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Review of Economic Studies
Journal Prestige (SJR): 9.589
Citation Impact (citeScore): 4
Number of Followers: 193  
  Hybrid Journal Hybrid journal (It can contain Open Access articles)
ISSN (Print) 0034-6527 - ISSN (Online) 1467-937X
Published by Oxford University Press Homepage  [412 journals]
  • The Cost of Job Loss
    • Authors: Burdett K; Carrillo-Tudela C, Coles M.
      Pages: 1757 - 1798
      Abstract: AbstractThis article identifies an equilibrium theory of wage formation and endogenous quit turnover in a labour market with on-the-job search, where risk averse workers accumulate human capital through learning-by-doing and lose skills while unemployed. Optimal contracting implies the wage paid increases with experience and tenure. Indirect inference using German data determines the deep parameters of the model. The estimated model not only reproduces the large and persistent fall in wages and earnings following job loss, a new structural decomposition finds foregone human capital accumulation (while unemployed) is the worker’s major cost of job loss.
      PubDate: Wed, 01 Apr 2020 00:00:00 GMT
      DOI: 10.1093/restud/rdaa014
      Issue No: Vol. 87, No. 4 (2020)
  • Unemployment Fluctuations, Match Quality, and the Wage Cyclicality of New
    • Authors: Gertler M; Huckfeldt C, Trigari A.
      Pages: 1876 - 1914
      Abstract: AbstractWe revisit the issue of the high cyclicality of wages of new hires. We show that after controlling for composition effects likely involving procyclical upgrading of job match quality, the wages of new hires are no more cyclical than those of existing workers. The key implication is that the sluggish behaviour of wages for existing workers is a better guide to the cyclicality of the marginal cost of labour than is the high measured cyclicality of new hires wages unadjusted for composition effects. Key to our identification is distinguishing between new hires from unemployment versus those who are job changers. We argue that to a reasonable approximation, the wages of the former provide a composition-free estimate of the wage flexibility, while the same is not true for the latter. We then develop a quantitative general equilibrium model with sticky wages via staggered contracting, on-the-job search, and heterogeneous match quality, and show that it can account for both the panel data evidence and aggregate evidence on labour market volatility.
      PubDate: Fri, 07 Feb 2020 00:00:00 GMT
      DOI: 10.1093/restud/rdaa004
      Issue No: Vol. 87, No. 4 (2020)
  • Population and Conflict
    • Authors: Acemoglu D; Fergusson L, Johnson S.
      Pages: 1565 - 1604
      Abstract: AbstractMedical innovations during the 1940s quickly resulted in significant health improvements around the world. Countries with initially higher mortality from infectious diseases experienced larger increases in life expectancy, population, and subsequent social conflict. This cross-country result is robust across alternative measures of conflict and is not driven by differential trends between countries with varying baseline characteristics. A similar effect is also present within Mexico. Initial suitability conditions for malaria varied across municipalities, and anti-malaria campaigns had differential effects on population growth and social conflict. Both across countries and within Mexico, increased conflict over scarce resources predominates and this effect is more pronounced during times of economic hardship (specifically, in countries with a poor growth record and in drought-stricken areas in Mexico). At least during this time period, a larger increase in population made social conflict more likely.
      PubDate: Wed, 21 Aug 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz042
      Issue No: Vol. 87, No. 4 (2019)
  • Exchange Rate Policies at the Zero Lower Bound
    • Authors: Amador M; Bianchi J, Bocola L, et al.
      Pages: 1605 - 1645
      Abstract: AbstractWe study the problem of a monetary authority pursuing an exchange rate policy that is inconsistent with interest rate parity because of a binding zero lower bound constraint. The resulting violation in interest rate parity generates an inflow of capital that the monetary authority needs to absorb by accumulating foreign reserves. We show that these interventions by the monetary authority are costly, and we derive a simple measure of these costs: they are proportional to deviations from the covered interest parity (CIP) condition and the amount of accumulated foreign reserves. Our framework can account for the recent experiences of “safe-haven” currencies and the sign of their observed deviations from CIP.
      PubDate: Wed, 27 Nov 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz059
      Issue No: Vol. 87, No. 4 (2019)
  • Vintage-Specific Driving Restrictions
    • Authors: Barahona N; Gallego F, Montero J.
      Pages: 1646 - 1682
      Abstract: AbstractLocal air pollution has led authorities in many cities around the world to impose limits on car use by means of driving restrictions or license-plate bans. By placing uniform restrictions on all cars, many of these programs have created incentives for drivers to buy additional, more polluting cars. We study vintage-specific restrictions, which place heavy limits on older, polluting vehicles and no limits on newer, cleaner ones. We use a novel model of the car market and results from Santiago’s 1992 program, the earliest program to use vintage-specific restrictions, to show that such restrictions should be designed to work exclusively through the extensive margin (type of car driven), never through the intensive margin (number of miles driven). If so, vintage restrictions can yield important welfare gains by moving the fleet composition toward cleaner cars, comparing well to alternative instruments such as scrappage subsidies and pollution-based registration fees.
      PubDate: Fri, 24 May 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz031
      Issue No: Vol. 87, No. 4 (2019)
  • Poor Little Rich Kids' The Role of Nature versus Nurture in Wealth and
           Other Economic Outcomes and Behaviours
    • Authors: Black S; Devereux P, Lundborg P, et al.
      Pages: 1683 - 1725
      Abstract: AbstractWealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for pre-birth factors and we find little evidence that nature/nurture interactions are important. When bequests are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth. We further build on the existing literature by providing a more comprehensive view of the role of nature and nurture on intergenerational mobility, looking at a wide range of different outcomes using a common sample and method. We find that environmental influences are relatively more important for wealth-related variables such as savings and investment decisions than for human capital. We conclude by studying consumption as an overall measure of welfare and find that, like wealth, it is more determined by environment than by biology.
      PubDate: Thu, 25 Jul 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz038
      Issue No: Vol. 87, No. 4 (2019)
  • A Quantitative Theory of Political Transitions
    • Authors: Buchheim L; Ulbricht R.
      Pages: 1726 - 1756
      Abstract: AbstractWe develop a quantitative theory of repeated political transitions driven by revolts and reforms. In the model, the beliefs of disenfranchised citizens play a key role in determining revolutionary pressure, which in interaction with preemptive reforms determine regime dynamics. We study the quantitative implications of the model by fitting it to data on the universe of political regimes existing between 1946 and 2010. The estimated model generates a process of political transitions that looks remarkably close to the data, replicating the empirical shape of transition hazards, the frequency of revolts relative to reforms, the distribution of newly established regime types after revolts and reforms, and the unconditional distribution over regime types.
      PubDate: Fri, 08 Nov 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz057
      Issue No: Vol. 87, No. 4 (2019)
  • Aging in Place, Housing Maintenance, and Reverse Mortgages
    • Authors: Cocco J; Lopes P.
      Pages: 1799 - 1836
      Abstract: AbstractWe study the role of housing wealth in financing retirement consumption. In our model retirees: 1. derive utility benefits from remaining in their home (aging in place); and 2. choose in each period whether to maintain their house. The evidence that we present shows that these features are important in explaining the saving decisions of the elderly. The costs and the maintenance requirement of reverse mortgages (RMs) reduce (or eliminate) the benefits of the loans for retirees who wish to do less maintenance. We evaluate the impact of different loan features on retirees’ utility, cash-flows to lenders, and to the government agency that provides mortgage insurance. We show that combining RMs with insurance against a forced home sale (e.g. due to a move to a nursing home) is Pareto improving and can lead to increased demand for the loans due to product complementarities.
      PubDate: Mon, 30 Sep 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz047
      Issue No: Vol. 87, No. 4 (2019)
  • (Il)legal Assignments in School Choice
    • Authors: Ehlers L; Morrill T.
      Pages: 1837 - 1875
      Abstract: AbstractIn public school choice, students with strict preferences are assigned to schools. Schools are endowed with priorities over students. Incorporating constraints from different applications, priorities are often modelled as choice functions over sets of students. It has been argued that the most desirable criterion for an assignment is stability; there should not exist any blocking pair: no student shall prefer some school to her assigned school and have higher priority than some student who got into that school or the school has an empty seat. We propose a blocking notion where in addition it must be possible to assign the student to her preferred school. We then define the following stability criterion for a set of assignments: a set of assignments is legal if and only if any assignment outside the set is blocked with some assignment in the set and no two assignments inside the set block each other. We show that under very basic conditions on priorities, there always exists a unique legal set of assignments, and that this set has a structure common to the set of stable assignments: (i) it is a lattice and (ii) it satisfies the rural hospitals theorem. The student-optimal legal assignment is efficient and provides a solution for the conflict between stability and efficiency.
      PubDate: Fri, 16 Aug 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz041
      Issue No: Vol. 87, No. 4 (2019)
  • Identification and Estimation in Non-Fundamental Structural VARMA Models
    • Authors: Gouriéroux C; Monfort A, Renne J.
      Pages: 1915 - 1953
      Abstract: AbstractThe basic assumption of a structural vector autoregressive moving average (SVARMA) model is that it is driven by a white noise whose components are uncorrelated or independent and can be interpreted as economic shocks, called “structural” shocks. When the errors are Gaussian, independence is equivalent to non-correlation and these models face two identification issues. The first identification problem is “static” and is due to the fact that there is an infinite number of linear transformations of a given random vector making its components uncorrelated. The second identification problem is “dynamic” and is a consequence of the fact that, even if a SVARMA admits a non-invertible moving average (MA) matrix polynomial, it may feature the same second-order dynamic properties as a VARMA process in which the MA matrix polynomials are invertible (the fundamental representation). The aim of this article is to explain that these difficulties are mainly due to the Gaussian assumption, and that both identification challenges are solved in a non-Gaussian framework if the structural shocks are assumed to be instantaneously and serially independent. We develop new parametric and semi-parametric estimation methods that accommodate non-fundamentalness in the MA dynamics. The functioning and performances of these methods are illustrated by applications conducted on both simulated and real data.
      PubDate: Fri, 17 May 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz028
      Issue No: Vol. 87, No. 4 (2019)
  • Dynamic Inconsistency in Food Choice: Experimental Evidence from Two Food
    • Authors: Sadoff S; Samek A, Sprenger C.
      Pages: 1954 - 1988
      Abstract: AbstractWe conduct field experiments to investigate dynamic inconsistency and commitment demand in food choice. In two home grocery delivery programs, we document substantial dynamic inconsistency between advance and immediate choices. When given the option to commit to their advance choices, around half of subjects take it up. Commitment demand is negatively correlated with dynamic inconsistency, suggesting those with larger self-control problems are less likely to be aware thereof. We evaluate the welfare consequences of dynamic inconsistency and commitment policies with utility measures based on advance, immediate, and unambiguous choices. Simply offering commitment has limited welfare (and behavioural) consequences under all measures.
      PubDate: Mon, 20 May 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz030
      Issue No: Vol. 87, No. 4 (2019)
  • Knowledge Spillovers through Networks of Scientists
    • Authors: Zacchia P.
      Pages: 1989 - 2018
      Abstract: AbstractIn this article, I directly test the hypothesis that interactions between inventors of different firms drive knowledge spillovers. I construct a network of publicly traded companies in which each link is a function of the relative proportion of two firms’ inventors who have former patent collaborators in both organizations. I use this measure to weigh the impact of R&D performed by each firm on the productivity and innovation outcomes of its network linkages. An empirical concern is that the resulting estimates may reflect unobserved, simultaneous determinants of firm performance, network connections, and external R&D. I address this problem with an innovative IV strategy, motivated by a game-theoretic model of firm interaction. I instrument the R&D of one firm’s connections with that of other firms that are sufficiently distant in network space. With the resulting spillover estimates, I calculate that among firms connected to the network the marginal social return of R&D amounts to approximately 112% of the marginal private return.
      PubDate: Wed, 29 May 2019 00:00:00 GMT
      DOI: 10.1093/restud/rdz033
      Issue No: Vol. 87, No. 4 (2019)
School of Mathematical and Computer Sciences
Heriot-Watt University
Edinburgh, EH14 4AS, UK
Tel: +00 44 (0)131 4513762

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