Contributions published at Department of Economics (Florian Scheuer)

Wage inequality between education groups in Germany has increased sharply in recent decades. This paper studies how compositional changes to the occupational structure and the geographic distribution of different types of jobs have affected this type of inequality. Employment has shifted away from traditionally mid-paying production occupations towards higher-paying cognitive/interactive occupations, and – to a lesser extent – towards low-paying manual services. However, only workers with university degrees have benefited from the expansion of higher-paid work. This increase in polarization played out relatively evenly across space. While such occupational shifts can contribute to between-group wage inequality, in the German case, the increase in occupational polarization was not large enough to materially contribute to wage inequality between education groups.

Individual wage growth is higher in more densely populated regions. Using data on detailed labour market biographies from Germany, this paper shows that job mobility contributes to this urban premium in wage growth. In urban regions, wage growth is higher both within jobs and between jobs. The higher between-job wage growth is driven by a combination of higher frequency of job changes and a higher payoff of moving between jobs. This finding is consistent with better coordination in denser labour markets. Further evidence shows that the gain from higher urban wage growth is not lost upon moving across regions, suggesting that a better job match results in higher human capital accumulation.

We examine methods for evaluating interventions designed to improve decision-making quality when people misunderstand the consequences of their choices. In an experiment involving financial education, conventional outcome metrics (financial literacy and directional behavioral responses) imply that two interventions are equally beneficial even though only one reduces the average severity of errors. We trace these failures to violations of the assumptions embedded in the conventional metrics. We propose a simple, intuitive, and broadly applicable outcome metric that properly differentiates between the interventions, and is robustly interpretable as a measure of welfare loss from misunderstanding consequences even when additional biases distort choices.

Since 1980, the world economy has experienced an increase of dominant firms. Dominant firms face limited competition in their market and exert monopoly power. Why has this happened, and why did it start in 1980? The rise of dominant firms has a direct impact on customers who pay higher prices, but it also has far-reaching implications for the macroeconomy. Widespread market power leads to wage stagnation and a decline in the labor share, it increases wage inequality, it slows down business dynamism, it reduces the number of startup firms and lowers innovation. In this public paper Eeckhout reviews the determinants of the rise of dominant firms, discusses the causes and consequences, and proposes directions for policy solutions.

Testosterone has been hypothesized to promote sexual motivation and behavior. However, experimental evidence in healthy humans is sparse and rarely establishes causality. The present study investigated how testosterone affects delay of gratification for sexual rewards. We administered a single dose of testosterone to healthy young males in a double-blind, placebo-controlled, between-participant design (N = 140). Participants underwent a sexual delay discounting task, in which they made a choice between a variable larger-later option (i.e., waiting longer to view a sexual picture for a longer duration) and a smaller-sooner option (i.e., waiting for a fixed shorter period of time to view the same picture for a shorter duration). We found that testosterone administration increased preference for the smaller-sooner option and induced steeper discounting for the delayed option. These findings provide direct experimental evidence that rapid testosterone elevations increase impulsivity for sexual rewards and represent an important step towards a better understanding of the neuroendocrine basis of sexual motivation in humans.

We analyze entry of a firm with a new and differentiated product into a market with two properties: An existing incumbent has a captive consumer base, and all consumers have heterogeneous tastes. The interaction between the share of captive consumers and the degree of taste heterogeneity leads to nonmonotone effects of both parameters on entry: The captive share can have an inverse-U relation with entry profits, and higher taste heterogeneity (i.e., less product substitutability) can impede entry in the presence of captive consumers.

This paper analyzes the long-term effects of potentially avoidable cesarean sections on children’s health. Using Finnish administrative data, we document that physicians perform more unplanned C-sections during their regular working hours on days that precede a weekend or public holiday and use this exogenous variation as an instrument for C-sections. We supplement our instrumental variables results with a differences-in-differences estimation strategy that exploits variation in birth mode within sibling pairs and across families. Our results suggest that avoidable unplanned C-sections increase the risk of asthma, but do not affect other immune-mediated disorders previously associated with C-sections.

Childhood obesity has adverse health and productivity consequences and it poses negative externalities to health services. To shed light on the role of parents, we elicit parental beliefs about the returns and the persistence of a healthy diet and exercise routine in childhood. Parents believe both types of investments to improve child and adult health outcomes. Consistent with a model of taste formation, parents believe that childhood health behaviors persist into adulthood. We show that perceived returns are predictive of health investments and outcomes, and that less educated parents view the returns to health investments to be lower. Our descriptive evidence suggests that beliefs contribute to the socioeconomic inequality in health outcomes and the intergenerational transmission of obesity.

One of the leading reasons behind social inequities is that elite groups have had access to more widespread and higher-quality educational opportunities much earlier, often when their economic returns were much higher. Nevertheless, measures of educational inequalities tend to focus exclusively on current differences within the school-age population. This paper proposes a new measure – the education inequity index (EII) – that captures cumulative differences in access to the economic returns of education across different groups. Concretely, the EII is the share of the cumulative wage premium appropriated by the elite over time in excess to that accrued by other groups. The paper advances a methodology to compute different versions of the EII using national household survey data. We then illustrate its applications by computing the economic, racial and gender EII for Brazil since 1980, separately for primary, secondary and college education. We showcase the new insights that the EII brings relative to other measures when it comes to monitoring inequities and informing policies to address them.

This article presents a study of the careers of French colonial governors between 1830 and 1960. We consider empires as the by-product of social entities structuring themselves. Specifically, we analyze the process of the emergence of this professional group with respect to other professional groups within the imperial space and the French metropolitan space, building on the concept of linked ecologies. Using data on the career of 637 colonial governors between 1830 and 1960, we examine how variations in the recruitment of these senior civil servants actually reflect the professionalization of this group. We rely on an optimal matching technique to distinguish typical sequence models and identify nine common career trajectories that can be grouped into four main clusters. We further compare the share of each cluster in the population of governors over time and show that the rise of the colonial cluster during the Interwar period corresponded to the peak of the administrative autonomy in the colonial space. We argue that this process is consistent with the professionalization of the governors’ corps, which is embodied by a common career within the colonial administration and a collective identity as a group.

Children’s self-regulation abilities are key predictors of educational success and other life outcomes such as income and health. However, self-regulation is not a school subject, and knowledge about how to generate lasting improvements in self-regulation and academic achievements with easily scalable, low-cost interventions is still limited. Here we report the results of a randomized controlled field study that integrates a short self-regulation teaching unit based on the concept of mental contrasting with implementation intentions into the school curriculum of first graders. We demonstrate that the treatment increases children’s skills in terms of impulse control and self-regulation while also generating lasting improvements in academic skills such as reading and monitoring careless mistakes. Moreover, it has a substantial effect on children’s long-term school career by increasing the likelihood of enroling in an advanced secondary school track three years later. Thus, self-regulation teaching can be integrated into the regular school curriculum at low cost, is easily scalable, and can substantially improve important abilities and children’s educational career path.

When did overseas trade start to matter for living standards? Traditional real-wage indices suggest that living standards in Europe stagnated before 1800. In this paper, we argue that welfare may have actually risen substantially, but surreptitiously, because of an influx of new goods. Colonial “luxuries” such as tea, coffee, and sugar became highly coveted. Together with more simple household staples such as potatoes and tomatoes, overseas goods transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. They became household items in many countries by the end of the 18th century. We apply two standard methods to calculate broad orders of magnitude of the resulting welfare gains. While they cannot be assessed precisely, gains from greater variety may well have been big enough to boost European real incomes by 10% or more (depending on the assumptions used).

Using newly collected data on death rates and aerial victories of more than 5,000 German fighter pilots during World War II, we examine the effects of public recognition on performance and risk-taking. When a particular pilot is honoured publicly, both the victory rate and the death rate of his former peers increase. Fellow pilots react more if they come from the same region of Germany, or if they worked closely with him. Our results suggest that personal rivalry can be a prime motivating force, and that non-financial rewards can lead to a crowd-in of both effort and risk-taking via social connections.

This paper studies random vectors X featuring symmetric distributions in that i) the order of the random variables in X does not affect its distribution, or ii) the distribution of X is symmetric at zero. We derive a number of characterization results for such random vectors, thereby connecting the distributional symmetry to various notions of how (Euclidean) functions have been regarded as symmetric. In addition, we present results about the marginals and conditionals of symmetrically distributed random vectors, and apply some of our results to various transformations of random vectors, e.g., to sums or products of random variables, or in context of a choice probability system known from economic models of discrete choice.

Interference across competing firms in RCTs can be informative about market structure. An experiment that subsidizes a random subset of traders who buy cocoa from farmers in Sierra Leone illustrates this idea. Interpreting treatment-control differences in prices and quantities purchased from farmers through a model of Cournot competition reveals differentiation between traders is low. Combining this result with quasi-experimental variation in world prices shows that the number of traders competing is 50 percent higher than the number operating in a village. Own-price and cross-price supply elasticities are high. Farmers face a competitive market in this first stage of the value chain.

I examine how one central aspect of the family environment - sibling sex composition - affects women’s gender conformity. Using Danish administrative data, I causally estimate the effect of having a second-born brother relative to a sister for first-born women. I show that women with a brother acquire more traditional gender roles as measured through their choice of occupation and partner. This results in a stronger response to motherhood in labor market outcomes. As a relevant mechanism, I provide evidence of increased gender-specialized parenting in families with mixed-sex children. Finally, I find persistent effects on the next generation of girls.

We assess the predictive power of survey measures of social capital with a new behavioral data set that examines whether citizens report a lost wallet to its owner. Using data from more than 17,000 “lost” wallets across 40 countries, we find that survey measures of social capital—especially questions concerning generalized trust or generalized morality — are strongly and significantly correlated with country-level differences in wallet reporting rates. A second finding is that lost wallet reporting rates predict unique variation in the outputs of social capital, such as economic development and government effectiveness, not captured by existing measures.

Wissenschaftliche Durchbrüche sind eine wesentliche Quelle des Wohlstands. Sie kommt zum Versiegen, wenn Mittel und Musse dafür fehlen und der Forschungsbetrieb bürokratisch wird.

Child labor is a pervasive practice; according to the International Labor Organization, there are 160 million child workers worldwide. That figure might, however, greatly underestimate the extent of the issue, since child labor indicators are typically based on surveys with parents – who have no incentive to truthfully disclose that their children work. This, in turn, poses important challenges to the ability of governments and international organizations to monitor and enforce children’s rights. Combining survey data, based on independent reports from primary school children and their parents in two cocoa-producing regions of Côte d’Ivoire, with novel third-party data from costly certification of cocoa production in these regions, partly based on satellite imagery, we show that adults dramatically under-report child labor in our study sample by a factor of at least 60%; in turn, children self-reports provide accurate regional and aggregate accounts of child labor. Evaluating the impacts of a campaign to discourage child labor, we also show that parents’ reports not only underestimate its prevalence, but can even lead to the wrong conclusions about whether and how policy interventions affect child labor.