources.
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Ritika Jain
December 17, 2020
Article number: 20200295
Abstract
Does the adoption of information and communication technologies (ICTs) lead to better and more inclusive women representation in the workforce? We explore this question for India- a developing economy characterized by strong patriarchal norms and gender-based discrimination in the workforce. Using the World Bank Enterprise Survey of 2014, we examine the effect of computerization, email usage and Internet services on three aspects of female representation- total female representation, representation across the hierarchy of workforce and quality of female representation. Using instrumental variable estimation models, we find that ICT adoption has a positive effect on the total share of women in the workforce. A deeper analysis reveals that the positive effect of ICTs on female employment is limited to the share of females in the highly skilled workforce. In contrast, it does not affect the female share in the low or unskilled workforce. This indicates that ICT adoption has a semi-polarization effect on women. We also find that ICT adoption is associated with better quality females in the workforce. Both rises in demand for skilled people and a women-friendly work environment drive these results. The overall findings establish the effective role of ICTs in enhancing women’s representation in the workforce.
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Guanfu Fang, Yu Chen
December 14, 2020
Article number: 20200210
Abstract
This study investigates the causal effect of older siblings’ schooling on their younger siblings’ schooling and labor market outcomes by exploiting the temporal and geographical variations in the implementation of compulsory schooling laws in China. Reform exposure is quantified as the number of years that an individual is eligible for compulsory education. We find that older siblings’ exposure to compulsory schooling reform had negative impacts on their younger siblings’ academic achievement and labor market performance. We provide some suggestive evidence for the mechanism of resource reallocation within households. These findings suggest that we may be overestimating the social benefits of compulsory schooling reforms by ignoring the resources constraints within households and the spillover effects on siblings.
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Mark D. Agee
December 7, 2020
Article number: 20200009
Abstract
This paper provides an empirical analysis of the determinants of adolescents’ crime reporting intentions with particular emphasis on the role of social interactions. The empirical strategy extends the discrete choice random utility model to allow preferences to be defined over the expected actions of an individual’s peer group defined by his or her class at school. In this context, students choose whether to report instances of bullying, property theft, or academic cheating they may witness at or around school. Both endogenous and exogenous peer group effects on adolescents’ crime reporting intentions are identified and estimated using a 1620-student dataset. Results lend support to the hypothesis that social interactions play a significant role in shaping adolescents’ decisions to report wrongdoing they may witness. These group influences can strengthen, or temper school policies aimed at encouraging students to take a more active role in reducing school or community crime.
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Kathryn L. Wagner
December 3, 2020
Article number: 20200190
Abstract
This paper evaluates the effect of Medicaid expansions for individuals with disabilities on crime rates and mental health status. Using the FBI’s Uniform Crime Reports and the CDC’s Behavioral Risk Factor Surveillance System Surveys, I estimate the impact of Medicaid using an event study approach. Results indicate a reduction in crime incidence that was strongest in the years immediately following the expansion and dissipated over time. Estimates also suggest a smaller likelihood of one day of poor mental health within the past month, but this impact was short-lived. Analysis suggests that improved alcohol abuse was not a main explanation for mental health improvements. The analysis cannot eliminate whether improvements to non-alcohol substance abuse treatment, financial strain, or access to treatment for other mental illnesses explain the impact to crime and mental health status. Expanding Medicaid shows a degree of impact on both crime and mental health suggesting several policy considerations.
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Lucia Mangiavacchi, Luca Piccoli, Chiara Rapallini
December 3, 2020
Article number: 20200189
Abstract
This study examines the role personality traits play in influencing consumption decisions for both individuals and households by means of a complete system of Engel curves. Estimations are performed on the German Socio-Economic Panel (SOEP) using the following four different samples: single men, single women, childless couples and couples with children. Personality traits are found to moderately improve the general goodness of fit of the model, reducing the RMSE on average by 2.8%. This is the result of some traits strongly contributing to explaining specific consumption categories, such as Mental Openness contributing substantially to explaining expenditure in education and culture, and several non-significant personality trait-consumption category associations. Robustness analysis suggests that the effect is fairly stable across age groups within the same household type and that the effects of personality traits on consumption choices are independent of education level.
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Kien Le, My Nguyen
December 2, 2020
Article number: 20200046
Abstract
This paper evaluates the impacts of education on women’s relational empowerment, within a context of 70 developing countries across the world. Exploiting the variation in educational attainment between biological sisters, we find that education is positively associated with women’s intra-household decision making authority in both financial and non-financial domains. Moreover, education reduces relational friction, especially women’s exposure to psychological abuse. Our mechanism analyses provide suggestive evidence that these improvements could be attributed to increased access to information, assortative matching, and better labor market outcome.
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Claudia Berg, M. Shahe Emran
February 1, 2020
Article number: 20180359
Abstract
This paper uses a unique data set on 143,000 poor households from Northern Bangladesh to analyze the effects of microfinance membership on a household’s ability to cope with seasonal famine known as Monga. We develop an identification and estimation strategy that exploits a jump and a kink at the 10-decimal land ownership-threshold driven by the Microfinance Institution screening process to ensure repayment by excluding the ultra-poor. Evidence shows that microfinance membership improves food security during Monga, especially for the poorest households who survive at the margin of one and two meals a day. The positive effects on food security are, however, not driven by higher income, as microcredit does not improve the ability to migrate for work, nor does it reduce dependence on distress sale of labor. The evidence is consistent with consumption smoothing being the primary mechanism behind the gains in food security of MFI households during the season of starvation.