Anne Ardila Brenoe, Brothers increase women’s gender conformity, In: Working paper series / Department of Economics, No. 376, 2021. (Working Paper)
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 to the next generation of girls. |
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Andreas Hefti, Julian Teichgräber, Inequality in models with a competition for market shares, In: Working paper series / Department of Economics, No. 375, 2021. (Working Paper)
This paper develops a framework to systematically study how changes in market conditions affect the equilibrium inequality between heterogeneous agents. By stating our setting as a "competition for market shares", we can derive inequality predictions for vastly different competition models. This approach allows us to identify a common structure, e.g., in monopolistic competition, perfect competition, or competition for prizes, that explains why these models deliver similar inequality predictions. We apply our results to problems from trade, competition theory, consumption inequality, political economics and marketing, and relate some of the predicted inequality patterns to empirical evidence. |
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Torsten Ehlers, Mathias Hoffmann, Alexander Raabe, Non-US global banks and dollar (co-)dependence: how housing markets became internationally synchronized, In: Working paper series / Department of Economics, No. 374, 2020. (Working Paper)
US net capital inflows drive the international synchronization of house price growth. An increase (decrease) in US net capital inflows improves (tightens) US dollar funding conditions for non-US global banks, leading them to increase (decrease) foreign lending to third-party borrowing countries. This induces a synchronization of lending across borrowing countries, which translates into an international synchronization of mortgage credit growth and, ultimately, house price growth. Importantly, this synchronization is driven by non-US global banks’ common but heterogenous exposure to US dollar funding conditions, not by the common exposure of borrowing countries to non-US global banks. Our results identify a novel channel of international transmission of US dollar funding conditions: As these conditions vary over time, borrowing country pairs whose non-US global creditor banks are more dependent on US dollar funding exhibit higher house price synchronization. |
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Henrik Kleven, Camille Landais, Johanna Posch, Andreas Steinhauer, Josef Zweimüller, Do family policies reduce gender inequality? Evidence from 60 years of policy experimentation, In: NBER Working Paper Series, No. 28082, 2021. (Working Paper)
Do family policies reduce gender inequality in the labor market? We contribute to this debate by investigating the joint impact of parental leave and child care, using administrative data covering the labor market and birth histories of Austrian workers over more than half a century. We start by quasi-experimentally identifying the causal effects of all family policy reforms since the 1950s on the full dynamics of male and female earnings. We then map these causal estimates into a decomposition framework building on Kleven, Landais and Søgaard (2019) to compute counterfactual gender inequality series. Our results show that the enormous expansions of parental leave and child care subsidies have had virtually no impact on gender convergence. |
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Nir Jaimovich, Stephen Terry, Nicolas Vincent, Location, location, location: manufacturing and house price growth, In: Discussion Paper Series, No. DP15409, 2020. (Working Paper)
Exploiting data on tens of millions of housing transactions, we show that (1) house prices grew by less in manufacturing-heavy US regions and (2) that this pattern is especially present for the lowest-value homes. Counterfactual accounting exercises reveal that regional differences in the growth of these lowest-value homes more than fully account for an observed increase in overall house price inequality. We conclude that the relative economic decline of manufacturing- heavy areas extends far beyond income and employment flows to include shifts in important local asset prices, a pattern which matters for total house price inequality. |
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Christian Rupietta, Johannes Meuer, Uschi Backes-Gellner, How do apprentices moderate the influence of organizational innovation on the technological innovation process?, In: Swiss Leading House "Economics of Education" Working Paper, No. 145, 2018. (Working Paper)
This paper contributes to the literature on non-monetary benefits of Vocational Education and Training (VET) by investigating its influence on a firm’s innovation process. While an increasing number of studies finds positive effects of VET on innovation in firms, the role that apprentices play in this mechanism has largely been unexplored. To analyze this role, we use the distinction between technological and organizational innovation, two complementary forms of innovation. When investigating the initiators of organizational innovation, to date, research has primarily focused on internal and external change agents at upper echelons. We conceptualize apprentices as hybrid (a combination of internal and external) change agents at lower echelons. We examine how apprentices in the Swiss VET system are key to integrating external knowledge (through school-based education) with internal knowledge (through on-the-job training) and moderating the influence of organizational innovation on technological innovation. Drawing on a sample of 1,240 firms from a representative Swiss Innovation Survey, we show that apprentices leverage the positive association between innovations in a firm’s business processes and organization of work with incremental innovations. With the description of a new mechanism that shows the significant role of apprentices on firms’ technological innovation activities and evidence for supportive associations between key variables, we contribute to the understanding of the influence of VET on innovation in firms. |
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Marek Pycia, Kyle Woodward, Auctions of homogeneous goods: a case for pay-as-bid, In: Discussion Paper Series, No. 15656, 2021. (Working Paper)
The pay-as-bid (or discriminatory) auction is a prominent format for selling homogenous goods such as treasury securities and commodities. We prove the uniqueness of its pure-strategy Bayesian Nash equilibrium and establish a tractable representation of equilibrium bids. Building on these results we analyze the optimal design of pay-as-bid auctions, as well as uniform-price auctions (the main alternative auction format), allowing for asymmetric information. We show that supply transparency and full disclosure are optimal in pay-as-bid, though not necessarily in uniform-price; pay-as-bid is revenue dominant and might be welfare dominant; and, under assumptions commonly imposed in empirical work, the two formats are revenue and welfare equivalent. |
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Rodrigo Adão, Paul Carrillo, Arnaud Costinot, Dave Donaldson, Dina Pomeranz, International trade and earnings inequality: a new factor content approach, In: Working Paper Series, No. 28263, 2020. (Working Paper)
We develop a new factor content approach to study the impact of trade on inequality. Our analysis generalizes the theoretical results of Deardorff and Staiger (1988) and improves on past empirical implementations of these results. Combined with unique administrative data from Ecuador, our approach yields measures of individual-level exposure to exports and imports, for both capital and labor income, as well as estimates of the incidence of such exposure across the income distribution. We find that international trade raises earnings inequality in Ecuador, especially in the upper-half of the income distribution. However, the drop in inequality experienced by Ecuador over the last decade would have been less pronounced in the absence of trade. |
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Maja Adena, Ruben Enikolopov, Maria Petrova, Hans-Joachim Voth, Bombs, broadcasts and resistance: Allied intervention and domestic opposition to the Nazi regime during World War II, In: CEPR Discussion Papers, No. 15292, 2020. (Working Paper)
Can bombs and broadcasts instigate resistance against a foreign regime? In this paper, we examine the canonical case of bombing designed to undermine enemy morale - the Allied bomber offensive against Germany during World War II. Our evidence shows that air power and the airwaves indeed undermined regime support. We collect data on treason trials and combine it with information on the bombing of over 900 German towns and cities. Using plausibly exogenous variation in weather, we show that places that suffered more bombardment saw noticeably more opposition. Bombing also reduced the combat motivation of soldiers: fighter pilots from bombed-out cities performed markedly less well after raids.
We also provide evidence that exposure to BBC radio, especially together with bombing, increased the number of resistance cases. We corroborate these findings with the evidence on people’s opinions and behavior using unique survey data collected in 1945. |
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Leonardo Bursztyn, Aakaash Rao, Christopher P Roth, David Yanagizawa-Drott, Misinformation during a pandemic, In: NBER Working Paper Series, No. 27417, 2020. (Working Paper)
Media outlets often present diverging, even conflicting, perspectives on reality — not only informing, but potentially misinforming audiences. We study the extent to which misinformation broadcast on mass media at the early stages of the coronavirus pandemic influenced health outcomes. We first document large differences in content between the two most popular cable news shows in the US, both on the same network, and in the adoption of preventative behaviors among viewers of these shows. Through both a selection-on-observables strategy and an instrumental variable approach, we find that areas with greater exposure to the show downplaying the threat of COVID-19 experienced a greater number of cases and deaths. We assess magnitudes through an epidemiological model highlighting the role of externalities and provide evidence that contemporaneous information exposure is a key underlying mechanism. |
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Johannes Kunz, Carol Propper, Kevin E Staub, Rainer Winkelmann, Assessing the quality of public services: does hospital competition crowd out the for-profit quality gap?, In: CEPR Discussion Papers, No. 15045, 2020. (Working Paper)
We examine variation in hospital quality across ownership, market concentration and membership of a hospital system. We use a measure of quality derived from the penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program. We employ a novel estimation approach that extracts latent hospital quality from panel data on penalties and addresses the problem of never- or always-penalized hospitals in short panels. Our quality measure correlates strongly across penalized conditions and with other non-incentivized quality metrics. We document a robust and sizable for-profit quality gap, which is largely crowded out by competition, particularly amongst high-quality and system-organized hospitals. |
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Andreas Haller, Stefan Staubli, Josef Zweimüller, Designing disability insurance reforms: tightening eligibility rules or reducing benefits, In: NBER Working Paper Series, No. 27602, 2020. (Working Paper)
We study the welfare effects of disability insurance (DI) and derive social-optimality conditions for the two main DI policy parameters: (i) DI eligibility rules and (ii) DI benefits. Causal evidence from two DI reforms in Austria generate fiscal multipliers (total over mechanical cost reductions) of 2.0-2.5 for stricter DI eligibility rules and of 1.3-1.4 for lower DI benefits. Stricter DI eligibility rules generate lower income losses (earnings + transfers), particularly at the lower end of the income distribution. Our analysis suggests that the welfare cost of rolling back the Austrian DI program is lower through tightening eligibility rules than through lowering benefits. Applying our framework to the US DI system suggests that both loosening eligibility rules, and increasing benefits, would be welfare increasing. |
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Igor Letina, Shuo Liu, Nick Netzer, Optimal contest design: a general approach, In: Discussion Papers, No. 20-11, 2020. (Working Paper)
We consider the design of contests for n agents when the principal can choose both the prize profile and the contest success function. Our framework includes Tullock contests, Lazear-Rosen tournaments and all-pay contests as special cases, among others. We show that the optimal contest has an intermediate degree of competitiveness in the contest success function, and a minimally competitive prize profile with n−1 identical prizes. The optimum can be achieved with a nested Tullock contest. We extend the model to allow for imperfect performance measurement and for heterogeneous agents. We relate our results to a recent literature which has asked similar questions but has typically focused on the design of either the prize profile or the contest success function. |
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Ralph Ossa, Robert W Staiger, Alan O Sykes, Disputes in international investment and trade, In: Working Paper Series, No. 27012, 2020. (Working Paper)
International investment agreements employ dispute settlement procedures that differ markedly from their counterparts in trade agreements along three key dimensions: standing (i.e., the right to file grievances), the nature of the remedy, and the remedial period. In the state-to-state dispute settlement procedures of a typical trade agreement, only governments have standing, while private investors also have standing in the investor-state dispute settlement procedures employed by investment agreements. Trade agreements typically employ tariff retaliation as the remedy for violation of the agreement, while the award of cash damages is the norm in investment disputes. And trade agreements typically provide for only prospective remedies covering harm done subsequent to a ruling, while the damages awarded in investment disputes routinely cover past as well as future harms. We develop parallel models of trade agreements and investment agreements and employ them to study these differences. We argue that the differences can be understood as arising from the fundamentally different problems that trade and investment agreements are designed to solve. |
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Hans-Joachim Voth, Guo Xu, Encouraging others: punishment and performance in the Royal Navy, In: CEPR Discussion Papers, No. 14476, 2020. (Working Paper)
Can severe penalties ”encourage the others”? Using the famous case of the British Admiral John Byng, executed for his failure to recapture French-held Menorca in 1757, we examine the incentive effects of judicial punishments. Men related to Byng performed markedly better after his unexpected death. We generalize this result using information from 963 court martials. Battle performance of captains related to a court-martialed and convicted officer improved sharply thereafter. The loss of influential connections was key for incentive effects - officers with other important connections improved little after Byng’s execution or other severe sentences. |
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Andreas Hefti, Peiyao Shen, King King Li, Igniting deliberation in high stake decisions: a field study, In: Working paper series / Department of Economics, No. 378, 2021. (Working Paper)
We conduct a large scale randomized field experiment to study whether providing recipients – 42,454 Chinese households in a rural area – with information on the costs of a real decision they make can help to improve the quality of their choices. The decisions are of high financial impact, as the objects of deliberation – air conditioners – have upfront prices exceeding the average monthly salary of a household. Besides providing nominal cost information, we conduct two additional treatments, where we either present the same information by making the real opportunity costs salient, or by administering the information via a quiz. The former aims at facilitating the comparison of effective costs, while the latter aims at enhancing attention and cognitive involvement. We find that providing cost information substantially affects the choices made, and reduces the decision mistakes, in particular in the two additional treatments. |
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Mathias Hoffmann, Iryna Stewen, Michael Stiefel, Growing like Germany: local public debt, local banks, low private investment, In: Working paper series / Department of Economics, No. 380, 2023. (Working Paper)
Over 2010-2016, municipal debt in Germany crowded out private investment worth 1 percent of GDP. Forced to lend to municipalities by their statutes, local public banks compensated for declining municipal-debt yields by charging higher rates to firms in Germany’s locally segmented credit markets. The ensuing crowding out was made worse by increased municipal borrowing when expensive fiscal commitments were shifted from federal and state to the municipal levels following the introduction of the debt brake. Our results identify new channels through which low interest rates adversely affect real outcomes and locally segmented credit markets can amplify contractionary effects from fiscal austerity. |
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Shimon Kogan, Florian H Schneider, Roberto A. Weber, Self-serving biases in beliefs about collective outcomes, In: Working paper series / Department of Economics, No. 379, 2021. (Working Paper)
Beliefs about collective outcomes, such as economic growth or firm profitability, play an important role in many contexts. We study biases in the formation of such beliefs. Specifically, we explore whether over-optimism and self-serving biases in information processing—documented for beliefs about individual outcomes—affect beliefs about collective outcomes. We find that people indeed exhibit self-serving biases for collective outcomes, and that such biases are similar to biases for individual outcomes. In addition, we investigate whether collective selfdelusion is mitigated by market institutions. If anything, biases in information processing are more pronounced in the presence of a market. |
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Carlos Alos-Ferrer, Maximilian Mihm, Updating stochastic choice, In: Working paper series / Department of Economics, No. 381, 2021. (Working Paper)
When an economic agent makes a choice, stochastic models predicting those choices can be updated. The structural assumptions embedded in the prior model condition the updated one, to the extent that the same evidence produces different predictions even when previous ones were identical. We provide a general framework for models of stochastic choice allowing for arbitrary forms of (structural) updating and show that different models can be sharply separated by their structural properties, leading to axiomatic characterizations. Our framework encompasses Bayesian updating given beliefs over deterministic preferences (as implied by popular random utility models) and standard neuroeconomic models of choice, which update decision values in the brain through reinforcement learning. |
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Sönke Ehret, Sonja Vogt, Andreas Hefti, Charles Efferson, Leading with the (recently) successful? Performance visibility and the evolution of risk taking, In: Working paper series / Department of Economics, No. 382, 2021. (Working Paper)
The popular practice of “leading by the successful” is viewed as a hallmark of motivational leadership. A central rationale for leaders to make successful team members salient is that it may induce social learning, where followers strive to adopt a favorable behavior. The reliance of a leader on such success-biased social learning presumes that imitation by followers occurs only to the extent as outstanding success was caused by a superior ability or knowledge of the respective peer. In this article, we conduct a laboratory experiment to study whether imitation of the successful may occur even if imitation necessarily fails to be an effective way of improving one’s performance. The experimental approach establishes the necessary control to assure that success-biased learning cannot systematically improve the decisions made, and allows us to isolate the behavior of the followers from possible feedback effects of the leader. The data show that a substantial amount of imitation occurs, which in our setting leads to a sizeable and persistent increase of the average risk taken in the teams. Our finding thus indicates a limitation of the practice to lead with the successful. |
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