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Pages: 857 - 876 Abstract: AbstractWe develop a Bayesian latent factor model of the joint long-run evolution of GDP per capita for 113 countries over the 118 years from 1900 to 2017. We find considerable heterogeneity in rates of convergence, including rates for some countries that are so slow that they might not converge (or diverge) in century-long samples, and a sparse correlation pattern (“convergence clubs”) between countries. The joint Bayesian structure allows us to compute a joint predictive distribution for the output paths of these countries over the next 100 years. This predictive distribution can be used for simulations requiring projections into the deep future, such as estimating the costs of climate change. The model's pooling of information across countries results in tighter prediction intervals than are achieved using univariate information sets. Still, even using more than a century of data on many countries, the 100-year growth paths exhibit very wide uncertainty. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00997 Issue No:Vol. 104, No. 5 (2022)
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Pages: 877 - 889 Abstract: AbstractBerkson errors are commonplace in empirical microeconomics. In consumer demand, this form of measurement error occurs when the price an individual pays is measured by the (weighted) average price paid by individuals in a group (e.g., a county) rather than the true transaction price. We show the importance of Berkson errors for demand estimation with nonseparable unobserved heterogeneity. We develop a consistent estimator using external information on the true price distribution. Examining gasoline demand in the United States, we document substantial within-market price variability. Accounting for Berkson errors is quantitatively important. Imposing the Slutsky shape constraint reduces sensitivity to Berkson errors. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_01018 Issue No:Vol. 104, No. 5 (2022)
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Pages: 890 - 908 Abstract: AbstractThis paper estimates the pass-through of minimum wage increases into the prices of U.S. grocery and drug stores. We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices. We show that price adjustments occur mostly in the three months following the passage of minimum wage legislation rather than after implementation, suggesting that pricing of groceries is forward-looking. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00981 Issue No:Vol. 104, No. 5 (2022)
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Pages: 909 - 928 Abstract: AbstractCosts from switching suppliers can affect prices by discouraging buyer movements from high- to low-cost sellers. This paper uses confidential data on U.S. importers and their Chinese exporters to investigate these costs. I find barriers to supplier adjustments: nearly half of importers keep their partner over time. Importers switch less if their supplier offers higher quality or provides lower prices. I propose and structurally estimate a dynamic discrete choice model to compute switching costs. Cost estimates are large, heterogeneous across products, and matter for trade prices: halving switching costs reduces the U.S.-China Import Price Index by 7.6%. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_01015 Issue No:Vol. 104, No. 5 (2022)
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Pages: 929 - 945 Abstract: AbstractUsing the Social Connectedness Index (Bailey, Cao, Kuchler, Stroebel et al., 2018) to capture county-to-county Facebook linkages, I explore how county-level earned income tax credit (EITC) claiming behavior changes when the county's out-of-state social network is exposed to a newly implemented state EITC. Having more out-of-state friends face a state EITC shifts the composition of EITC claims toward more self-employment claiming. EITC-claiming households' income distribution also shifts, moving away from the EITC region with smaller credits, toward income levels that generate the largest EITC. This mimics the direct impacts of state-level EITC policies, consistent with social networks increasing information or salience about EITC policy. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00995 Issue No:Vol. 104, No. 5 (2022)
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Pages: 946 - 961 Abstract: AbstractThis paper analyzes crime as a function of the interaction between offenders and victims. I study robbery of bus drivers, a crime that remains common in cities throughout the world. Exploiting the timing of a Chilean public transportation reform and detailed administrative data, I show how victims' propensity to resist an attack can alter the level and nature of criminal activity. I also find a large decline in crime after the implementation of a technological innovation that eliminated cash transactions on buses. My results suggest a strong relationship between victim incentives, cash, and crime. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00989 Issue No:Vol. 104, No. 5 (2022)
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Pages: 962 - 980 Abstract: AbstractBefore the racial integration of schools in the southern United States, predominantly African American schools were staffed almost exclusively by African American teachers as well, and teaching constituted an extraordinarily large share of professional employment among southern Blacks. The large-scale desegregation of southern schools that occurred after passage of the 1964 Civil Rights Act represented a potential threat to this employment base, and this paper estimates how student integration affected Black teacher employment. Using newly assembled archival data from 759 southern school districts observed between 1960 and 1972, I estimate that a school district transitioning from fully segregated to fully integrated education, which approximates the experience of the modal southern district in this period, led to a 41.7% reduction in Black teacher employment. Additional results, including event-study specifications and models with extensive controls for concurrent policy changes, strongly suggest that these employment reductions were a causal effect of integration and not due to school district self-selection into desegregation. To study the broader impacts of reduced teaching employment, I estimate race-specific changes in occupations and earnings in the decennial Censuses and find that displaced southern Black teachers either entered lower skill occupations within the South or migrated out of the region to continue teaching and that integration-induced displacement led to substantial earnings reductions. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00984 Issue No:Vol. 104, No. 5 (2022)
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Pages: 981 - 996 Abstract: AbstractWe examine gender differences in career progression and promotions using personnel data from the European Central Bank (ECB) during the period 2003–2017. A gender wage gap emerges within a few years of hiring, despite broadly similar entry conditions. We also find a gender promotion gap before 2010 when the ECB issued a public commitment to diversity. Following this change, the promotion gap disappears. Using data on promotion applications, we find a gender application bias, partly driven by preferences for competition. Following promotion, women perform better in terms of salary progression. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00988 Issue No:Vol. 104, No. 5 (2022)
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Pages: 997 - 1009 Abstract: AbstractOver the past fifteen years, eleven states have restricted employers' access to the credit reports of job applicants. We estimate that county-level job vacancies have fallen by 5.5% in occupations affected by these laws relative to exempt occupations in the same counties and national-level vacancies for the same occupations. Cross-sectional heterogeneity suggests that employers use credit reports as signals of a worker's ability to perform the job: vacancies fall more in counties with a large share of subprime residents and less for occupations with other commonly available signals. Vacancies fall most for occupations involving routine tasks, suggesting that credit reports contain information relevant for these types of jobs. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_01019 Issue No:Vol. 104, No. 5 (2022)
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Pages: 1010 - 1027 Abstract: AbstractDo individuals care about their relative income' While this is a long-standing hypothesis, revealed-preference evidence remains elusive. We provide a unique test by studying residential choices: individuals often must choose between places with different income distributions, and as a result they “choose” their relative income. We conducted a field experiment with 1,080 senior medical students who participated in the National Resident Matching Program. We estimate their preferences by combining choice data, survey data on perceptions, and information-provision experiments. The evidence suggests that individuals care about their relative income and that these preferences differ across single and nonsingle individuals. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00991 Issue No:Vol. 104, No. 5 (2022)
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Pages: 1028 - 1045 Abstract: AbstractUsing data on adults' cognitive skills from nineteen countries, this paper shows that labor market conditions during the education-to-work transition affected workers' long-term skill development. Workers who faced higher unemployment rates at ages 18 to 25 have lower skills at ages 36 to 59. Unemployment rates at ages 26 to 35 do not have such an effect. Skill inequality is affected: those with less educated parents experience most of the negative effects. Using German panel data on skills, I document a mechanism related to heterogeneous skill development across firms: young workers at large firms experience higher skill growth than those at small firms. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_01008 Issue No:Vol. 104, No. 5 (2022)
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Pages: 1046 - 1058 Abstract: AbstractWe show that giant and unpredictable oil and gas discoveries trigger FDI bonanzas. Across developing countries, we document a 56% increase in FDI in the two years following a giant discovery. These booms are driven by new projects in sectors such as manufacturing, retail, services, and construction. To assess the job creation effects of one such FDI bonanza in Mozambique, we combine concurrent waves of household surveys and firm censuses and estimate the local job multiplier of FDI. Our estimates suggest that for each new FDI job, an additional 4.4 jobs are created locally, 2.1 of which are formal jobs. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00999 Issue No:Vol. 104, No. 5 (2022)
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Pages: 1059 - 1078 Abstract: AbstractWe use a survey experiment to generate direct evidence on how people acquire and process information. Participants can buy different information signals that could help them forecast future national home prices. We elicit their valuations and exogenously vary the cost of information. Participants put substantial value on their preferred signal and, when acquired, incorporate the signal in their beliefs. However, they disagree on which signal to buy. As a result, making information cheaper does not decrease the cross-sectional dispersion of expectations. We provide a model with costly acquisition and processing of information, which can match most of our empirical results. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_00994 Issue No:Vol. 104, No. 5 (2022)
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Pages: 1079 - 1095 Abstract: AbstractWe exploit inheritance episodes to provide novel causal evidence on the long-run effects of a large financial windfall on saving behavior. For identification, we combine a longitudinal panel of administrative wealth reports with variation in the timing of sudden, unexpected parental deaths. We show that after inheritance, net worth converges toward the path established before parental death, with only one-third of the initial windfall remaining after nine years. We interpret these findings through the lens of a generalized consumption-saving framework. To quantitatively replicate this behavior, life-cycle consumption models require impatient consumers and strong precautionary saving motives. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_01004 Issue No:Vol. 104, No. 5 (2022)
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Pages: 1096 - 1109 Abstract: AbstractMany studies have shown that consumption responds to the arrival of predictable income (excess sensitivity). This paper uses a buffer stock model of consumption to understand what causes excess sensitivity and to test which parameterization is consistent with empirical excess sensitivity estimates. Using high-frequency granular data from a personal finance app, I find that while liquidity constraints are a proximate cause, preferences are the ultimate cause of excess sensitivity. Furthermore, it finds that for feasible parameters, a quasi-hyperbolic version of the model is more consistent with the level of excess sensitivity relative to a standard exponential model. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_01026 Issue No:Vol. 104, No. 5 (2022)
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Pages: 1110 - 1119 Abstract: AbstractThe principle that people should be held personally responsible for the consequences of their choices is a fundamental moral ideal in Western societies. We report from a large-scale experimental study of how far-reaching this principle is for inequality acceptance. We show that third-party spectators violate minimal conditions for a morally relevant choice when making redistributive decisions for two workers. They accept more inequality when the workers have made nominal and forced choices than when brute luck is the source of inequality. We argue that our findings shed light on important current political debates about personal responsibility and redistributive policies. PubDate: Thu, 08 Sep 2022 00:00:00 GMT DOI: 10.1162/rest_a_01010 Issue No:Vol. 104, No. 5 (2022)
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