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1244 - Reshaping Infrastructure: Evidence from the division of GermanyMarta Santamaria
This paper quantiﬁes the gains from infrastructure investments and shows that reshaping the highway network after a large economic shock, the division of Germany, had positive welfare and income eﬀects. To address the endogeneity between infrastructure and economic outcomes, I develop a multi-region quantitative trade model where infrastructure is chosen by the government to maximise welfare. I calibrate the model to the pre war German economy and estimate the key structural parameter of the model using the pre war Highway Plan. I exploit the division of Germany, a large-scale exogenous shock to economic fundamentals, to show that the model can predict changes in highway construction after the division. Using newly collected data, I document that half of the new highway investments deviated from the pre war Highway Plan. I ﬁnd that the reallocation of these investments (one-third of the network) increased real income by 0.69% to 2% each year, compared to the construction of the original pre war Plan. Finally, I ﬁnd a large cost of path-dependence: the ability to reshape the full network in anticipation of the division could have increased real income by an additional 1.85%.
1243 - Identification and Estimation of Group-Level Partial EffectsKenichi Nagasawa
This paper presents identification and estimation results for causal effects of group-level variables when agents select into groups. I specify a triangular system of equations to model outcome determination and group selection, accommodating general non separable models. Using conditional independence and completeness assumptions, I show that the group-level distribution of individual characteristics is a valid control function, conditional on which group-level variables of interest become exogenous. Building on this result, I identify average effects under a common support condition. The key identifying requirements are more plausible in settings where a rich array of individual characteristics are observed. For the identified parameter, I construct a kernel-based estimator and prove its consistency. Although the identification argument uses completeness, the estimation procedure does not involve solving for an ill-posed integral equation.
1242 - Do British wind generators behave strategically in response to the Western Link interconnector?Mario Intini and Michael Waterson
In Britain, the key source of renewable generation is wind, most abundant on the west coast of Scotland, where there is relatively little demand. For this reason, an interconnector, the Western Link, was built to take electricity closer to demand. When the Link is operating, payments by National Grid to constrain wind farms not to produce will be lower, we may predict, since fewer or less restrictive constraints need be imposed. But the Link has not been working consistently. We empirically estimate the link’s value. Focusing on the three most recent episodes of outage, starting on 4th May 2018 up to 25th September 2019, our essential approach is to treat these outages as a natural experiment using hourly data. Our results reveal that the Link had an important role in costs saved and price constrained and MWh curtailed reductions. We estimate a cost-saving of almost £30m. However, the saving appears to drop over time, so we investigate wind farms’ behaviour. We find that wind farms behave strategically since the accuracy of wind forecasting depends on the relevant prices impacting their earnings
1241 - The challenges of universal health insurance in developing countries: Evidence from a large-scale randomized experiment in IndonesiaAbhijit Banerjee, Amy Finkelstein, Rema Hanna, Benjamin Olken & Arianna Ornaghi
To assess ways to achieve widespread health insurance coverage with financial solvency in developing countries, we designed a randomized experiment involving almost 6,000 households in Indonesia who are subject to a nationally mandated government health insurance program. We assessed several interventions that simple theory and prior evidence suggest could increase coverage and reduce adverse selection: substantial temporary price subsidies (which had to be activated within a limited time window and lasted for only a year), assisted registration, and information. Both temporary subsidies and assisted registration increased initial enrolment. Temporary subsidies attracted lower cost enrolees, in part by eliminating the practice observed in the no subsidy group of strategically timing coverage for a few months during health emergencies. As a result, while subsidies were in effect, they increased coverage more than eightfold, at no higher unit cost; even after the subsidies ended, coverage remained twice as high, again at no higher unit cost. However, the most intensive (and effective) intervention – assisted registration and a full one-year subsidy – resulted in only a 30 percent initial enrollment rate, underscoring the challenges to achieving widespread coverage.
1240 - Secession with Natural ResourcesAmrita Dhillon, Pramila Krishnan, Manasa Patnam and Carlo Perroni
We look at the formation of new Indian states in 2001 to uncover the effects of political secession on the comparative economic performance of natural resource rich and natural resource poor areas. Resource rich constituencies fared comparatively worse within new states that inherited are relatively larger proportion of natural resources. We argue that these patterns reﬂect how political reorganisation affected the quality of state governance of natural resources. We describe a model of collusion between state politicians and resource rent recipients that can account for the relationships we see in the data between natural resource abundance and post-break up local outcomes.
1239 - Attribution Bias by Gender: Evidence from a Laboratory ExperimentJames Fenske, Alessandro Castagnetti and Karmini Sharma
In many settings, economic outcomes depend on the competence and eﬀort of the agents involved, and also on luck. When principals assess agents’ performance they can suﬀer from attribution bias by gender: male agents may be assessed more favorably than female agents because males will be rewarded for good luck, while women are punished for bad luck. We conduct a laboratory experiment to test whether principals judge agents’ outcomes diﬀerently by gender. Agents perform tasks for the principals and the realized outcomes depend on both the agents’ performance and luck. Principals then assess agents’ performance and decide what to pay the agents. Our experimental results do not show evidence consistent with attribution bias by gender. While principals’ payments and beliefs about agent performance are heavily inﬂuenced by realized outcomes, they do not depend on the gender of the agent. We ﬁnd suggestive evidence that the interaction between the gender of the principal and the agent plays a role. In particular, principals are more generous to agents of the opposite gender.