The B.E. Journal of Economic Analysis & Policy Volume 16 Issue 1 -

The B.E. Journal of Economic Analysis & Policy

Volume 16 Issue 1 -

Contents
Journal Overview

Frontmatter

December 19, 2015 Page range: i-iv

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Contributions

Does Water Quality Improve When a Safe Drinking Water Act Violation Is Issued? A Study of the Effectiveness of the SDWA in California

Katherine K. Grooms September 22, 2015 Page range: 1-23

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Abstract

The Safe Drinking Water Act addresses harmful contaminants in drinking water by providing states the authority to monitor public water systems, notify the public of exceedances above allowable levels, and cite persistent violators. Violating water systems are subject to intense regulatory and public scrutiny. The response of contaminant levels to violation status has not been explored empirically. This paper addresses this relationship through an event study using data on arsenic and nitrate levels in California. I find that violation status has a significant positive effect on nitrate levels post-violation, but no effect on arsenic levels. I also examine the effect of the 2006 arsenic Maximum Contaminant Level revision, finding a discontinuity in contaminant levels at revision. These results suggest that while public disclosure may deter systems from violating, once they go into violation the Public Notification Rule is not effective at encouraging a return to compliance.

File Sharing and Film Revenues: Estimates of Sales Displacement at the Box Office

Jordi McKenzie, W. David Walls May 27, 2015 Page range: 25-57

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This study examines the impact of peer-to-peer (P2P) file sharing on the Australian theatrical film industry. Using a large data set of torrent downloads observed on three popular P2P networks, we find evidence of a sales displacement effect on box office revenues. However, although statistically significant, the economic significance of this displacement appears relatively small. To establish causality, we make use of the state-day-level panel data structure permitting the use of film fixed effects to help mitigate the endogeneity between film revenues and downloads. To further assist identification, we propose a downloading cost function that considers other states’ downloading activities as a proxy for the number of peers in the download swarm; the US DVD release date as a supply shock to P2P networks; and the substantial structural progression within the Australian internet service provision industry that occurred over the sample period. We observe that the release gap between the US and Australian markets is a key contributor to piracy early in a film’s theatrical life. This finding provides a partial explanation for the industry’s move towards coordinated worldwide releases.

Do Boys and Girls Use Computers Differently, and Does It Contribute to Why Boys do Worse in School Than Girls?

Robert W. Fairlie August 20, 2015 Page range: 59-96

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Abstract

Boys are doing worse in school than are girls, which has been dubbed “the Boy Crisis.” An analysis of the latest data on educational outcomes among boys and girls reveals extensive disparities in grades, reading and writing test scores, and other measurable educational outcomes, and these disparities exist across family resources and race. Focusing on disadvantaged schoolchildren, I then examine whether time investments made by boys and girls related to computer use contribute to the gender gap in academic achievement. Data from several sources indicate that boys are less likely to use computers for schoolwork and are more likely to use computers for playing games, but are less likely to use computers for social networking and email than are girls. Using data from a large field experiment randomly providing free personal computers to schoolchildren for home use, I also test whether these differential patterns of computer use displace homework time and ultimately translate into worse educational outcomes among boys. No evidence is found indicating that personal computers crowd out homework time and effort for disadvantaged boys relative to girls. Home computers also do not have negative effects on educational outcomes such as grades, test scores, courses completed, and tardies for disadvantaged boys relative to girls.

Wages, Hours, and the School-to-Work Transition: The Consequences of Leaving School in a Recession for Less-Educated Men

Jamin D. Speer September 10, 2015 Page range: 97-124

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Using the NLSY’s weekly work history data to precisely measure labor market outcomes and the school-to-work transition, I document severe but short-lived effects of leaving school in a recession for men with 9–12 years of education. I find significant effects of entry labor market conditions on wages, job quality, and the transition time from school to work. In contrast to published evidence on more educated workers, I also find large effects on work hours on both the extensive and the intensive margins. When workers leave high school in a recession, they take substantially longer to find a job, earn lower wages, and work fewer full-time weeks and more part-time weeks. A 4-point rise in the initial unemployment rate leads to an increase in the school-to-work transition time of 9 weeks, a 16% decline in year-one average wage, a 28% fall in hours worked in the first year, and a 45% decline in first-year earnings. However, effects of entry conditions are not persistent and are largely gone after the first year.

Are We Architects of Our Own Happiness? The Importance of Family Background for Well-Being

Daniel D. Schnitzlein, Christoph Wunder September 30, 2015 Page range: 125-149

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Abstract

This paper analyzes whether individuals have equal opportunity to achieve happiness (or well-being). We estimate sibling correlations and intergenerational correlations in self-reported life satisfaction, satisfaction with household income, job satisfaction, and satisfaction with health. We find high sibling correlations for all measures of well-being. The results suggest that family background explains, on average, between 30% and 60% of the inequality in permanent well-being. The influence is smaller when the siblings’ psychological and geographical distance from their parental home is larger. Results from intergenerational correlations suggest that parental characteristics are considerably less important than family and community factors.

The Real Cost of Credit Constraints: Evidence from Micro-finance

Renuka Sane, Susan Thomas November 3, 2015 Page range: 151-183

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The paper studies the effect of a law that banned micro-credit lending in the state of Andhra Pradesh in India. Regions in Andhra Pradesh are matched to regions that did not face the ban. A difference-in-difference estimation of changes in matched regions is used to establish a causal impact on average household consumption in the region. The results show that the average household consumption in the ban-affected regions dropped by 15% immediately after the ban compared to the matched regions, and persisted for four quarters. The result is robust to cross-sectional variations in regional exposure to micro-finance prior to the ban, variation in rural and urban locations and variations in matching strategy. The analysis points to a ban as a sub-optimal intervention to improve customer welfare.

Boycott or Buycott?: Internal Politics and Consumer Choices

Xavier Cuadras-Morató, Josep Maria Raya October 27, 2015 Page range: 185-218

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Abstract

Does politics affect economic relations? In particular, do political tensions significantly affect consumer choices? The main objective of the paper is to study the consequences of political conflicts between Spain and Catalonia (a region of Spain) and the subsequent boycott calls on sales of Catalan sparkling wine ( cava ) in the Spanish market. We use data from sales of sparkling wine in supermarkets and similar outlets. To determine with precision the boycott period we use data on the number of news on the issue that appeared in the main national Spanish daily newspapers. The results of our econometric analysis indicate that the boycott calls triggered different consumers’ reactions in different territories. While consumers in some Spanish regions followed them and reduced their purchases of Catalan cava , there was also an anti-boycott reaction of Catalan consumers which led them to increase their consumption of the product. As a consequence of this, the boycott calls had an insignificant impact at the Spanish aggregate level. These results can be rationalized by the predictions of theoretical models of boycotts that include both the free riding and animosity motives.

On the Design of Educational Conditional Cash Transfer Programs and Their Impact on Non-Education Outcomes: The Case of Teenage Pregnancy

Darwin Cortés, Juan Gallego, Darío Maldonado October 30, 2015 Page range: 219-258

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Abstract

Using a simple model to characterize adolescents’ behavior, we show that the effect of educational Conditional Cash Transfer (CCT) programs on teenage pregnancy depends on the limits and conditions of the programs. The model shows that when benefits are conditional on school success or when the program has a binding duration limit, the CCT reduces teenage pregnancy rates. Using original data, we estimate this relation for two different CCT programs implemented in Bogotá, Colombia. The two programs differ in that only one of them conditions benefit renewal on school success. The empirical results are consistent with the predictions of the model. Only the program that conditions renewal of the transfer, reduces average teenage pregnancy rates. We also find that, also consistent with our model, the other program reduces teenage pregnancy rates only for those girls for which the duration limit is binding.

The Impact of Female Education on Teenage Fertility: Evidence from Turkey

Pınar Mine Güneş November 6, 2015 Page range: 259-288

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This paper explores the causal relationship between female education and teenage fertility by exploiting a change in the compulsory schooling law (CSL) in Turkey. Using variation in the exposure to the CSL across cohorts and variation across provinces by the intensity of additional classrooms constructed in the birth provinces as an instrumental variable, the results indicate that primary school completion reduces teenage fertility by 0.37 births and the incidence of teenage childbearing by around 28 percentage points. Exploring heterogeneous effects indicates that female education reduces teenage fertility more in provinces with lower population density and higher agricultural activity. This paper also disentangles intensive- and extensive-margin effects and explores various channels, such as postponing marriage and contraceptive use, linking education and fertility. Finally, this paper demonstrates that there are additional social benefits of education in terms of child health.

Ownership and Exit Behavior: Evidence from the Home Health Care Market

Chiara Orsini November 10, 2015 Page range: 289-320

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In the US health care system a high fraction of suppliers are not-for-profit companies. Some argue that non-profits are “for-profits in disguise” and I test this proposition in a quasi-experimental way by examining the exit behavior of home health care firms after a legislative change considerably reduced reimbursed visits per patient. The change allows me to construct a cross provider measure of restriction in reimbursement and to use this measure and time-series variation due to the passage of the law in my estimates. I find that exits among for-profit firms are higher than those of not-for-profit firms, rejecting the null that these sectors responded to the legislation in similar ways. In addition, my results expand the view that “not-for-profit” firms are a form of “trapped capital.” There is little capital investment in the home health care market, so the higher exit rates of for-profit firms after the law change indicate the possible role of labor inputs in generating differences in exit behavior across sectors.

Topics

The Impact of Maternity Leave Laws on Cesarean Delivery

Christiana Stoddard, Wendy A. Stock, Elise Hogenson October 1, 2015 Page range: 321-364

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Through their influence on insurance and relative leave length, maternity leave laws can alter the incentives to choose cesarean delivery. We use a difference-in-difference approach to estimate the impact of state-level maternity leave laws on cesarean delivery. Empirical results suggest that maternity leave laws guaranteeing relatively short leaves are associated with reduced probability of cesarean delivery. Laws that guarantee continued insurance coverage during the leave are associated with an increase in the probability of cesarean delivery among insured women.

Optimal Product R&D Policies with Endogenous Quality Choices and Unilateral Spillover

Yumiko Taba June 30, 2015 Page range: 365-391

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This study derives non-cooperative and cooperative optimal product research and development (R&D) policies of a country with a high-quality firm and a country with a low-quality firm in the presence of technology spillover under Cournot and Bertrand competitions in an international duopoly. When the respective governments determine their R&D policies non-cooperatively, optimal policies for both countries involve an R&D tax (subsidy) if spillover is large (small). When the governments choose their R&D policies cooperatively, a tax is always optimal for the country with low-quality firm and a subsidy (tax) is optimal for the country with high-quality firm if spillover is large (small). In addition, we show that the non-cooperative optimal product R&D Policy is tax for a wider range of spillover effects under Cournot competition, compared to the case of Bertrand competition.

Shopping Hours and Price Competition with Loyal Consumers

Miguel Flores, Tobias Wenzel September 30, 2015 Page range: 393-407

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We study a retail market where firms compete in shopping hours and prices, and consumers have night-time or day-time preferences. In contrast to the existing literature, we introduce a market expansion effect of extending shopping hours by adding a segment of consumers (the loyal consumers) whose demand is increased if shopping hours are extended. We find that prices can increase due to shopping hours deregulation so that some consumers are worse off with deregulation. We also find that the extent of the price increase depends on the competitiveness of the retail industry.

Gender Differences in Competitiveness: Evidence from Educational Admission Reforms

Arnt O. Hopland, Ole Henning Nyhus September 24, 2015 Page range: 409-436

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This paper studies whether increased competition has adverse consequences for students’ intrinsic motivation by studying an upper secondary admission reform in Norway. While earlier students were enrolled into their neighboring school, the new system introduces school choice, where admission is based on performance in lower secondary school. Using a difference-in-differences approach, we find that whereas the motivation for boys seems to be unaffected by the increased competition, there are adverse consequences on the motivation for girls.

Moral Hazard in Monday Claim Filing: Evidence from Spanish Sick Leave Insurance

Angel Luis Martin-Roman, Alfonso Moral October 27, 2015 Page range: 437-476

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The Monday effect on workers’ compensation insurance shows that there is a higher proportion of hard-to-diagnose injuries the first day of the week. The aim of this paper is to test whether the physiological hypothesis or the economic explanation is more satisfactory to understand this Monday effect and, if both are correct, to obtain an estimation of the magnitude of each of them. To do this, we exploit the singular legal regulation of Spanish sick leave benefits and use this country as a “laboratory”. Our econometric analysis detects and measures a hard-to-diagnose reporting gap on Mondays by about 6.5 percentage points due to physiological reasons and up to 1.4 percentage points attributable to moral hazard for those injuries with a short recovery period.

A Trade and Welfare Analysis of Tariff Changes Within the TPP

Juyoung Cheong, Shino Takayama October 29, 2015 Page range: 477-511

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This paper examines the effects of the Trans-Pacific Partnership (TPP) tariff reductions on trade flows and welfare of the TPP members and nonmembers following the Caliendo and Parro (2015) method. We use comprehensive sectoral data on 39 countries and the rest of the world, including those in the Association of Southeast Asian Nations (ASEAN) and the Organization for Economic Co-operation and Development (OECD). Our results show that many TPP nonmembers along with the TPP members gain from the TPP tariff reductions, suggesting the existence of a positive externality, with the welfare gains mainly arising from the changes in the terms of trade. Our analysis also shows that the TPP members increase their imports from other TPP members and decrease from non-TPP members, but the trade creation effects exceed the trade diversion effects. Our calibration results under various assumptions of the model emphasize the role of multiple sectors and sectoral linkages in the welfare analysis of the TPP tariff reductions.

Do Economic Development Incentives Crowd Out Public Expenditures in U.S. States?

Jia Wang November 27, 2015 Page range: 513-538

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This paper investigates whether economic development incentives (EDI) crowd out public expenditures in U.S. states. Using EDI data from a new database, this paper employs a two-way fixed effect panel framework and generalized method of moments (GMM) approach to account for dynamic features associated with public expenditures. Potential endogeneity of policy variables and problems with unbalanced panels are also addressed. Results show relatively little effect of incentives spending on most public goods expenditures contemporaneously, with negative repercussions beginning to appear in year one. Findings of this paper carry practical importance for policymakers concerning the efficacy of incentives.

About this journal

Objective
The B.E. Journal of Economic Analysis & Policy (BEJEAP) welcomes submissions that employ microeconomics to analyze issues in organizational economics, consumer behavior, and public policy. Articles submitted to BEJEAP can come in two formats: research papers and letters. Authors should bring to their analysis whatever microeconomic theoretical, experimental or econometric tools are helpful. We publish both empirical work and applied theory (though not more abstract forms of applied theory), and our aim is to disseminate papers that have practical implications for public policy, organizational or individual decision making.

Topics

Design of organizations and institutions
Industrial organization
Health economics
Public finance
Labour Economics
Economics of education, family, development, law, or the environment
Effects of domestic and international policy

Article formats
Research Papers, Letters

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