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2020 Working papers

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1315 - Age-Based Policy in the Context of the Covid-19 Pandemic : How Common are Multi Generational Households?

Thijs Van Rens & Andrew J. Oswald

Are general lockdowns an appropriate response to the threat of Covid-19? Recent cost-benefit studies do not favour the case for them. Instead, since the virus practises a form of age discrimination (approximately 90% of coronavirus deaths are older than 65), some analysts have suggested an alternative. It is that younger citizens -- the generation worst affected by lockdowns and the one that will predominantly pay the eventual tax bill for furlough -- should be allowed to return to work to sustain the economy. Lockdown advocates argue that this would be dangerous, because older people would get infected by young workers living in the same home. We explore that claim. We find that 96% of UK workers under age 40 do not live with anyone over 65. In fact, 92% of all UK workers live in a household without anyone over 65 years old – and that holds true for white and BAME workers. Releasing young workers would thus expose only a small fraction of older citizens to intra-household transmission, although we recognize that the absolute number of people infected might eventually become considerable, and some vulnerable citizens could potentially be at risk if they live in large households. In general this paper’s results illustrate the potential value of fine-tuning the lifting of restrictions. Our findings buttress the cost-benefit case for age-based policies.

1314 - Does Contact Tracing Work? Quasi-Experimental Evidence from an Excel Error in England

Thiemo Fetzer & Thomas Graeber

Contact tracing has been a central pillar of the public health response to the COVID-19 pandemic. Yet, contact tracing measures face substantive challenges in practice and well-identified evidence about their effectiveness remains scarce. This paper exploits quasi-random variation in COVID-19 contact tracing. Between September 25 and October 2, 2020, a total of 15,841 COVID-19 cases in England (around 15 to 20% of all cases) were not immediately referred to the contact tracing system due to a data processing error. Case information was truncated from an Excel spreadsheet after the row limit had been reached, which was discovered on October 3. There is substantial variation in the degree to which different parts of England areas were exposed – by chance – to delayed referrals of COVID-19 cases to to the contact tracing system. We show that more affected areas subsequently experienced a drastic rise in new COVID-19 infections and deaths alongside an increase in the positivity rate and the number of test performed, as well as a decline in the performance of the contact tracing system. Conservative estimates suggest that the failure of timely contact tracing due to the data glitch is associated with more than 125,000 additional infections and over 1,500 additional COVID-19 related deaths. Our findings provide strong quasi-experimental evidence for the effectiveness of contact tracing.

1311 - Pay Transparency and Cracks in the Glass Ceiling

Emma Duchini, Stefania Simion & Arthur Turrell

This paper studies firms’ and employees’ responses to pay transparency requirements. Each year since 2018, more than 10,000 UK firms have been required to disclose publicly their gender pay gap and gender composition along the wage distribution. Theoretically, pay transparency is meant to act as an information shock that alters the bargaining power of male and female employees vis- a-vis the firm in opposite ways. Coupled with the potential negative effects of unequal pay on firms’ reputation, this shock could improve women’s relative occupational and pay outcomes. We test these theoretical predictions using a difference-in-differences strategy that exploits variations in the UK mandate across firm size and time. This analysis delivers four main findings. First, pay transparency increases women’s probability of working in above-median-wage occupations by 5 percent compared to the pre-policy mean. Second, while this effect has not yet translated into a significant rise in women’s pay, the policy leads to a 2.8 percent decrease in men’s real hourly pay, reducing the pre-policy gender pay gap by 15 percent. Third, combining the difference-in-differences strategy with a text analysis of job listings, we find suggestive evidence that treated firms adopt female-friendly hiring practices in ads for high-gender-pay-gap occupations. Fourth, a reputation motive seems to drive employers’ reactions, as firms publishing worse gender equality indicators score lower in YouGov Women’s Rankings. Moreover, publicly listed firms experience a 35-basis-point average fall in cumulative abnormal returns in the days following their publication of gender equality data.

1280 - Measuring the Regional Economic Cost of Brexit: Evidence up to 2019

Thiemo Fetzer & Shizhuo Wang

The United Kingdom (UK) reported record employment levels following its vote to Leave the European Union (EU), leading to many pundits discarding the dire pre-Brexit vote impact assessments as part of “project fear.” This paper studies the cost of the Brexit-vote to date across UK regions finding significant evidence suggesting that the economic costs of the Brexit-vote are both sizeable and far from evenly distributed. Among 382 districts, at least 168 districts appear to be Brexit-vote losers, having lost, on average 8.54 percentage points of output in 2018 compared to their respective synthetic controls. The Brexit-vote costs are increasing in a districts: a) support for Leave in 2016; b) the size of its manufacturing sector; c) the share of low skilled. The Brexit vote induced economic divergence across regions is already exacerbating the regional economic inequalities that the 2016 EU referendum vote made apparent. Indirect evidence further suggests that firms may, amidst the significant (trade) policy uncertainty, have shifted away from capital to labor in the short term given that Brexit has, to date, not led to changes in market access. The resulting short-term employment- and payroll growth post-2016 is not supported by productivity increases in most parts of the UK. This sets up the possibility for significant labor market adjustments once Brexit becomes a defacto reality. Further, there is some evidence suggesting that COVID19 may exacerbate the regional economic impact of the Brexit-vote to date.

1273 - Religion in Economic History: A Survey

Sascha O. Becker, Jared Rubin & Ludger Woessmann

This chapter surveys the recent social science literature on religion in economic history, covering both socioeconomic causes and consequences of religion. Following the rapidly growing literature, it focuses on the three main monotheisms—Judaism, Christianity, and Islam—and on the period up to WWII. Works on Judaism address Jewish occupational specialization, human capital, emancipation, and the causes and consequences of Jewish persecution. One set of papers on Christianity studies the role of the Catholic Church in European economic history since the medieval period. Taking advantage of newly digitized data and advanced econometric techniques, the voluminous literature on the Protestant Reformation studies its socioeconomic causes as well as its consequences for human capital, secularization, political change, technology diffusion, and social outcomes. Works on missionaries show that early access to Christian missions still has political, educational, and economic consequences in present-day Africa, Asia, and Latin America. Much of the economics of Islam focuses on the role that Islam and Islamic institutions played in political-economy outcomes and in the “long divergence” between the Middle East and Western Europe. Finally, cross-country analyses seek to understand the broader determinants of religious practice and its various effects across the world. We highlight three general insights that emerge from this literature. First, the monotheistic character of the Abrahamic religions facilitated a close historical interconnection of religion with political power and conflict. Second, human capital often played a leading role in the interconnection between religion and economic history. Third, many socioeconomic factors matter in the historical development of religions.

1270 - India’s Lockdown: An Interim Report

Debraj Ray and S. Subramanian

Our goal is to provide an interim report on the Indian lock down provoked by the covid19 pandemic. While our main themes — ranging from the philosophy of lock down to the provision of relief measures — transcend the Indian case, our context is deeply India-specific in several senses that we hope will become clear through the article. A fundamental theme that recurs throughout our writing is the enormous visibility of covid19 deaths worldwide,now that sensitivities and anxieties regarding the pandemic have been honed to an extreme sharpness. Governments everywhere are propelled to respect this visibility, developing countries perhaps even more so than their developed counterparts. In advanced economies, the cost of achieving this reduction in visible deaths is“merely”a dramatic reduction in overall economic activity,coupled with a far reaching relief package to partly compensate those who bear such losses. But for India, adevelopingcountrywithgreatsectoralandoccupationalvulnerabilities,this dramatic reduction is more than economics: it means lives lost. These lost lives,through violence, starvation, indebtedness and extreme stress, both psychological and physiological, are invisible, in the sense that they are—and will continue to be—diffuse in space, time, cause and category. They will blend into the surrounding landscape; they are not news, though the intrepid statistician or economist will pick them up as the months go by. It is this conjunction of visibility and invisibility that drives the Indian response. The lock down meets all international standards so far; the relief package none.