Warwick Monash Economics Student Papers
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The Warwick Monash Economics Student Papers (WM-ESP) gather the best Undergraduate and Masters dissertations by Economics students from the University of Warwick and Monash University. This bi-annual paper series showcases research undertaken by our students on a varied range of topics. Papers range in length from 5,000 to 8,000 words depending on whether the student is an undergraduate or postgraduate, and the university they attend. The papers included in the series are carefully selected based on their quality and originality. WM-ESP aims to disseminate research in Economics as well as acknowledge the students for their exemplary work, contributing to the research environment in both departments.
WM-ESP Editorial Board
- Sascha O. Becker (Monash University and University of Warwick)
- Mark Crosby (Monash University)
- Atisha Ghosh (University of Warwick)
- James Fenske (University of Warwick)
- Cecilia T. Lanata-Briones (University of Warwick)
- Thomas Martin (University of Warwick)
- Vinod Mishra (Monash University)
- Choon Wang (Monash University)
- Natalia Zinovyeva (University of Warwick)
56 - The relationship between the University Wage Premium and the Urban/Rural Divide in AustraliaDaniel Boss
This paper extends research conducted on the wage premia in Australia from acquiring tertiary education qualifications, covering the period 2007-08 to 2019-20. This analysis finds that while there is an increase in wages for those that complete tertiary education, the proportional increase in wages from obtaining university qualification declines marginally over the period. Conversely, the proportional increase in wages from obtaining other tertiary qualifications remains constant, with males consistently earning higher proportional increases than females. When accounting for location, there is no consistent significant effect on wages when comparing capital city and regional populations. However, when the mining industry is also accounted for, there is a significant positive effect to wages from living in a capital city in most years assessed, ranging from 2.5 to 6.7 per cent
55 - The effect of overeducation on unemployment in OECD countriesConnor McGrath
The optimal allocation of human resources into different areas of the economy is vital for the growth and productivity of countries, particularly in a rapidly changing workforce environment. Previous literature and statistics indicate that overeducation (when an individual is overqualified for their career) lengthens unemployment at the individual level after graduation, among other negative outcomes. This study aimed to assess whether increasing the proportion of higher degree graduates affected the unemployment rate of countries in the subsequent year, using a differences in differences model. The study used graduation data from 2013-2018 in 23 countries. The results suggest that having more bachelor’s and master’s degree graduates increases the next year’s unemployment rate in countries with higher relative levels of overeducation, while increasing graduates from other degree types did not have this effect. This study was severely limited by a small sample size, but the results suggest further research on this issue is warranted.
54 - The relationship between inequality and bank credit in AustraliaJamie van Netten
This paper examines the relationship between economic inequality and expansions of bank credit in Australia throughout recent decades. This relationship is a central component of what has become colloquially known as the “Rajan hypothesis” and more technically referred to as the “inequality, credit, crisis nexus”. The findings of the paper suggest that although there is a strong positive relationship between inequality and expansions of bank credit in Australia at the most aggregated level (consistent with international studies of the phenomenon in which Australia was included in panel data), when the types of loans are examined in more detail, their correlation with inequality is not consistent with the belief that credit is channelled specifically to low income households as inequality worsens (as is suggested by the Rajan hypothesis). There are multiple ways in which the Australian case differs from the American which may contribute to the differing results, some of which include a lower levels of income inequality, more progressive taxation policy which reduces consumption inequality, and stricter macroprudential policy which resulted in fewer subprime loans.
53 - Application method of rational inattention hypothesis, and Rational Inattention New Keynesian Philips Curve creationShun Tonami
This paper gives a fresh perspective on the New Keynesian Philips Curve (NKPC) when combining the rational inattention hypothesis, which will give a new insight into backward-looking evidence. A further contribution of this paper is to give a unique application method of the development of the rational inattention hypothesis in other economic fields. This study provides the viewpoint that OLS (ordinary least squares) estimators have an imperfect information bias under the noise information model where economic agents optimize their behaviors through the rational inattention hypothesis. Specifically, the information flow constraint is redefined as the regression coefficient constraint by information theory extension. As a result, if the rational inattention hypothesis is expected to hold in economic fields, the Ridge regression can provide optimal estimations for economists in their fields by allowing them to consider the imperfect information bias through penalizing the coefficients. In empirical work, the rational inattention model complements the NKPC by including the imperfect information bias error in the regression analysis. The estimation reveals that the imperfect information bias error can play a backward-looking role. The rational inattention NKPC introduces the backward-looking element theoretically and demonstrates inflation inertia well.
52 - Is car sharing in Australia socio-spatially equitable?Angeline Bilas
This paper investigates the impact of car sharing services (GoGet and Flexicar) on transport equity in Melbourne and Brisbane, Australia, including two lower socio-economic regions of Melbourne. The results show evidence of strong latent demand for car sharing services in these areas, indicating the potential for car sharing to improve access to transport and transport equity for disadvantaged communities. The study also finds that the main barriers to the adoption of car sharing were lack of availability, cost and lack of awareness. The findings suggest that expanding car sharing services could improve transport equity outcomes in low socio-economic areas.
51 - How does Monitoring and Evaluation affect Racial Health Inequality?Evidence from PMAQ Program in BrazilTaoshan Chen
This study provides novel evidence on how monitoring and evaluation affects racial health inequality, with data from the Primary Care Access and Quality (PMAQ) Program in Brazil. By using the heterogeneity-robust estimator from de Chaisemartin and D'Haultfoeuille (2022), this study considers the non-staggered and non-binary characteristics of the treatment. The results show that an increase in monitoring and evaluation intensity can reduce racial health inequality, achieved by improving the health conditions for non-white individuals and deterioration of the health conditions for white individuals. It is suggested for policy makers to increase the allocation of health resources to ensure that while racial health inequality is reduced, both white and non-white individuals can benefit from an improvement in primary health care, rather than narrowing the gap by reducing the quality of care for one group.
50 - Mann's imperial march: Modelling the role of marcher lords in ancient state development and expansionAndrew Moore
This article uses economic analysis of the marcher lord actor theorised by sociology literature, particularly the work of Michael Mann (1986), to explain the shifting nature of power in the ancient world. We model the marcher lord to argue that a first mover advantage from developing state institutions first does not bring a lasting military advantage as lesser developed lords located closer to the periphery of a region are better able to diversify their armies. We develop a second model to analyse Mann's strategies of control and a rational calculus of technology adoption to consider whether new empires will emerge to dominate existing empires. We find that advancement does not emanate from the seat of power, rather marcher lords on the periphery of civilisation development have the opportunity to expand leading to them being more innovative and able to shift the centre of power away from stablished empires in later time periods.
49 - The Role of Social Contact in the Infectious Disease Spreading: Evidence from the 1918 Influenza in SwedenXinghua Qi
Infectious disease has always been a concern to people, especially under the current COVID-19 pandemic. The aim of this paper is to find a causal relationship between social interaction and disease spreading. This paper takes the ‘Spanish Flu’ in 1918 in the background of Sweden rather than COVID to rule out some uncertainty in transmission tunnels and use railway access as proximity to social contact. Using Diff-in-Diff identification, combined with a short-term event-study design, I show that localities that have railway stations nearby are likely to have more death cases during the influenza period. I use exogenous variation in railway station emergence from initial railway plans in addition and verifying that railway indeed facilitates the disease transmission and mortality rate as well but only with limited effects.
48 - The impact of private health insurance on household savings: Evidence from AustraliaJohn Nguyen
This paper analyses for the first time, the relationship between private health insurance and household savings behaviour in Australia. Using the nationally representative longitudinal dataset from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, we estimate the effect of private health insurance on savings, wealth accumulation and different types of asset holdings. We find strong evidence of a positive relationship between private health insurance and savings using a variety of panel fixed-effects, instrumental and non- instrumental methods. The magnitude of the effect is larger for households that do not receive public transfers, reside in a major city, have better health or have completed tertiary education. Our findings show that time preference is a partial mediation channel between private health insurance and savings, resulting in larger effects for non-financial asset holdings driven mostly by real estate wealth.
47 - Estimating the Impact of the Minimum Energy Efficiency Standard on Property PricesEleni Sandi
The Minimum Energy Efficiency Standard (MEES) aims to improve the energy efficiency of privately rented properties in England and Wales. Previous literature identifies this policy intervention as a driver of transition risk as it devalues substandard real estate. This paper reveals that MEES also devalues neighbouring houses meant to be una↵ected by the policy, i.e. above-standard properties. The study leverages a dataset that combines energy efficiency and transaction data at the postcode level to capture this spatial externality. A concentration measure for sub-standard properties within a neighbourhood is constructed, which is applied to aggregate and property level analyses using a difference-in-difference specification. The aggregate analysis reveals that an incremental increase in the concentration of sub-standard housing within a postcode sector after introducing the standard leads to a 20.1% decrease in aggregate prices for above-standard houses. A repeated sales regression run on property-level data finds that an increase in concentration leads to a more plausible 4.03% decrease in prices for above-standard properties. These results imply potential problems for homeowners who may find themselves in negative equity due to the aggregate price drop, which may also negatively impact their pro-environmental investments.
46 - Income and wildlife hunting in the Anthropocene: Evidence from CambodiaSharar Kader
Wildlife hunting is one of the largest causes of biodiversity loss, yet its drivers are still poorly understood. This paper quantifies the relationship between income and wildlife hunting in Cambodia, a country at the forefront of the clash between economic development and biodiversity loss. We use two nationally representative datasets which, unusually, collect detailed data on both the consumption and sales of hunted wildlife to estimate the importance of income on wildlife hunting in rural areas. Using rainfall shocks in the beginning of the main agricultural production season and prices of other protein sources as sources of exogenous variation in household income, we show that income has a causal negative relationship with wildlife hunting in rural Cambodia. We use these estimates to explore the effectiveness of cash transfers as a policy that promotes both wildlife conservation and poverty alleviation by primarily reducing the value of hunted wildlife as a coping strategy.
45 - Can Education Change Risk Preference? Evidence from Indonesia and MexicoReene Zhou
To test whether education can change risk preference, I exploit the Indonesian school construction programme and the Mexican education reform in compulsory schooling as two separate natural experiments. Applying the instrumental variable approach, I do not find a causal effect of education on risk preference. The results are consistent in the two different settings, so my findings are externally valid. The results suggest that a change in risk preference may not be the channel via which the impact of education on risk-taking in real life. This paper contributes to the literature on the determinants of social preferences and the outcomes of education.
44 - The effect of housing costs on household transportationFaye Khammo
We use individual-level panel data from Australia and a novel fixed-effect instrumental variable approach to estimate the causal effect of housing cost on five measures of household transportation; work commute time, relocation, and the respective expenditure share on motor vehicle fuel, public transport and taxi, and total transportation. The instrumental variable exploits arguably exogenous variation in housing costs induced by foreign investments that flow differentially into regions according to the past geographical distribution of immigrants. We find that rises in housing costs, measured by the composite opportunity costs faced by representative renters and owners living in an area, increase an individual’s work commute time and the probability of relocation, and lead to a shift in the individual’s expenditure away from fuel towards public transportation.
43 - Analysing the response of U.S. financial market to the Federal Open Market Committee statements and minutes based on computational linguistic approachesPan Xuefan
I conduct content analysis and extent the existing models of analysing the reaction of the stock market and foreign currency markets to the release of Federal Open Market Committee (FOMC) statements and meeting minutes. The tone changes and uncertainty level of the monetary policy communication are constructed using the dictionary-based word-count approach at the whole document level. I further apply the Latent Dirichlet Allocation (LDA) algorithm to investigate the different impacts of topics in the meeting minutes. High-frequency data is used as the analysis is an event study. I find that the tone change and uncertainty level have limited explanation power on the magnitude of the effect of the release of FOMC documents especially statements on the financial market. The communication from FOMC is more informative for the market during the zero lower bound period, compared to the whole sample period.
42 - Government Expenditures in a Small Open Economy Model: The Role of Credit ConstraintZhe Wu
We investigate the role of international credit market constraint in a dynamic stochastic general equilibrium model in determining the effect of government spending policies on macroeconomic variables such as consumption and the real exchange rate in a small open economy. The numerical results show that increasing government expenditure under certain economic shocks can increase the value of the real exchange rate and reduce the chance of the small open economy reaching the borrowing limit. Hence, the dynamics of consumption and the real exchange rate can be significantly affected by government spending policies under international credit market constraints.
41 - How the risk of job automation in the UK has changed over timeMatthew James Darke
Developments in Artificial Intelligence and Machine Learning technologies have had massive implications for labour automation. This paper builds on the task-based methodology first adopted by Frey and Osborne (2013) to predict how the risk of automation evolved in the UK labour between 2012 and 2017 using data from the UK Skills and Employment Survey. The analysis accounts for technological progress, making use of two sets of experts’ assessments for 70 occupations. The probability of automation is predicted for each individual using a set of self-reported job skills. It finds that the proportion of jobs at high-risk from automation has risen from 10.6% to 23.4%, and that this is largely due to better technology rather than changing job skill requirements. It also identifies sectors experiencing the greatest increase in automation risk between the two periods and, in contrast, those which appear complementary to technology, drawing on occupational case studies as evidence.
40 - Price dispersion in the rideshare industry: a study of the Mexico City marketTom Sullivan
Nascent and highly dynamic industries such as the rideshare industry have disrupted traditional industries and business models. The use of technology has allowed firms like Uber and Didi to compete over both consumers and workers on an increasingly sophisticated level. This paper explores the use of algorithmic pricing strategies employed by the rideshare industry and the impact of such strategies on the overall level of competition in the market. It uses the Mexico City, Mexico, rideshare industry as a case study. The paper shows that specific firms target specific consumers based on whether those consumers are informed or uninformed about other options in the market, and do so at specific times based on the level of demand in the market. The findings of the paper are relevant for both economic understanding of such markets as well as policy responses.
39 - The Educational Impact of Weakening Teachers’ Unions: Evidence from WisconsinJack Kemp
The impact of teachers’ unions on educational outcomes is theoretically and empirically ambiguous. This study aims to provide additional evidence to this debate by analyzing the educational impact of Wisconsin’s Act 10, which significantly weakened teachers’ unions. A unique school-level dataset is constructed containing data on educational outcomes, high-school and district-level characteristics in Wisconsin and Illinois. Schools in treated and control groups are matched using propensity score matching. A difference-in-difference methodology is used to mitigate problems surrounding simultaneity and omitted variable bias from standard OLS regression. This paper uses an event study design and a triple difference model to estimate the effect of Act 10 on the dropout rate and subject proficiency rate. The triple difference model used has lower power but is more robust to the parallel trends assumption as it takes into account differences in economic conditions between states. Models suggest that weakening teachers’ unions worsens educational outcomes, providing support for the union-voice hypothesis.
38 - Miss Congeniality in Crisis: a theoretical model of gender, cooperation and leadershipJeanne Yi-Ern Cheong
Why do female leaders do better in crisis situations than their male counterparts as a stylised fact? We integrate intrinsic preference into a Leader – Expert coordination game to model the impact of dominant strategies on the effectiveness of crisis management outcomes. We show that given the Leader has intrinsic preference for cooperative (competitive) behaviour, the Expert will reciprocate in kind which results in the highest (lowest) social outcome. Using cultural transmission theory to develop the theoretical micro-foundation of this preference, we find socialisation inefficiencies arising from two-parent socialisation result in the persistence of cooperative traits in women and competitive traits in men, thereby providing a mechanism for more effective crisis management by female leaders. Drawing upon feminist and leadership theory to inform our assumptions, we suggest that collective ability to deal with crisis will be improved if male leaders are more cooperative.
37 - Why Do Men Keep Swiping Right? Two-Sided Search in Swipe-Based Dating PlatformsPatricio Hernandez Senosiain
In today's love market, swipe-based dating platforms (SBDPs) such as Tinder or Bumble have a well-established presence, but novel platform features can add signicant complexities to the user's search problem in ways that have been largely under-studied in previous literature. This paper formulates a model of two-sided search within SBDPs, where agents with heterogeneous preferences seek multiple romantic partners whilst facing intertemporal action constraints. Using numerical methods, I approximate stationary equilibria and perform comparative statics on various exogenous parameters that help explain stylised empirical facts. Finally, agent-based simulations are used to asses the structure of stationary equilibria as well as its attainability under myopic best-response dynamics.
36 - Do economic impact assessments of motorsport events overlook a human capital cost from changes in spectators’ driving behaviour? An investigation into the Australian Formula One Grand PrixJack Doughty
This research project intends to further contribute to academic literature surrounding the relationship between motorsport events and spectators’ driving behaviour. Namely, it attempts to determine if there is a quantifiable human capital cost to Victoria’s economy from greater motor vehicle crashes (MVCs) over the course of the Australian Formula One Grand Prix event. In examining VicRoads traffic incident data from 2006 to 2019, this analysis finds statistically significant evidence to suggest there is on average +7.05 to +13.01 more high-speed MVCs in Victoria throughout the Australian Formula One Grand Prix event. In attempting to improve the accuracy of economic impact assessment methodology, this translates to a previously ignored expected human capital cost to Victoria’s economy when a Formula One event is hosted of $1,326,450.52 to $2,447,818.62. In response, this research project contends that economic impact assessments for motorsport events must include a calculation of the human capital cost from a change in spectators’ driving behaviour.
35 - Do Songs Become More Popular After Being Sampled?Harry Beaven
Ever since star-studded copyright infringement cases in the early 1990s concluded that the process of music sampling did not constitute ‘fair use’ of intellectual property, high licensing costs have made the process prohibitively expensive. Employing streaming service data, this paper reevaluates the traditional ineligibility of the fair use doctrine by presenting empirical evidence of music sampling’s effect on the popularity of sampled songs on Spotify over the period 2016-2022. It then examines for which levels of pre-sampling popularity this effect is strongest, as well as the effect of genre and the relationship between the genres of the sampled and sampling song. We find that sampled songs are added to playlists at a 20-40% higher rate for a seven week period after being repurposed within popular songs. Furthermore, original works see greater increases in the rate of playlist addition when there is more scope for sampling to act as informative advertising: when sampled songs were already well known, or had genre characteristics that imply listener familiarity (such as being repurposed in a song of the same genre), our primary findings diminished or disappeared entirely.
34 - Exchange Asymmetry and Charitable ObjectsAnthony Luxford
This paper presents results from an online experiment to show whether exchange asymmetry exists with charitable objects; a novelty good not yet used in past experiments. The rationale of this novelty was to excavate the notion of ownership of the goods by reason that charitable objects cannot be kept. These experimental results show exchange asymmetry exists in this novel context, implicating that ownership of the object was not necessary for exchange asymmetry to occur. This supports literature which posits that experimental protocols underpin observed exchange asymmetries in laboratory experiments. This research, therefore, further demarcates a distinguishing line between (1) the increased valuation of an object due to idiosyncratic associations through its ownership over time and (2) an immediately instantiated sense of ownership proclaimed to be the same effect manifesting in laboratory experiments.
33 - Impacts of ECB Unconventional Monetary Policy on Eurozone sovereign risk: A Cross-Country AnalysisAnya Dobson
This paper investigates the impact of ECB Unconventional Monetary Policy announcements on the 10-year sovereign bond yields of eleven Euro area countries. This paper uses event study methodology to examine expansionary UMP announcements between 1st January 2007 and 31st December 2021. Consistent with the literature, I find significant negative announcement effects on sovereign yields collectively examining all programmes. Differences in the magnitude and significance of individual country reactions are closely related to their solvency status. This is persistent for the most recent programmes in response to the Covid-19 pandemic which extends the scope of current literature. This paper also incorporates intraday analysis to more closely examine the determinants of announcement effects on their respective dates.
32 - The inter-cohort distributional effects of Japan's indirect tax reformsTakeshi Kogawa
This study attempts to estimate how Japan’s consumption tax reforms affected the welfare of different cohorts of households, using long-term household level panel data including age of head, income and expenditure of each household in Japan. In order to evaluate distributional effects of tax reform, this study compares lifetime Equivalent Variations, which are calculated from estimated value of lifetime share of expenditure on food. As a result, it is shown that, the consumption tax reform in 2019, in which tax rates on non-food items was hiked from 8% to 10%, reduced utility by 1.29% to 1.55% in terms of the EVs in the income ratio, with relatively large effects on the younger, higher-income groups. Furthermore, a simulation analysis of the effect of a tax reduction when the consumption tax rate on food products is set at 0% in 2025 was conducted suggests that the reduced tax rate system could have a certain positive economic effect on the lower-income groups but that the older, higher-income groups could be disproportionately affected.
31 - Retail Electricity Subsidy in Vietnam: Review and Welfare Effect Under ReformTruong Phuong Lam Do
This paper examines the subsidy in the retail electricity market from two perspectives: cash transfer and quantity–based subsidy. The cash transfer is measured by three dimensions: benefit incidence, beneficiary incidence, and materiality; The quantity-based subsidy is established under the increasing block rate pricing. Overall, both subsidies are not efficient in supporting the poor. To improve the quantity–based subsidy, three proposals, along with the proposal from the company running the market are examined. The welfare effect under these plans is measured by the change in consumer surplus. Findings from this paper show that the reform should let the first blocks reflect the full marginal cost. Moreover, the price structure should be changed in both marginal price and the intervals. To mitigate the reduction in the quantity–based subsidy, the government should improve the cash transfer by reducing the extortion and targeting more efficiently, especially to poor households who live in rented houses.
30 - An Investigation on Intercohort Income Inequalities and Millennials Impoverishment in Great Britain’s RegionsMarco Sarandrea
This paper investigates intercohort income inequalities and Millennials’ impoverishment in Great Britain between 1991 and 2018, focusing on the regional heterogeneity of the phenomena. Results show that Millennials’ cohorts (1980-1984 and 1985-1989) are the first ever to experience intercohort income regressions and that inequalities are extremely diverse among regions. Each cohort’s monthly incomes are compared to the previous cohort’s for Great Britain, England’s macro-areas and for Government offices for the regions (GORs). In Great Britain, the 1980-1984 cohort loses £144 each month compared to the 1975-1979 cohort. The cohort-on-cohort income reduction increases to £297 for the 1985-1989 cohort. In Northern England, Millennials experience intercohort income regressions only for the 1985-1989 cohort. In Southern England, the 1985-1989 cohort sees a higher intercohort income regression than the 1980-1984 cohort in absolute terms (- £368 for 1980-1984 versus - £425 for 1985-1989). The same happens in the North (+ £68 for 1980-1984 versus - £407 for 1985-1989), whereas in the Midlands regressions are constant for both cohorts (- £151 for 1980-1984 and - £148 for 1985-1989). The 1980-1984 cohort undergoes a substantial cohort-on-cohort income loss only in four GORs, even enjoying income increases in three GORs.
29 - The impact of the COVID-19 pandemic on Labour Force Participation in Chile : Evidence from a Difference-in-Differences approachDiego Orlando Robles Cariaga
Due to the rapid global spread of COVID-19, many governments imposed nationwide closures with direct consequences on people's welfare, and Chile is not far from this scenario. Therefore, this paper aims to investigate the impact of the national lockdown adopted by the Chilean government on employment. To this end, a difference-in-differences (DID) methodology is used to compare the occupational situation of the inhabitants of the Metropolitan Region during the post-treatment period. The empirical results, based on a cross-sectional dataset, indicate that employment was not affected due to the lockdown policies adopted by the Chilean government to curb the spread of COVID-19. However, the results show that women, those living in poorer communes, and those less educated are more likely to lose their jobs.
28 - Intergenerational human capital, risk aversion, and the poverty trapChau Pham
This paper addresses two issues: the underinvestment in education and the poverty trap that ensues for poor households. In a setting where the end outcome is binary, an investing agent faces two levels of risk, one in the intermediate outcome - how much human capital she obtains for a given amount of investment, and one inherent in the end outcome - whether she gets the high-paid job. We show that when human capital is inheritable, risk-averse agents are deterred from investing because their parents are not suﬀiciently educated. Moreover, the U-shaped expected utility means the optimal investment occurs at either corners. If this investment or underinvestment is sustained through generations, a separating equilibrium such that poor households do not invest while wealthier ones do emerges. The divergence in educational attainment translates into a divergence in wealth between those who invest and those who do not. A simple calibration employing data from the NLSY97 demonstrates the existence of these equilibria at different levels of risk-aversion.
27 - Present Bias Predicts Low Adoption of Profitable Technologies : The Case of Livestock Vaccination in Northern LaosChristian Creed
Can behavioural characteristics explain the low adoption of profitable technologies? We explore this question by quantifying the importance of present bias on cattle producers’ decision to vaccinate against foot-and-mouth disease, a simple and well-known technology that, despite its high returns, is largely overlooked. Our results show that producers who exhibit a stronger present bias are much less likely to vaccinate their cattle, an effect which is robust to a large set of control variables (including wealth and access to information), larger than the effect of any other observed covariate and insensitive to plausible assumptions about the importance of unobserved determinants of adoption. We discuss some of the potential implications of these results for the design of vaccine delivery and to other policies that aim to overcome self-control problems.
26 - What is The Impact of China’s Entry into the WTO on CO2 Emissions?Yuqi Duan
This study investigates the impact of China’s entry into the WTO on carbon dioxide emissions from a global standpoint. A panel of production-based CO2 emissions and consumption-based CO2 emissions of 39 countries from 1995 to 2007 is constructed by integrating country-sector level data from WIOD. Using a triple difference design, I observe additions in production and consumption emissions after this specific trade openness event. The results vary according to the country’s income level. For example, this event has a more significant effect in developed countries than developing countries. The above results are due to the growth in both production and consumption emission intensities after the event. Notably, the magnitude of the increase in the production emissions is smaller than the consumption emissions, thus inferring that the CO2 emissions embodied in domestic production used for exports or final consumption partially decrease through the growing high-emission intensity intermediate goods imported from China.
25 - Tail-risk Comprehension and Protection in Real-time Electricity Pricing: Experimental EvidenceMadeline Pretto
Do households comprehend the nature of price tail-risks inherent to real-time electricity pricing plans? Through an incentivised online experiment, we find that a probabilistic risk disclosure elicits greater demand for real-time pricing (RTP) products relative to a low-risk fixed-price alternative, without improving comprehension of tail-risk in RTP. Participants also show a tendency to place low value on tail-risk protection. Finally, the experience of a bill shock improves risk comprehension and drives choice away from RTP, suggesting that personal experience plays a greater role in self-imposed risk protection than does a probabilistic risk disclosure. We discuss the implications these findings may have for regulators with a consumer protection mandate.
24 - Access to Fintech and Poverty : Evidence from the Arrival of 4G Networks in IndonesiaFatkhurrohman
This paper investigates the effect of the arrival of 4G networks on poverty rates by exploiting the gradual adoption of 4G networks in 514 districts/cities in Indonesia. Robust differences-in-differences estimates indicate that 4G network adoption has a significant negative influence on poverty rates – which we argue is due to the increased access to Fintech afforded by the 4G network, thus increasing poor people's access to credit. Moreover, Fintech capitalizes on mobile app-based services, a vastly growing business that has gained popularity since 2015. In addition, this paper also finds that Fintech promotes internet-based job opportunities for impoverished individuals, increasing their income and alleviating poverty in Indonesia.
23 - News Media, Digital Platforms and Content SharingGeoffrey Go
The recent ‘News Media Bargaining Code’ has raised controversy as Australia attempts to force digital platforms to pay news publishers for their links and snippets. To understand the impacts of the bargaining code on both the sustainability and quality of journalism, we develop a model where there are two types of news content available to consumers: full news from the news publisher and snippets on the platform. We show that the bargaining code strictly improves the news publisher’s welfare but increases their joint investment incentives if and only if the relative investment in snippets is suffciently large. We further establish that commercial agreements are a promising alternative that strictly increases both the welfare of news publishers and the quality of their news. Our results suggest that the bargaining code is better used as an indirect threat to promote fair commercial negotiations, rather than used directly.
22 - Unemployment Dynamics in the Nordics : Is there Heterogeneity in the Relative Importance of Ins and Outs?Oskar Thorleifsson
Unemployment by sub-group differs in terms of cyclical fluctuations. I examine whether there is heterogeneity in the relative contributions of the inflow and outflow rate to cyclical unemployment variations in the Nordics. The aggregate results suggest that fluctuations in the job-finding rate are a key driver of cyclical unemployment variations, excluding Norway. Despite notable differences in cyclical unemployment by gender, the contributions of ins and outs are roughly similar. However, evidence from Sweden and Denmark suggests that the separation rate is slightly more important for males compared to females. Substantially lower turnover for older workers makes comparison by age less reliable. Evidence from Sweden suggests notable differences by education level and between native- and foreign-born workers.
21 - Reading Between the Lines: Objective Function Estimation using RBA CommunicationsRobert Gao
We use a dictionary based natural language processing approach to quantify the sentiment of RBA communications. This measure of sentiment is then used as a proxy for loss in the estimation of the RBA’s objective function. We find that RBA communications imply a target for average inflation between 2.4% to 2.7% for short run horizons of up to one year ahead, consistent with the RBA’s medium term inflation target band of 2-3%. This result is robust to different forms of communication, forecast horizons, and allowing for asymmetric preferences. We also find that the RBA’s loss improves with rising output growth, commodity prices and stock market returns, as well as an appreciating exchange rate and falling unemployment.
20 - Environmental Factors and Internal Migration in IndiaKenji Komeda
This paper estimates the effect of air pollution, water pollution and water scarcity on internal migration in India using gravity model with 2SLS estimation. It contributes to the literature by first incorporating nationwide migrants and those three environmental factors into the analysis. The migration data is drawn from the Indian Census 2001 and 2011 and provides us with state-district pair-wise migration flows for certain time periods.With a wide range of data sources including Indian government platforms and satellite data, this study compiles a rich and comprehensive dataset. We find that the increase in air pollutant (PM2.5) at origin pushes out migrants, with larger influence on male than female. This paper also discovers, with more robust evidence, that the increase in groundwater level, a proxy for water scarcity level, at origin leads to less out-migrants and increase in groundwater at destination pulls more in-migrants for both genders. However, consistent evidence on water pollutants was not found.
19 - Natural Resource Management and Nutrition Outcomes: A Quasi-experimental Evaluation of Fisheries Decentralisation in Laos.Benjamin Chipperfield
We estimate the impact of a national fisheries decentralisation policy on the nutritional status of children in Lao PDR. Using a double robust estimator that combines propensity score and OLS regression, our results show that the causal impacts of this policy are heterogeneous and driven by nutritional gains among younger children living in villages that rely more heavily on natural resources, with girls benefiting more than boys. We identify higher consumption of fish as one mechanism that explains these gains. This change is not accompanied by greater allocation of time to fishing or investment in fishing assets, allaying fears that decentralisation of fisheries management may lead to over-exploitation of local resources. Our findings show that nationally implemented decentralised natural resources management policies can improve welfare
18 - Does Bad Air Quality Contribute to Obesity? Evidence from China’s Central Heating SystemYuxuan Ma
This study finds that individuals exposed to an additional 1 μg/m3airborne particulate matter smaller than 2.5 lead to a statistically significant 0.121 kg/m2rising of body mass index. This positive relationship is identified by two-stage least square regression using a regression discontinuity estimator of air pollution generated by China’s coal-burning winter heating policy, which only heats for northerners but not for southerners, as the instrument variable. This identification utilizing the quasi-experimental method of regression discontinuity design based on the difference of county’s latitude from both parametric and nonparametric approaches, using different kernel types and bandwidth sizes, with 6000 observations in 2008. Further, the result shows that heating policy caused airborne particulate matter smaller than 2.5 and body mass index significantly increasing in the north and south divided line. These findings not only contribute to the identification of causality between air pollution and obesity but help guide social and environmental policy as well.
17 - Transport Access and the Labour Market in the United StatesLachlan Priest
In this paper I analyse the effects that car ownership has on one’s outcomes in the labour market, and the barriers that a lack of car access presents in the United States. I also analyse the transport mismatch hypothesis. I do this by looking at time series regressions using car ownership as the explanatory variable. I also look at how trip distances, and public transport wait time are affected by income, and the types of cities people live in. I find evidence that car access is associated with increased participation in the labour force overall, as well as commute times, but has a varied impact on salaries. The results also show that higher income is associated with longer travel distances. Higher income is also associated with shorter wait times for public transport, but this is less pronounced in cities that have a good public transport system.
16 - Do Political Actors Engage in Strategic Deception on Social Media?Simon Ricketts
We examine whether political actors engage in strategic deception on social media. We find evidence that certain groups of politicians engage in deception in response to an election. To infer deception, we construct a novel wealth inference model from text of political social media accounts. We use machine learning and natural language processing, which is accurate to within half an order of magnitude when compared to real wealth disclosures as required by law in the United States. Wealth exaggeration is not homogenous ; in an election year, the wealthiest political actors minimise their perceived wealth, while the poorest exaggerate their perceived wealth. We do not find evidence that there are differences in exaggeration due to sex, party or experience.
15 - Predicting Specialty Coffee Auction Prices Using Machine LearningZoltan Aldott
This paper aims to contribute to the coffee pricing literature pertaining to the Cup of Excellence (CoE) competitions by revising the feature set used and extending the modelling approach using machine learning. The specific dataset used is merged from data provided by the Alliance for Coffee Excellence and information collected through scraping public information from the Cup of Excellence website. The paper compares popular supervised learning algorithms exploring multiple interpretations of tasting notes to attain an efficient predictive model of prices. The algorithms compared include OLS, regularised linear algorithms, the decision tree, as well as, bagging and gradient-boosting ensemble methods. The best-performing models are further optimised using hyperparameter tuning and the most efficient one is selected. Based on a gradient-boosting regression, the final model is analysed to find the key relationships driving model predictions. Permutation feature importance and accumulated local effects analyses are used to provide insights into the non-linearities present in the data generating process.
14 - Has access to health insurance through the Indonesian social security system improved people’s understanding of health issues? Evidence from a national surveyMuhammad Indra Kurniawan
This essay studies the national health insurance system’s impacts on health awareness in Indonesia. I estimate the effects of the insurance enrolment on health knowledge and health behaviour changes after the launch of compulsory social health insurance. Individuals who are less aware of their health may contribute to moral hazard in health insurance. I apply the difference-in-differences method to compare treatment and control groups and the before-after period of the intervention in 2014. Data from the Indonesia Demographic and Health Survey is utilised in this study. Results indicate that social health insurance is negatively correlated with the propensity of knowing certain diseases and contraceptive methods. The scheme adversely affects individuals’ smoking behaviour. Therefore, improving promotive and preventive programs throughout the insurance’s benefits is essential.
13 - Labour demand in the UK during the COVID-19 pandemic : evidence from online job postingsStepan Vacha
The COVID-19 pandemic hit the labour market significantly through its impact on human health. This paper uses job posting data to measure the effect of the pandemic on labour demand in the UK throughout 2020, including estimates of recovery. It demonstrates the advantage of using online job vacancies to monitor the labour market compared to lagged estimates or surveys used by the Office for National Statistics (ONS). The labour demand shock is found to be of a similar size to those reported in the US or Sweden. Total weekly vacancies posted online were down by 39% during the fist wave and 12.5% in the second half of 2020, representing a significant, but not full recovery. The significance and size of the shock vary among different industries of the economy. All industries except Human health & social work activities have seen a significant drop in job postings due to the pandemic, with the Accommodation & food service activities sector being hit the most. Although the ONS estimates have grasped the main impact of the pandemic on vacancies, using real-time data can provide the policymakers with a much-needed timely information when dealing with a shock like the global health pandemic.
12 - Timor-Leste quarterly Gross Domestic Product (GDP) indicatorFaviana Bosco de Sousa
This paper evaluates the performance of the Denton method in estimating quarterly GDP using indicators [QGDPi(E)] and explores alternative indicators for GDP components that have big errors. This report uses Timor-Leste quarterly data on GDP expenditure and its components from 2010 to 2019 sourced from GDS (Statistical office of Timor-Leste). The QGDPi(E) is temporally disaggregated through the Denton method, and the results will be evaluated in two ways. Firstly, I compare the Denton results to the Cholette-Dagum results. Secondly, I compare the Denton findings to the published (adjusted) quarterly GDP series. Overall, results show that the Cholette-Dagum approach disaggregates the GDP better than the Denton method, based on the mean absolute error estimation. However, the estimation error of GDP and its components for every quarter are similar for both methods. Therefore, it is concluded that the performance of both procedures is very similar. This result could be used as a guide to disaggregating annual GDP into quarterly series using both approaches, which would be beneficial for Timor-Leste. Finally, this study suggests that GDS continues to use the Denton method in the short term. However, it recommends using a more transparent time series regression-based model to estimate quarterly GDP for a better result in the future.
11 - Machines and Markets : Assessing the Impact of Algorithmic Trading on Financial Market EfficiencyKaran Garg
The rise of machine learning has revolutionised finance. Institutions across the world have increasingly turned to data science and machine learning to create trading models without the need for human intervention. This has had various implications for the financial markets that they operate in, including market efficiency. This paper simulates a financial market with agent-based modelling and Monte-Carlo style simulations, to motivate a qualitative discussion about the implications of increased algorithmic trading on financial market efficiency. It finds that algorithmic traders (ATs) can seemingly increase market efficiency through better liquidity management and more complete extraction of information from prices. However, this also comes with increased instability and potential convergence to an unstable equilibrium. The Adaptive Market Hypothesis (Lo, 2004) is suggested as an alternative framework for analysing AT behaviour.
10 - Finance and Growth of SMEs in South Asia: Evidence from Bangladesh, Pakistan, and Sri LankaPalak Sharma
This paper studies the determinants of access to finance in small and medium enterprises (SMEs) in three South Asian economies, Bangladesh, Pakistan, and Sri Lanka. The data for this study is from the World Enterprise Survey data set for each country collected by the World bank. The paper uses logistic regression for empirical analysis. Findings of this paper confirm that access to formal and informal finance is significantly determined by the size, age, and formalization of firms. The gender of the owner-manager, sales performance, location, and legal status of the firm are insignificant predictors of a firm’s ability to raise finance. Results from this paper can help governments shape policy and develop programs that can augment a firm’s ability to raise financing from formal sources.
9 - Do mobile phones empower women? A perspective from rural IndiaJingjing Chen
Empowerment for girls and women, Goal 5 for the Sustainable Development Goals, is the key for economic development. As mobile phones become cheaper and more prevalent, a growing number of researchers are investigating their impact on women's empowerment. Most previous research has relied on interviews and cross-sectional data, so their conclusion limited to the association rather than establishing the causal relationship between mobile phones and female empowerment. This paper used Indian Human Development Survey 2005 and 2011-2012 to study the association between mobile phone ownership and women's empowerment in rural India. Then difference in- difference strategy was applied to identify the causal impact of village mobile phone service installation on female empowerment. Like previous studies, the results from this paper suggest that mobile phone ownership was associated with higher women's empowerment. Moreover, mobile phone service installation increased women's involvement in decision-making process but it decreased female labour force participation and contraceptive usage in rural India.
8 - Dynamic Personalized Pricing with Active ConsumersXiaolei Wang
We study a two-period duopoly model where firms gather consumer data from first period customers then use them for second-period personalized pricing, with a focus on active consumers who can bypass price discrimination with identity management (IM). As a result, IM weakens competition and allows firms to adopt perfect price discrimination which gives massive profit for firms in the personalized-pricing stage. Anticipating this, firms engage in below-cost pricing in the first stage to compete for consumer data. This strategy is similar to predatory pricing not only because of below-cost pricing but firms can also recoup losses later, however, we show that in this case below-cost pricing is driven by competition and beneficial to consumers.
7 - Does boardroom diversity impact the financial performance of FTSE 350 firms?Iarina Corniciuc
This paper examines the impact of diversity on a firm's financial performance, a topic which requires more research due to the fast changes in boardroom composition and the inconclusive previous literature. The main analysis utilises panel data with a fixed effect model to examine FTSE 350 UK firms between 2001 and 2020. Results show that the percent of females is positively and significantly correlated with the two firm performance variables, Tobin's Q and ROA. Initial results also show that a higher count of nationalities have a positive and significant impact on firm performance. These results are in line with various theories which state that diverse groups are found to be more innovative as they cover a wider range of knowledge. The paper provides empirical proof of token theory, which states that gender diversity below a threshold of 15% has a negative impact on a firm's performance. This could be due to being perceived as a minority causing isolation, which in turn impacts performance. Results also show that the critical mass point, where most benefits are reaped in the relationship, lies at 40% and above female directors. This is in line with the proposed EU directive of a quota of 40% female directors.
6 - Gender and Disadvantage in the Evolution of Test Score GapsMolly Paterson
This paper details the evolution of numeracy test score gaps based on gender and socioeconomic status, particularly considering children’s early circumstances. We use the rich dataset: The Longitudinal Study of Australian Children (LSAC) to bring together two strands of literature on gaps between students on a gender and a socioeconomic basis. We establish an interrelationship between socioeconomic gaps, based on early life household income and parental education, and the gender gap in numeracy. We find that between Grades 3 to 9, boys have an advantage in numeracy scores over girls, which widens over time. By Grade 9, poorer female students are doubly disadvantaged compared to richer female students and male students. We confirm that early life circumstances continue to impact student’s achievement into adolescence, demonstrating the importance of early interventions to address gender and socioeconomic gaps.
5 - When does the winner take more? The role of political alignment in transfers to Romanian municipalitiesGeorgiana Puscas
This paper explores whether the political alignment between mayors and the central government brings additional financial benefits to municipalities in Romania, using a novel dataset over 2012-2018. Analysing close municipal elections, I apply a regression discontinuity design to identify the effect of political alignment on several categories of transfers. I find that politically aligned municipalities receive per capita about 19% more equalisation transfers, 46% more subventions and 30% more transfers for roads. The results indicate that transfers for decentralised costs at municipality level are nondiscretionary
4 - Weather Shocks and Economic Activity. Evidence from the PhilippinesMarvin Pardillo
As global temperatures continue to rise, strategies to mitigate the adverse effects of weather shock events become crucial. While previous studies have analysed the effect of climatic variation on economic activity at the national level, there is a lack of understanding of the developmental effects of weather shocks at the subnational level. This study uses monthly night light data captured by Visible Infrared Imaging Radiometer Suite (VIIRS) and weather data to examine the effect of weather shock events at the municipal level in the Philippines. We find that excesses and shortages in monthly rainfall are associated with a decrease in the level of economic activity. We also find that lower temperatures are associated with an increase in the level of economic activity whereas higher temperatures are associated with a decrease in economic activity.
3 - Estimating the Impact of Natural Disasters on Caribbean ExportsEleni Sandi
This paper aims to estimate the impact of natural disasters on exports in the Caribbean countries using a panel fixed effects regression. The paper’s main contribution lies in identifying the manufacturing industries that are disproportionately affected by natural disasters in the given region. It finds that an additional natural disaster in the Caribbean leads to a significant short-run decrease in total exports, whilst mineral, chemical, paper, textile and metal industries suffer the most. Using alternative disaster measures reveals that deaths have the largest impact on exports, emphasising the Caribbean’s high vulnerability to natural shocks. Interestingly, a dynamic model reveals a long-term negative effect on exports that strengthens over time. The main results remain robust to a variety of alternative model specifications. Total disaster effects seem to be driven by disasters in Haiti, although further research on country heterogeneity is recommended. Taken together, these findings are especially alarming in the context of climate change and global warming, as natural disasters are expected to increase in intensity and frequency. Drawing on these results, the policy implication is decreasing the Caribbean’s vulnerability by tackling the moral hazard problem of unconditional donor aid.
2 - What About Super? Financial Literacy as a Barrier to Market EntryPaul Boykett
A majority of households do not invest their savings and fewer make voluntary contributions to superannuation. This may increase their risk of financial hardship in later life and has raised questions about the role of governments and educators in addressing barriers to market entry. Our probit model framework measures the effect of financial literacy on market participation and contributes new evidence by analysing superannuation and demographical heterogeneity in market barriers. Results indicate that poor financial literacy deters voluntary superannuation contributions and traditional investment, particularly for low-income households. Evidence also suggests that financial advice facilitates market entry while improving financial literacy could shift investor’s financial market exposure towards superannuation in later life. These findings enrich our understanding of market barriers and help to guide superannuation policy.
1 - Joint estimation of time and risk preferences using a representative sample of UK households' subjective perceptions of timeAidan Aungles
I use real money choices from the Innovation Panel of the UK Household Longitudinal Survey to jointly estimate time and risk preferences via Maximum Likelihood Estimation using dfferent specifications of subjective time. First, survey-elicited individual estimation of subjective time is utilised. Second, I use two sample-level estimations of subjective time based upon psychophysical laws which have been found to hold for the perception of stimuli such as light and heat, and apply them to the perception of time (To clarify, here, the sample's average curvature of subjective time is estimated). These specifications are examined closely and compared to that of objective time. Lastly, I also add to the literature on the heterogeneity of time and risk preferences utilising the wide range of variables available.