The B.E. Journal of Economic Analysis & Policy

Published by De Gruyter

Volume 22 Issue 4

October 2022

Issue of The B.E. Journal of Economic Analysis & Policy

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Contents
Journal Overview

Publicly Available October 20, 2022

Frontmatter

Page range: i-iii

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Research Articles

July 15, 2022

Default Behavior and Risk Aversion in Defined Contribution Retirement Systems: Evidence from Chile

Marcela Parada-Contzen

Page range: 655-714

Abstract

This paper studies the design of investment policies in defined contribution retirement systems. I estimate a dynamic system of correlated equations of lifecycle behavior that fully models the individual’s decision-making process to account for estimation biases. In the model, individuals make decisions that impact their retirement wealth within the Chilean retirement system. Behaviors are allowed to depend on risk preferences while modeling other sources of nonlinear unobserved heterogeneity. The estimated decision-making process allows us to simulate the effects of policy experiments (ex ante), such as defaulting individuals into riskier investment strategies or increasing contribution rates. The results indicate that individuals react by opting into safer plans despite their observed inertia and that increases in mandatory contributions generate little crowding out of other behaviors. Not modeling risk aversion and its endogeneity with behavior leads to substantial simulation biases.

Publicly Available July 11, 2022

Linking Employment and Death: Measuring the Structural Disparity in COVID-19 Deaths for Non-telework Essential Workers

Thomas Patten Krumel, Corey Goodrich, Rui Sun, Nathan Fiala

Page range: 715-738

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Abstract

The intensity of the early months of the COVID-19 pandemic were a surprise to many people and functioned as an unexpected disturbance where individuals and businesses were slow to adapt their behavior. This event allows us to explore pre-pandemic structural differences in employment and estimate the public health impacts of these first few months of the pandemic. Novel datasets provided by the Connecticut Department of Health and the Massachusetts Department of Health enable us to link deaths to industry and occupation directly at the individual level. A significant number of working-aged people died from COVID-19, with black and Hispanic populations dying at much higher rates. Linking individual deaths with employment, we find that nearly half of these deaths come from people working non-telework essential jobs. Black and Hispanic non-telework essential workers died at a rate 14-percentage points higher than white individuals employed in these same occupations.

September 27, 2022

Estimating the Effect of Distance on the Migration of Higher Education Candidates

Diogo Lourenço, Carla Sá

Page range: 739-761

Abstract

In this paper, we use a gravity approach to study the impact of distance on desired migratory flows of candidates to undergraduate courses in Portugal. We employ a large administrative database that includes the entire population of candidates to public HE institutions in Portugal from 2008 to 2019. We document, in line with the literature, that distance is a significant deterrent to mobility, with flows showing an average elasticity to distance between −2 and −1, a value that tends to decay as distance increases. We find that flows are particularly sensitive when distance is measured by travel time. We show, however, that the deterrence effect is not homogeneous. Among other results, we identify and measure important differences across fields of education. Finally, we illustrate how using different probability density functions can be of service in finding the most appropriate gravity model specification.

September 21, 2022

Do Female Politicians Lead to Better Learning Outcomes?

Sadia Priyanka

Page range: 763-800

Abstract

Despite progress towards universal primary education, children in India lag in age and grade-appropriate learning competencies. This paper studies the effect of women’s political leadership in state legislatures on primary school-aged children’s learning outcomes. I use close elections won by women against men as an instrument for the election of a female politician and find significant gains in math and reading proficiency in children 8–11. Using a rich set of school and household-level data, I evaluate the impact on public and household investments. There is an increased likelihood of public schools receiving grants and inputs beneficial for learning. Further, female politicians lead households to exhibit more confidence in the ability of public schools to provide a better education. Consistent with this perception change, there are reduced time allocation and spending on supplementary household resources. The net positive effect suggests the policy effect outweighs the crowding out of private resources.

Open Access September 21, 2022

Understanding Household Consumption Behaviour: What do we Learn from a Developing Country?

Nguyen Van Tran

Page range: 801-858

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Abstract

Understanding and changing household consumption behaviour are considered the core driving force of the economic growth of a nation. Vietnam’s economic growth is mainly driven by final household consumption, which constituted over two-thirds of GDP during the last three decades. This paper aims to provide a novel way to understand household consumption decisions in a developing country based on several different but inter-related economic hypotheses of household consumption behaviour. Using a three-wave balance panel dataset constructed from nationally representative Vietnamese household surveys, we find strong evidence to support the importance of the permanent income hypothesis, the life-cycle factor hypothesis and the precautionary savings hypothesis. However, there is no evidence for the sex ratio hypothesis. Addressing the shortcomings of previous studies, this paper confirms the entry and exit of formal sectors and agriculture are the oriental predictors of precautionary motives. Heterogeneity analysis suggests the effect is fairly stable across balance sheet characteristics but varies across consumption categories. Our results are robust to a variety of robustness checks. These findings highlight the importance of combining a wide range of proxies for job insecurity and uncertainty indicators to understand household consumption behaviour, thus providing a powerful test of consumption and savings theories in short panels. The implications of these findings also are discussed and proposed in this research.

September 21, 2022

Learning with Differing-Ability Peers: Evidence from a Natural Experiment in South Korea

Seungwoo Chin, Eunjee Kwon

Page range: 859-887

Abstract

Whether to group students based on their prior academic achievements has been at the center of policy and research debate. This article explores a quasi-experimental setting in South Korea where the “Equalization Policy” replaced ability-tracking in high school students’ allocation. The policy abolished high school entrance exams and began assigning students to high schools without considering students’ prior academic performance, which exposed students to an ability-mixing learning environment. Using a difference-in-difference approach, we show that ability-mixing considerably reduces the number of low-performers in a national college entrance test. At the same time, high-performers are hardly affected by the policy changes. We document that the behavioral changes of low-performing students may drive the main results. In contrast, we find no evidence that grouping mechanisms affect teacher-pupil interaction and teacher quality.

October 12, 2022

Is Bilingual Education Desirable in Multilingual countries?

Kazuhiro Yuki

Page range: 889-949

Abstract

In many countries, people use their mother tongue in local business, but use the language of the former colonizer in national business. How much weight should be placed on teaching one’s mother tongue and the lingua franca is a critical issue in these countries. This paper develops a model to examine these issues theoretically. It is shown that balanced education of the two languages is critical for skill development of those with limited wealth. It is also found that balanced bilingual education yields higher earnings net of educational expenditure than lingua-franca-only education only when a country has favorable educational and technological conditions (productivity is reasonably high and education is reasonably effective) and only for those with adequate wealth. Policy implications of the results are also discussed.

Letter

August 22, 2022

Is the Non-disclosure Policy of Audit Intensity Always Effective? A Theoretical Exploration

Yong Ma, Wanlin Deng, Hao Jiang

Page range: 951-966

Abstract

This study theoretically explores the effectiveness of the non-disclosure policy of audit intensity using the portfolio choice approach. In our setting, audit intensity follows a two-state Markov chain, which is not disclosed by the tax authority, and agents will exploit the available information to learn the state and accordingly make tax evasion decisions. We find that the effectiveness of the non-disclosure policy in reducing tax evasion and increasing tax revenues depends on the proportion of time in the high-intensity state. Interestingly, when this proportion is high during a period, the disclosure policy is more effective.

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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