Authors:Michaillat P; Saez E. Pages: 197 - 215 Abstract: At the zero lower bound, the New Keynesian model predicts that output and inflation collapse to implausibly low levels and that government spending and forward guidance have implausibly large effects. To resolve these anomalies, we introduce wealth into the utility function; the justification is that wealth is a marker of social status, and people value status. Since people partly save to accrue social status, the Euler equation is modified. As a result, when the marginal utility of wealth is sufficiently large, the dynamical system representing the zero-lower-bound equilibrium transforms from a saddle to a source, which resolves all the anomalies. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00893 Issue No:Vol. 103, No. 2 (2021)
Authors:Kurmann A; Sims E. Pages: 216 - 235 Abstract: This paper documents large revisions in a widely used series of utilization-adjusted total factor productivity (TFP) by Fernald (2014) and shows that these revisions can materially affect empirical results about the effects of news shocks. We trace these revisions to changes in estimated factor utilization that are evocative of cyclical measurement issues with productivity. We propose an alternative identification that is robust to these measurement issues. Applied to U.S. data, the shock predicts delayed productivity growth while simultaneously generating strong responses of novel indicators of technological innovation and forward-looking variables. The shock does not lead to comovement in macroeconomic aggregates. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00896 Issue No:Vol. 103, No. 2 (2021)
Authors:Homonoff T; O'Brien R, Sussman AB. Pages: 236 - 250 Abstract: One in five consumer credit accounts incurs late fees each quarter. Evidence on the efficacy of regulations to improve behavior through enhanced disclosure of financial product attributes is mixed. We test a novel form of disclosure that provides borrowers with a personalized measure of their creditworthiness. In a field experiment with over 400,000 student loan borrowers, treatment group members received communications about the availability of their FICO Score. The intervention significantly reduced late payments and increased borrowers' FICO Scores. Survey data show treatment group members were less likely to overestimate their FICO Scores, suggesting the intervention may correct for overoptimism. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00888 Issue No:Vol. 103, No. 2 (2021)
Authors:Kerwin JT; Thornton RL. Pages: 251 - 264 Abstract: This paper demonstrates the acute sensitivity of education program effectiveness to the choices of inputs and outcome measures, using a randomized evaluation of a mother-tongue literacy program. The program raises reading scores by 0.64 SD and writing scores by 0.45 SD. A reduced-cost version instead yields statistically insignificant reading gains and some large negative effects (−0.33 SDs) on advanced writing. We combine a conceptual model of education production with detailed classroom observations to examine the mechanisms driving the results; we show they could be driven by the program initially lowering productivity before raising it, and potentially by missing complementary inputs in the reduced-cost version. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00911 Issue No:Vol. 103, No. 2 (2021)
Authors:Shenhav N. Pages: 265 - 279 Abstract: This paper examines the effect of the female-to-male wage ratio, “relative wage,” on women's spouse quality, marriage, and labor supply over three decades. Exploiting task-based demand shifts as a shock to relative pay, I find that a higher relative wage (a) increases the quality of women's mates, as measured by higher spousal education; (b) reduces marriage without substitution to cohabitation; and (c) raises women's hours of work. These effects are consistent with a model in which a higher relative wage increases the minimum nonpecuniary benefits (“quality”) women require from a spouse and therefore reduce marriage among low-quality husbands. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00919 Issue No:Vol. 103, No. 2 (2021)
Authors:Weisburd S. Pages: 280 - 293 Abstract: This paper estimates the impact of police presence on crime using a unique database that tracks the exact location of Dallas Police Department patrol cars throughout 2009. To address the concern that officer location is often driven by crime, my instrument exploits police responses to calls outside their allocated coverage beat. This variable provides a plausible shift in police presence within the abandoned beat that is driven by the police goal of minimizing response times. I find that a 10% decrease in police presence at that location results in a 7% increase in crime. This result sheds light on the black box of policing and crime and suggests that routine changes in police patrol can have a significant impact on criminal behavior. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00889 Issue No:Vol. 103, No. 2 (2021)
Authors:Agan A; Freedman M, Owens E. Pages: 294 - 309 Abstract: Governments in the United States must offer free legal services to low-income people accused of crimes. To provide these services, many jurisdictions rely on assigned counsel systems, where private attorneys represent indigent defendants on a contract basis. These defendants are more likely to be convicted and incarcerated than defendants with privately retained attorneys. Using detailed court records, we investigate the mechanisms behind this disparity and consider their policy implications. We find that adverse selection among lawyers is not the primary contributor to the assigned counsel penalty. We conclude that reform efforts should address moral hazard in assigned counsel systems. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00891 Issue No:Vol. 103, No. 2 (2021)
Authors:Steinmayr A. Pages: 310 - 327 Abstract: This paper investigates how different forms of exposure to refugees affect voting for Far Right parties. I study the state of Upper Austria where many municipalities hosted asylum seekers and also experienced a massive flow of refugees crossing into Germany in 2015. Exposure to refugees passing through border municipalities increased Far Right votes by about 1.5 percentage points, which suggests that mere exposure can increase Far Right support. Conversely, contact and sustained interactions between natives and asylum seekers in hosting municipalities decreased Far Right votes by about 4 percentage points, which is in line with the intergroup contact theory. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00922 Issue No:Vol. 103, No. 2 (2021)
Authors:Johnsson I; Moon H. Pages: 328 - 345 Abstract: We propose methods of estimating the linear-in-means model of peer effects in which the peer group, defined by a social network, is endogenous in the outcome equation for peer effects. Endogeneity is due to unobservable individual characteristics that influence both link formation in the network and the outcome of interest. We propose two estimators of the peer effect equation that control for the endogeneity of the social connections using a control function approach. We leave the functional form of the control function unspecified, estimate the model using a sieve semiparametric approach and establish asymptotics of the semiparametric estimator. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00870 Issue No:Vol. 103, No. 2 (2021)
Authors:Canay IA; Santos A, Shaikh AM. Pages: 346 - 363 Abstract: This paper studies the wild bootstrap–based test proposed in Cameron, Gelbach, and Miller (2008). Existing analyses of its properties require that number of clusters is “large.” In an asymptotic framework in which the number of clusters is “small,” we provide conditions under which an unstudentized version of the test is valid. These conditions include homogeneity-like restrictions on the distribution of covariates. We further establish that a studentized version of the test may only overreject the null hypothesis by a “small” amount that decreases exponentially with the number of clusters. We obtain a qualitatively similar result for “score” bootstrap-based tests, which permit testing in nonlinear models. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00887 Issue No:Vol. 103, No. 2 (2021)
Authors:Erten B; Leight J. Pages: 364 - 380 Abstract: This paper analyzes the effect of China's accession to the World Trade Organization in 2001 on structural transformation at the local level, exploiting cross-sectional variation in tariff uncertainty faced by county economies pre-2001. Using a new panel of 1,800 Chinese counties from 1996 to 2013, we find that counties more exposed to the reduction in tariff uncertainty postaccession are characterized by increased exports and foreign direct investment, shrinking agricultural sectors, expanding secondary sectors, and higher total and per capita GDP. In addition, when labor substitutes from nonagricultural to agricultural production in counties exposed to positive trade shocks, agricultural output declines. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00852 Issue No:Vol. 103, No. 2 (2021)
Authors:Kovak BK; Oldenski L, Sly N. Pages: 381 - 396 Abstract: We use firm-level data on U.S. multinationals to show how offshoring affects domestic employment within and across firms. We introduce a new instrument for offshoring, bilateral tax treaties, which reduce the cost of offshore activities. We find substantial heterogeneity in effects. A 10% increase in affiliate employment drives a 1.3% increase in employment at the U.S. parent firm, with smaller effects at the industry and regional levels. In contrast, offshoring by vertical multinationals drives declining employment among nonmultinationals in the same industry, and firms opening new affiliates exhibit smaller domestic employment growth than those expanding existing affiliates. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00878 Issue No:Vol. 103, No. 2 (2021)
Authors:Artiles M; Kleine-Rueschkamp L, León-Ciliotta G. Pages: 397 - 411 Abstract: We estimate the effects of political accountability on the selection of politicians when accountability mechanisms are prone to political capture. We compare the characteristics of candidates running in municipalities where the previous incumbent was ousted from office through a recall referendum with those who run where the recall referendum failed by a small margin. Having a recalled incumbent in the previous term causes a negative selection of candidates in terms of their education and previous experience. They are also less representative of indigenous groups. The results are driven by localities where the accountability institution is likely used for political purposes. PubDate: Mon, 10 May 2021 00:00:00 GMT DOI: 10.1162/rest_a_00906 Issue No:Vol. 103, No. 2 (2021)
Hybrid journal (It can contain Open Access articles)
