Sonia Bhalotra, Emilia Brito, Damian Clarke, Pilar Larroulet & Francisco Pino

We leverage staggered implementation of lockdown across Chile’s 346 municipalities, identifying dynamic impacts on domestic violence (DV). Using administrative data, we find lockdown imposition increases indicators of DV-related distress, while decreasing DV reports to the police. We identify male job loss as a mechanism driving distress, and female job loss as driving decreased reporting. Stimulus payments to poor households act on both margins, their impacts partially differentiated by lockdown status. Once lockdown is lifted, police reports surge but we see a ratchet effect in distress. Our findings accentuate the controversy around welfare impacts of lockdown mandates.

Sonia Bhalotra, Damian Clarke, Hanna Mühlrad and Mårten Palme

IVF allows women to delay birth and pursue careers, but IVF massively increases the risk of twin birth. There is limited evidence of how having twins influences women’s post-birth careers. We investigate this, leveraging a single embryo transfer (SET) mandate implemented in Sweden in 2003, following which the share of twin births showed a precipitous drop of 70%. Linking birth registers to hospitalization and earnings registers, we identify substantial improvements in maternal and child health and women’s earnings following IVF birth, alongside an increase in subsequent fertility. We provide the first comprehensive evaluation of SET, relevant given the secular rise in IVF births and growing concerns over twin birth risk. We contribute new estimates of the child penalty imposed by twin as opposed to singleton birth, relevant to the secular rise in the global twin birth rate.

Anselm Hager, Lukas Hensel, Christopher Roth & Andreas Stegmann

We conduct a natural field experiment with a major European party to test whether giving party supporters the opportunity to voice their opinions increases their engagement in the party’s electoral campaign. In our experiment, the party asked a random subset of supporters for their opinions on the importance of different topics. Giving supporters more opportunities to voice their opinions increases their engagement in the campaign as measured using behavioral data from the party’s smartphone application. Survey data reveals that our voice treatments also increase other margins of campaign effort as well as perceived voice. Our evidence highlights that parties can increase their supporters’ investment in the democratic process by implementing policies that increase their voice.

Georgios Efthyvoulou, Vincenzo Bove & Harry Pickard

When people migrate internally, do they tend to move to locations that reflect their political preferences? To address this question, we first compile a unique panel dataset on the universe of population movements in England and Wales across 346 local authority districts over the period 2002-2015, and estimate a gravity model of internal migration. We show that proximity in partisan composition exerts an important positive effect on migration flows, which is of a similar order of magnitude as wage differentials or ethnic proximity. We then use individual survey based data over the same time period to investigate some of the micro-foundations underlying the macromoves. We find that political alignment to the district of residence contributes to individuals' sense of belonging and fitting in consistent with the existence of a political homophily mechanism and that a migrant's political ideology can predict the partisanship of the destination district.

Sonia Bhalotra, Atheendar Venkataramani & Selma Walther

We investigate women’s fertility, labor and marriage market responses to large declines in child mortality. We find delayed childbearing, with lower intensive and extensive margin fertility, a decline in the chances of ever having married, increased labor force participation and an improvement in occupational status. This constitutes the first evidence that improvements in child survival allow women to start fertility later and invest more in the labor market. We present a new theory of fertility that incorporates dynamic choices and reconciles our findings with existing models of behavior.

Gianna Boero, Tej Nathwani, Robin Naylor and Jeremy Smith

A long-standing puzzle in the economics of education concerns the observed constancy of the average earnings premium for a degree despite a prolonged period of substantial growth in the share of graduates in the working population in the UK. Focusing on birth cohorts between 1970 and 1990, we produce evidence of a recent decline in the earnings premium for graduates over non-graduates by age 26. For those born in 1990, we estimate an average graduate earnings premium of 10%, contrasting with an estimate of 17% for the 1970 birth cohort. We also find a substantial increase in dispersion around the average premium according to class of degree awarded. Combined with a falling average, this has left the earnings of 1990-born graduates awarded lower degree classes only 3% above that of non-graduates. Among the 1970-born cohort, the equivalent earnings premium was 14%. We suggest that this precipitous fall is consistent with a ‘double-scarring’ effect associated with the combination of increased higher education participation and a rise in the proportion of graduates awarded an upper honours degree over the span of the two cohorts.

Thiemo Fetzer

Reliable COVID-19 testing remains a central pillar to manage the pandemic. Yet, the accuracy and reliability of tests and test equipment has regularly been brought into question. Both false-positive and false-negative test results convey costs. Yet, false negatives are likely more problematic due to the risk of onward transmission and the failure to break infection chains as a result. This paper studies the epidemiological impact of a false negative in the context of a high vaccine uptake country. Between 2 September and 12 October an estimated 43,000 PCR tests in the UK may have produced a false negative test result with individuals infected being told that they tested negative. These instances were particularly pronounced in the South West of England. Using a synthetic control method approach concentrating on the 13 most affected regions, this paper estimates that every false negative COVID-19 case is likely to have caused between 0.6 to 1.6 additional infections in the subsequent weeks

Natalie Chen & Dennis Novy

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements, and WTO membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost effects are strong for ‘thin’ bilateral relationships characterised by small import shares, and weak or even zero for ‘thick’ relationships.

Manuel Bagues & Velichka Dimitrova

We quantify the impact of COVID-19 vaccination on psychological well-being using information from a large-scale panel survey representative of the UK population. Exploiting exogenous variation in the timing of vaccinations, we find that vaccination increases psychological well-being by 0.12 standard deviation, compensating for around one half of the overall decrease caused by the pandemic. This effect persists for at least two months, and it is associated with a decrease in the perceived likelihood of contracting COVID-19 and higher engagement in social activities. The improvement is 1.5 times larger for mentally distressed individuals, supporting the prioritization of this group in vaccination roll-outs.

Michael W.L. Elsby Jennifer C. Smith Jonathan Wadsworth

This paper examines the role of population flows on labour market dynamics across immigrant and native-born populations in the United Kingdom. Population flows are large, and cyclical, driven first by the maturation of baby boom cohorts in the 1980s, and latterly by immigration in the 2000s. New measures of labour market flows by migrant status uncover both the flow origins of disparities in the levels and cyclicalities of immigrant and native labour market outcomes, as well as their more recent convergence. A novel dynamic accounting framework reveals that population flows have played a non-trivial role in the volatility of labour markets among both the UK-born and, especially, immigrants.

Jiaqi Li

This paper documents substantial racial differences in child penalties in the US. Black women experience only half the child penalties as white women. The racial gap is primarily driven by married women with high wages in the South, returning to the labor market almost immediately after childbirth. Furthermore, the racial gap does not change after I control for the racial difference in the distribution of her prior-childbirth covariates (wage, occupation, industry, government job, job with life insurance), husband covariates (labor income, wage, or gender attitudes), uncertainty (variance in husband income, asset income, or probability of husband being laid-off), and informal help (number of relatives within walking distance, and the number of sisters). In addition, the racial gap in child penalty is uncorrelated with time-varying state-level incarceration. In conclusion, the paper largely rules out economic covariates, gender norms, homeownership, informal family help, and potential incarceration of husbands as the main mechanisms driving the gap, leaving preference and discrimination as potential explanations.

Ali Moghaddasi Kelishomi and Daniel Sgroi

Iran has the world’s only government-regulated kidney market, in which around 1000 individuals go through live kidney-removal surgery annually. We report the results of the first field study of donor behavior in this unique and controversial market. Those who enter the market have low income, typically entering to raise funds. They have lower risk tolerance and higher patience levels than the Iranian average. There is no difference in rationality from population averages. There is evidence of altruism among participants. This might shed light on the sort of people likely to participate if other nations were to operate such markets.

Marcus Miller & Ben Zissimos

From a wide-ranging historical survey, Acemoglu and Robinson conclude that the preservation of liberty depends on being in a ‘narrow corridor’ where there is a balance of power between the state and society. We first examine the support Binmore's game-theoretic treatment of Social Contracts provides for such a ‘narrow corridor’ of liberty and justice – and what extremes to expect without them. We also consider how the biological model of Competing Species helps to describe the dynamics of conflicting powers outside the narrow corridor– where, as in contemporary Russia and China, any Social Contracts that exist are neither free nor fair.

Arun Advani

Capital gains are particularly complex to tax given their infrequency, the different ways in which they are generated, and worries about harming productivity. There are theoretical arguments in support of everything from zero rates to high rates of tax on capital. In this paper, I first discuss the impact of capital gains on inequality, which often motivates discussions about how gains should be taxed. I then set out the principles that determine how gains should be taxed, in particular how the tax rate should relate to income tax rates. I propose that capital gains tax rates be equalized with income tax rates, subject to provisions to allow gains to be ‘smoothed’ over time and to remove inflation from the tax base. I highlight key transitional issues in moving to such a tax structure. Finally, I discuss the specific lessons for Canada.

Alessandro Iaria and Ao Wang

We introduce a Generalized Nested Logit model of demand for bundles that can be estimated sequentially and virtually eliminates any challenge of dimensionality related to large choice sets. We use it to investigate quantity discounts for carbonated soft drinks by simulating a counterfactual with linear pricing. The prices of quantities up to 1L decrease by −31.5% while those of larger quantities increase by +14.8%. Purchased quantities decrease by −20.4%, associated added sugar by −23.8%, and industry profit by −20.5%. Consumer surplus however reduces only moderately, suggesting that linear pricing may be effective in limiting added sugar intake.

Amit Chaudhary

Misallocation of resources in an economy makes firms less productive. I document the roles of heterogeneity, sorting, and complementarity in a framework where workers, managers, and firms interact to shape productivity. The approach I follow uses the movement of workers and managers across firms to identify the distribution of productivity. I webscraped novel microdata of crime reports from the Indian police department and combined them with the worker-level measurement of productivity. Using this data I show that the third source of heterogeneity in the form of manager ability is an important driver of differences in firm productivity. I empirically identify complementarities between workers, managers, and firms using my estimation methodology. Counterfactual results show that reallocating workers by applying a positive assortative sorting rule can increase police department productivity by 10%.

Sonia Bhalotra and Manuel Fernandez

We investigate supply-side barriers to medical care in Colombia, where citizens have a constitutional right to health, but insurance companies impose restrictions. We use administrative data on judicial claims for health as a proxy for unmet demand. We validate this using the health services utilization register, showing that judicial claims map into large, pervasive decreases in medical consultations, procedures, hospitalizations and emergency care. This manifests in population health outcomes. We identify increases in mortality pervasive across cause, age, sex, and income, with larger increases for cancer and individuals over the age of fifty.

Sonia Bhalotra, Irma Clots-Figueras & Lakshmi Iyer

Debates around abortion typically invoke religion and politics but there is no causal evidence of the impact of politician religion on abortion. Leveraging quasi-random variation in politician religion generated by close elections in India and controlling for the party affiliation of politicians, we find lower rates of sex-selective abortion in districts won by Muslim state legislators, consistent with a higher reported aversion to abortion among Muslims compared to Hindus. The competing hypothesis that this reflects weaker son preference among Muslims is undermined by stated preference data and by demonstrating that fertility and girl-biased infant mortality increase in Muslim-won districts

Daniel Sgroi, Jonathan Yeo and Shi Zhuo

Group identity is known to exert a powerful socio-psychological influence on behaviour but to date has been largely explored as a uni-dimensional phenomenon. We consider the role of multiple dimensions of identity, asking what might happen to ingroup and outgroup perceptions and the resulting implications for cooperation. Carefully selecting two politically charged identity dimensions documented to have similar strength and to be largely orthogonal (religious belief and views about government size), we find that priming individuals to consider both dimensions rather than one has a noticeable effect on behaviour. Moving from one to two dimensions can produce a significant increase in ingroup allocations at the expense of fairness to outgroup individuals, although the effect varies as we switch from primarily considering religion to government size. Evidence suggests that the heterogeneity of such effects is related to the degree of “harmony” between groups in the dimensions concerned.

Ceren Bengu Cibik and Daniel Sgroi

We provide the first investigation of the relationship between self-awareness and dishonesty in a multi-wave pre-registered experiment with 1,260 subjects. In the first wave we vary the level of awareness of subjects' past dishonesty and explore the impact on behaviour in tasks that include the scope to lie. In the second wave we vary the degree of competitiveness in one of our core tasks to further explore the interactions between self-awareness, (dis)honesty and competition. We also test for the experimental demand effect in order to rule it out. Our results suggest that in non-interactive tasks, self-awareness helps to lower dishonesty in the future. However, in tasks that are competitive in nature becoming more aware of past dishonesty raises the likelihood of dishonesty in the future. In other words, we show when making people aware of their own past dishonesty can help to reduce dishonesty and when it might backfire. We are also careful to test for any possible demand effect, and perform text analysis to provide independent verification of the success of our treatments.

Elliott Ash, Daniel Sgroi, Anthony Tuckwell and Shi Zhuo

Mindfulness meditation has been found to influence various important outcomes such as health, stress, depression, productivity, and altruism. We report evidence from a randomised controlled trial on a previously untested effect of mindfulness: information avoidance. We find that a relatively short mindfulness treatment (two weeks, 15 minutes a day) is able to induce a statistically significant reduction in information avoidance – that is, avoiding information that may cause worry or regret. Supplementary evidence supports mindfulness’s effects on emotion regulation as a possible mechanism for the effect.

Daniel AC Barbosa, Thiemo Fetzer, Caterina Soto & & Pedro CL Souza

We provide experimental evidence that monitoring of the police activity through body-worn cameras reduces use-of-force, handcuffs and arrests, and enhances criminal reporting. Stronger treatment effects occur on events classified ex-ante of low seriousness. Monitoring effects are moderated by officer rank, which is consistent with a career concern motive by junior officers. Overall, results show that the use of body-worn cameras de-escalates conflicts.

Nicholas Crafts

This paper reviews the claim that economic policymakers in the post-Covid UK should learn the lessons of the 1940s. Post-1945 policies relating to delivering full employment, levelling up, upgrading social security, dealing with the public debt legacy, and addressing the productivity puzzle are considered. The paper finds many reasons to criticize 1940s’ policies. Although, superficially, outcomes appear to have been good, a closer look reveals significant failings notably concerning design of the welfare state and supply-side policy for growth. The main lesson from the 1940s is not to repeat the policy errors of those days.

Arun Advani, Helen Hughson & Hannah Tarrant

In this paper we model the revenue that could be raised from an annual and a one-off wealth tax of the design recommended by Advani, Chamberlain and Summers (2020b). We examine the distributional effects of the tax, both in terms of wealth and other characteristics. We also estimate the share of taxpayers who would face liquidity constraints in meeting their tax liability. We find that an annual wealth tax charging 0.17% on wealth above £500,000 could generate £10 billion in revenue, before administrative costs. Alternatively, a one-off tax charging 4.8% (effectively 0.95% per year, paid over a five-year period) on wealth above the same threshold, would generate £250 billion in revenue. To put our revenue estimates into context, we present revenue estimates and costings for some commonly-proposed reforms to the existing set of taxes on capital.

Arun Advani & Hannah Tarrant

In this paper, we review the existing empirical evidence on how individuals respond to the incentives created by a net wealth tax. Variation in the overall magnitude of behavioural responses is substantial: estimates of the elasticity of taxable wealth vary by a factor of 800. We explore three key reasons for this variation: tax design, context, and methodology. We then discuss what is known about the importance of individual margins of response and how these interact with policy choices. Finally, we use our analysis to systematically narrow down and reconcile the range of elasticity estimates. We argue that a well-designed wealth tax would reduce the tax base by 7-17% if levied at a tax rate of 1%.

Arun Advani, George Bangham and Jack Leslie

We show that wealth inequality in the UK is high and has increased slightly over the past decade as financial asset prices increased in the wake of the financial crisis. But data deficiencies are a major barrier in understanding the true distribution, composition and size of household wealth. The most comprehensive survey of household wealth in the UK does a good job of capturing the vast majority of the wealth distribution, but that nearly £800 billion of wealth held by the very wealthiest UK households is missing. We also find tentative evidence that survey measures of high-wealth families undervalue their assets – our central estimate of the true value of wealth held by households in the UK is 5% higher than the survey data suggests.

Vasco M. Carvalho, Mirko Draca, and Nikolas Kuhlen

How do firms and inventors move through ‘knowledge space’ as they develop their innovations? We propose a method for tracking patterns of ‘exploration and exploitation’ in patenting behaviour in the US for the period since 1920. Our exploration measure is constructed from the text of patents and involves the use of ‘Bayesian Surprise’ to measure how different current patent-based innovations are from existing portfolios. Our results indicate that there are distinct ‘life-cycle’ patterns to firm and inventor exploration. Furthermore, exploration activity is more geographically concentrated than general patenting, but this concentration is centred outside the main hubs of patenting.

Farzad Javidanrad

Over the last four decades, the term “financialisation” has entered economics terminologies to explain the development of capitalist economies in which: a) the rate of profit in the production sector is falling or narrowing relative to that in the financial sector b) profit seeking through financial speculation has grown rapidly among the household and the production sectors; c) public and private debt is rapidly accelerating and its ratio to GDP is increasing swiftly; d) there is an independent and accelerated growth of the financial sector compared to that of the real sector. This paper is a theoretical attempt to shed light on these features through the lens of the paradox of monetary profit and its manifestation in the capitalist economy, i.e. the shortage of money in circulation. The aim of this paper is to show how the paradox of monetary profit provides a theoretical framework to analyse the mechanism by which the capitalist economies move towards financialisation. This theoretical argument shows the connection between the shortage of money in circulation and financialisation. The core idea proposed in this paper is that financialisation is the direct result of the shortage of money in circulation, and that this shortage can be explained through the paradox of monetary profit.

Arun Advani, Tahnee Ooms and Andy Summers

Policymakers tend to ‘treasure what is measured’ and overlook phenomena that are not. In an era of increased reliance on administrative data, existing policies also often determine what is measured in the first place. We analyse this two-way interaction between measurement and policy in the context of the investment incomes and capital gains that are missing from the UK’s official income statistics. We show that these ‘missing incomes’ change the picture of economic inequality over the past decade, revealing rising top income shares during the period of austerity. The underestimation of these forms of income in official statistics has diverted attention from tax policies that disproportionately benefit the wealthiest. We urge a renewed focus on how policy affects and is affected by measurement.

Sonia Bhalotra, Diogo G. C. Britto, Paolo Pinotti and Breno Sampaio

We estimate impacts of male job loss, female job loss, and male unemployment benefits on domestic violence in Brazil. We merge employer-employee and social welfare registers with administrative data on domestic violence cases brought to criminal courts, use of public shelters by victims and mandatory notifications of domestic violence by health providers. Leveraging mass layoffs for identification, we find that both male and female job loss, independently, lead to large and pervasive increases in domestic violence. Exploiting a discontinuity in unemployment insurance eligibility, we find that eligible men are not less likely to commit domestic violence while benefits are being paid, and more likely to commit it once benefits expire. Our findings are consistent with job loss increasing domestic violence on account of a negative income shock and an increase in exposure of victims to perpetrators, with unemployment benefits partially offsetting the income shock while reinforcing the exposure shock.

Rabah Arezki, Simeon Djankov, Ha Nguyen & Ivan Yotzov

Using a new dataset of 198 national elections across 48 democracies, this paper is the first to systematically examine the effects of oil price shocks on incumbents’ political fortunes in developed oil-importing countries. We find that oil price increases systematically lower the odds of re election for incumbents and increase the likelihood of changes in the ideology of the incoming government. These shocks are found to operate through lowering consumption growth

Bhaskar Chakravorty, Wiji Arulampalam, Apurav Yash Bhatiya, Clement Imbert & Roland Rathelot

Using a randomised experiment, we show that providing better information about prospective jobs to vocational trainees can improve their placement outcomes. The study setting is the vocational training programme DDU-GKY in India. We find that including in the training two information sessions about placement opportunities make trainees 17% more likely to stay in the jobs in which they are placed. We argue that this effect is likely driven by improved selection into training. As a result of the intervention, trainees that are over-optimistic about placement jobs are more likely to drop out before placement.

Nicholas Crafts

In 1930 Keynes opined that by 2030 people would work only 15 hours per week. As such, this prediction will not be realised. However, expected lifetime hours of leisure and non-market work in the UK rose by 60 per cent between 1931 and 2011, considerably more than Keynes would have expected. This reflects increases in life expectancy at older ages and much longer expected periods of retirement. Leisure in retirement contributes to high life satisfaction for the elderly but building up savings to pay for it is a barrier to working only 15 hours per week.

Ludovica Gazze & Jennifer Heissel

Concerns about drinking water contamination through lead service lines, which connect street water mains to homes in many cities in the United States, might hinder resource-constrained municipalities from performing important infrastructure upgrades. Construction on water mains might disturb the service lines and increase lead levels in drinking water. We estimate the effects of water main maintenance on drinking water and children's blood levels by exploiting unique geocoded data and over 2,200 water main replacements in Chicago, a city with almost 400,000 known lead service lines. By comparing water and blood samples in homes at different distances from replaced mains before and after replacement, we find no evidence that water main replacement affects water or children's lead levels.

Arun Advani, Elliot Ash, David Cai & Imran Rasul

How does economics compare to other social sciences in its study of issues related to race and ethnicity? We assess this using a corpus of 500,000 academic publications in economics, political science, and sociology. Using an algorithmic approach to classify race-related publications, we document that economics lags far behind the other disciplines in the volume and share of race-related research, despite having higher absolute volumes of research output. Since 1960, there have been 13,000 race-related publications in sociology, 4,000 in political science, and 3,000 in economics. Since around 1970, the share of economics publications that are race-related has hovered just below 2% (although the share is higher in top-5 journals); in political science the share has been around 4% since the mid-1990s, while in sociology it has been above 6% since the 1960s and risen to over 12% in the last decade. Finally, using survey data collected from the Social Science Prediction Platform, we find economists tend to overestimate the amount of race-related research in all disciplines, but especially so in economics.

Felix Chopra, Ingar Haaland & Christopher Roth

Using a large-scale online experiment with more than 8,000 U.S. respondents, we examine how the demand for a politics newsletter changes when the newsletter content is fact-checked. We first document an overall muted demand for factchecking when the newsletter features stories from an ideologically aligned source, even though fact-checking increases the perceived accuracy of the newsletter. The average impact of fact-checking masks substantial heterogeneity by ideology: factchecking reduces demand among respondents with strong ideological views and increases demand among ideologically moderate respondents. Furthermore, factchecking increases demand among all respondents when the newsletter features stories from an ideologically non-aligned source.

Sascha O. Becker, Francisco J. Pino & Jordi Vidal-Robert

The Protestant Reformation in the early 16th century challenged the monopoly of the Catholic Church. The printing press helped the new movement spread its ideas well beyond the cradle of the Reformation in Luther’s city of Wittenberg. The Catholic Church reacted by issuing indexes of forbidden books which blacklisted not only Protestant authors but all authors whose ideas were considered to be in conflict with Catholic doctrine. We use newly digitized data on the universe of books censored by the Catholic Church during the Counter-Reformation, containing information on titles, authors, printers and printing locations. We classify censored books by topic (religion, sciences, social sciences and arts) and language and record when and where books were indexed. Our results show that Catholic censorship did reduce printing of forbidden authors, as intended, but also negatively impacted on the diffusion of knowledge, and city growth.

Marta Santamaría, Jaume Ventura and Uğur Yeşilbayraktar

Are country borders still an impediment to trade flows within Europe? Using a microlevel survey with 3 million annual shipments of goods, we construct a matrix of bilateral trade for 269 European regions. Take two similar region pairs, one containing regions in different countries and the other containing regions in the same country. The market share of the origin region in the destination region for the international pair is 17.5 percent that of the intranational pair. Across industries, this estimate ranges from 12.3 to 38.9 percent. For post-1910 borders, this estimate is 28.8 percent. The implication is clear: Europe is far from having a single market.

Thushyanthan Baskaran, Sonia Bhalotra, Brian Min & Yogesh Uppal

There has been a phenomenal global increase in the proportion of women in politics in the last two decades, but there is no evidence of how this influences economic performance. We investigate this using data on competitive elections to India’s state assemblies, leveraging close elections to isolate causal effects. We find significantly higher growth in economic activity in constituencies that elect women and no evidence of negative spillovers to neighbouring male-led constituencies, consistent with net growth. Probing mechanisms, we find evidence consistent with women legislators being more efficacious, less corrupt and less vulnerable to political opportunism.

Sonia Bhalotra, Damian Clarke, Joseph F. Gomes & Atheendar Venkataramani

Millions of women continue to die during and soon after childbirth, even where the knowledge and resources to avoid this are available. We posit that raising the share of women in parliament can trigger action. Leveraging the timing of gender quota legislation across developing countries, we identify sharp sustained reductions of 8–10 percent in maternal mortality. Investigating mechanisms, we find that gender quotas lead to increases in percentage points of 5–8 in skilled birth attendance and 4–8 in prenatal care utilization, alongside a decline in fertility of 6–7 percent and an increase in the schooling of young women of about 0.5 years. The results are robust to numerous robustness checks. They suggest a new policy tool for tackling maternal mortality.

Ludovica Gazze, Claudia Persico & Sandra Spirovska

Children exposed to pollutants like lead are more disruptive and have lower achievement. However, little is known about whether lead-exposed children affect the long-run outcomes of their peers. We estimate these spillover effects using new data on preschool blood lead levels (BLLs) matched to education data for all students in North Carolina public schools. We compare siblings whose school-grade cohorts differ in the proportion of children with elevated BLLs, holding constant school and peers’ demographics. Having more lead-exposed peers is associated with lower high-school graduation and SAT-taking rates and increased suspensions and absences. Peer effects are larger for same-gendered students.

Ao Wang

Applied researchers most often estimate the demand for differentiated products assuming that at most one item can be purchased. Yet simultaneous multiple purchases are pervasive. Ignoring the interdependence among multiple purchases can lead to erroneous counterfactuals, in particular, because complementarities are ruled out. I consider the identification and estimation of a random coefficient discrete choice model of bundles, namely sets of products, when only product-level market shares are available. This last feature arises when only aggregate purchases of products, as opposed to individual purchases of bundles, are available, a very common phenomenon in practice. Following the classical approach with aggregate data, I consider a two-step method. First, using a novel inversion result in which demand can exhibit Hicksian complementarity, I recover the mean utilities of products from product-level market shares. Second, to infer the structural parameters from the mean utilities while dealing with price endogeneity, I use instrumental variables. I propose a practically useful GMM estimator whose implementation is straightforward, essentially as a standard BLP estimator. Finally, I estimate the demand for Ready-To-Eat (RTE) cereals and milk in the US. The demand estimates suggest that RTE cereals and milk are overall complementary and the synergy in consumption crucially depends on their characteristics. Ignoring such complementarities results in misleading counterfactuals.

Sonia Bhalotra, Irma Clots-Figueras, Lakshmi Iyer & Joseph Vecci

This paper examines policy effectiveness as a function of leader identity. We experimentally vary leader religious identity in a coordination game implemented in India, and focus upon citizen reactions to leader identity, controlling for leader actions. We find that minority leaders improve coordination, while majority leaders do not. Alternative treatment arms reveal that affirmative action for minorities reverses this result, while intergroup contact improves the effectiveness of leaders of both identities. We also find that minority leaders are less effective in towns with a history of intergroup conflict. Our results demonstrate that leader and policy effectiveness depend upon citizen reactions, conditioned by social identity and past conflict.

James Fenske, Namrata Kala & Jinlin Wei

Using a new dataset on city populations in colonial India, we show that the railroad network increased city size in the period 1881 to 1931. Our baseline estimation approach includes fixed effects for city and year, and we construct instrumental variables for railroad proximity based on distance from a least cost path spanning cities that existed prior to the start of railroad construction. Cities that increased market access due to the railroad grew, particularly those cities that were initially small and isolated.

Silvia Miranda-Agrippino & Giovanni Ricco

We propose a Bayesian approach to Local Projections that optimally addresses the empirical bias-variance tradeoff inherent in the choice between VARs and LPs. Bayesian Local Projections (BLP) regularise the LP regression models by using informative priors, thus estimating impulse response functions potentially better able to capture the properties of the data as compared to iterative VARs. In doing so, BLP preserve the flexibility of LPs to empirical model misspecifications while retaining a degree of estimation uncertainty comparable to a Bayesian VAR with standard macroeconomic priors. As a regularised direct forecast, this framework is also a valuable alternative to BVARs for multivariate out-of-sample projections.

Greg Howard & Arianna Ornaghi

How do different local policies in a federal system affect local land values, production, and sorting? We study the question exploiting a large historical policy change : U.S. Alcohol Prohibition in the early twentieth century. Comparing same-state early and late adopters of county dry laws in a difference-in-differences design, we find that early Prohibition adoption increased population and farm real estate values. Moreover, we find strong effects on farm productivity consistent with increased investment due to a land price channel. In equilibrium, the policy change disproportionately attracted immigrants and African-Americans.

S Anukriti, Sonia Bhalotra & Eddy H. F. Tam

Access to prenatal sex-detection technology in India has led to a phenomenal increase in abortion of girls. We find that it has also narrowed the gender gap in under-5 mortality, consistent with surviving girls being more wanted than aborted girls. For every three aborted girls, one additional girl survived to age five. Mechanisms include moderation of son-biased fertility stopping and narrowing of gender gaps in parental investments. However, surviving girls are more likely to be born in lower status families. Our findings have implications not only for counts of missing girls but also for the later life outcomes of girls.

Sonia Bhalotra, Martin Karlsson, Therese Nilsson & Nina Schwarz

We identify earnings impacts of exposure to an infant health intervention in Sweden, using individual linked administrative data to trace potential mechanisms. Leveraging quasi-random variation in eligibility, we estimate that exposure was associated with higher test scores in primary school for boys and girls. However only girls were more likely to score in the top quintile. Subsequent gains, in secondary schooling, employment, and earnings, are restricted to girls. We show that the differential gains for women accrued from both skills and opportunities, expansion of the welfare state having created unprecedented employment opportunities for women.

Livia Paranhos

This paper applies neural network models to forecast inflation. The use of a particular recurrent neural network, the long-short term memory model, or LSTM, that summarizes macroeconomic information into common components is a major contribution of the paper. Results from an exercise with US data indicate that the estimated neural nets usually present better forecasting performance than standard benchmarks, especially at long horizons. The LSTM in particular is found to outperform the traditional feed-forward network at long horizons, suggesting an advantage of the recurrent model in capturing the long-term trend of inflation. This finding can be rationalized by the so called long memory of the LSTM that incorporates relatively old information in the forecast as long as accuracy is improved, while economizing in the number of estimated parameters. Interestingly, the neural nets containing macroeconomic information capture well the features of inflation during and after the Great Recession, possibly indicating a role for nonlinearities and macro information in this episode. The estimated common components used in the forecast seem able to capture the business cycle dynamics, as well as information on prices.

Enrico Cantoni, Ludovica Gazzè, and Jerome Schafer

We study the effects of different types of concurrent elections using individual-level administrative and survey data from Italy. Exploiting different voting ages for the two Houses of Parliament in a voter-level Regression Discontinuity Design, we find no effect of Senate voting eligibility on voter turnout or information acquisition. We also estimate city-level Differences-in-Differences showing that concurrent high-salience municipal elections increase turnout in lower-salience provincial and European elections, but not vice-versa. These concurrency effects are concentrated in municipalities in the South of Italy, possibly due to weaker political parties and lower levels of social capital.

Peter Andre, Carlo Pizzinelli, Christopher Roth & Johannes Wohlfart

Using a sample of 2,200 households representative of the US population and a sample of more than 1,000 experts, we measure beliefs about how aggregate unemployment and inflation respond to different macroeconomic shocks. Expert predictions are quantitatively close to standard DSGE models and VAR evidence. While households' beliefs are directionally aligned with those of experts in the case of oil supply shocks and government spending shocks, they predict an opposite reaction of inflation to monetary policy and income tax shocks. A substantial fraction of deviations of household predictions can be explained by the use of a simple affective heuristic

Sebastian Link, Andreas Peichl, Christopher Roth & Johannes Wohlfart

We leverage survey data from Germany, Italy, and the US to document several novel stylized facts about the extent of information frictions among firms and households. First, firms’ expectations about the central bank policy rate, inflation, and aggregate unemployment are more aligned with expert forecasts and less dispersed than households’ . Second, there is substantially more heterogeneity in information frictions within households than within firms. Third, consistent with firms having stronger priors, they update their policy rate expectations significantly less compared to households when provided with an expert forecast. Our results have important implications for modelling heterogeneity in macroeconomic models.

Leonardo Bursztyn, Ingar Haaland, Aakaash Rao & Chris Roth

We study how popular rationales enable public anti-minority actions. Rationales to oppose minorities genuinely persuade some people. But they also provide “excuses” that may reduce the stigma associated with anti-minority expression, thereby increasing anti-minority behavior. In a first experiment, participants learn that a previous respondent authorized a donation to an anti-immigrant organization and then make an inference about the respondent’s underlying motivations. Participants informed that their matched respondent learned about a study claiming that immigrants increase crime rates before authorizing the donation see the respondent as less intolerant. In a second experiment, participants learn about that same study and then choose whether to authorize a public donation to the anti-immigrant organization. Participants informed that their exposure to the rationale will be publicly observable are substantially more likely to make the donation than participants who are informed that their exposure will remain private. A final experiment shows that people are more willing to post anti-immigrant content on social media when they can use an anti-immigrant video clip from Fox News as an excuse. Our findings suggest that prominent public figures can lower the social cost of intolerant expression by popularizing rationales, increasing anti-minority expression.

Ingar Haaland & Chris Roth

This paper provides representative evidence on beliefs about racial discrimination and examines whether information causally affects support for pro-black policies. Eliciting quantitative beliefs about the extent of hiring discrimination against blacks, we uncover large disagreement about the extent of racial discrimination with particularly pronounced partisan differences. An information treatment leads to a convergence in beliefs about racial discrimination but does not lead to a similar convergence in support of pro-black policies. The results demonstrate that while providing information can substantially reduce disagreement about the extent of racial discrimination, it is not sufficient to reduce disagreement about pro-black policies.

Francis Bloch, Kalyan Chatterjee and Bhaskar Dutta

This paper studies a game of attack and interception in a network, where a single attacker chooses a target and a path, and each node chooses a level of protection. We show that the Nash equilibrium of the game exists and is unique. It involves a mixed strategy of the attacker except when one target has a very high value relative to others. We characterize equilibrium attack paths and attack distributions as a function of the underlying network and target values. We also show that adding a link or increasing the value of a target may harm the attacker - a comparative statics effect which is reminiscent of Braess's paradox in transportation economics. Finally, we contrast the Nash equilibrium with the equilibria of two variations of the model : one where nodes make sequential protection decisions upon observing the arrival of a suspicious object, and one where all nodes cooperate in defense.

Veronika Czellar, David T. Frazier and Eric Renault

Indirect Inference (I-I) is a popular technique for estimating complex parametric models whose likelihood function is intractable, however, the statistical efficiency of I-I estimation is questionable. While the efficient method of moments, Gallant and Tauchen (1996), promises efficiency, the price to pay for this efficiency is a loss of parsimony and thereby a potential lack of robustness to model misspecification. This stands in contrast to simpler I-I estimation strategies, which are known to display less sensitivity to model misspecification due in large part to their focus on specific elements of the underlying structural model. In this research, we propose a new simulation-based approach that maintains the parsimony of I-I estimation, which is often critical in empirical applications, but can also deliver estimators that are nearly as efficient as maximum likelihood. This new approach is based on using a constrained approximation to the structural model, which ensures identification and can deliver estimators that are consistent and nearly efficient. We demonstrate this approach through several examples, and show that this approach can deliver estimators that are nearly as efficient as maximum likelihood, when feasible, but can be employed in many situations where maximum likelihood is infeasible.

David T. Frazier, Eric Renault, Lina Zhang & Xueyan Zhao

We study the impact of weak identification in discrete choice models, and provide insights into the determinants of identification strength in these models. Using these insights, we propose a novel test that can consistently detect weak identification in commonly applied discrete choice models, such as probit, logit, and many of their extensions. Furthermore, we demonstrate that when the null hypothesis of weak identification is rejected, Wald-based inference can be carried out using standard formulas and critical values. A Monte Carlo study compares our proposed testing approach against commonly applied weak identification tests. The results simultaneously demonstrate the good performance of our approach and the fundamental failure of using conventional weak identification tests for linear models in the discrete choice model context. Furthermore, we compare our approach against those commonly applied in the literature in two empirical examples: married women labor force participation, and US food aid and civil conflicts.

Stefano Caria, Grant Gordon, Maximilian Kasy, Simon Quinn, Soha Shami & Alexander Teytelboym

We introduce an adaptive targeted treatment assignment methodology for field experiments. Our Tempered Thompson Algorithm balances the goals of maximizing the precision of treatment effect estimates and maximizing the welfare of experimental participants. A hierarchical Bayesian model allows us to adaptively target treatments. We implement our methodology in Jordan, testing policies to help Syrian refugees and local jobseekers to find work. The immediate employment impacts of a small cash grant, information and psychological support are small, but targeting raises employment by 1 percentage-point (20%). After four months, cash has a sizable effect on employment and earnings of Syrians.

Arun Advani, Andy Summers & Hannah Tarrant

We compare two approaches to measuring UK top income shares - the share of income going to particular subgroups, such as the top 1%. We set out four criteria that an ideal top share series should satisfy: (i) comparability between numerator and denominator ; (ii) comparability over time ; (iii) international comparability; and (iv) practical sustainability. Our preferred approach meets three of these; by contrast the approach currently used to produce UK fiscal income series meets none of them. Changing to our preferred approach matters quantitatively : the share of income going to the top 1% is 2 percentage points higher, but rising more slowly, than under the alternative.

Subhasish Dey & Tanisha Ghosal

This paper studies the impact of a conditional cash transfer program called Kanyashree Prakalpa (KP) in the Indian state of West Bengal that aimed to improve the status and well-being of girls by reducing incidence of child marriage and increasing the secondary or higher education of girls till at least 18 years of age. Using the data from multiple rounds of National Family Health Survey (NFHS), difference-in-differences and triple-difference are employed considering the younger cohort (exposed to the program) as the treated group, the older cohort (not exposed to the program) as the control group, and the neighbouring state of Jharkhand as a comparison state. The analysis suggests that the KP program has reduced the probability of child marriage by 6.7 percent and increased the probability of secondary or higher educational attainment by 6 percent. The study contributes to the scarce literature of the significant long-term impact of the KP program towards women’s well-being and empowerment.

Monica Martinez-Bravo & Andreas Stegmann

In July 2011, the Pakistani public learnt that the CIA had used a vaccination campaign as cover to capture Osama Bin Laden. The Taliban leveraged on this information and launched an anti-vaccine propaganda campaign to discredit vaccines and vaccination workers. We evaluate the effects of these events on immunization by implementing a Difference-in-Differences strategy across cohorts and districts. We find that vaccination rates declined 12 to 20% per standard deviation in support for Islamist parties. These results suggest that information discrediting vaccination campaigns can negatively affect trust in health services and demand for immunization

Christopher Roth, Sonja Settele & Johannes Wohlfart

We conduct an experiment with a representative sample from the US to study households’ demand for macroeconomic information. Respondents who learn of a higher personal exposure to unemployment risk during recessions increase their demand for an expert forecast about the likelihood of a recession. This finding is consistent with macroeconomic models of endogenous information acquisition, according to which the demand for information depends on its expected benefits. Moreover, respondents’ updating about their personal unemployment risk suggests that households are imperfectly informed about their exposure to aggregate fluctuations, which may distort their beliefs about the benefits of acquiring macroeconomic information.

Sascha O Becker, Volker Lindenthal, Sharun Mukand & Fabian Waldinger

We study the role of professional networks in facilitating emigration of Jewish academics dismissed from their jobs by the Nazi government. We use individual-level exogenous variation in the timing of dismissals to estimate the causal effect of networks. Academics with more ties to early émigrés (emigrated 1933-1934) were more likely to emigrate. Early émigrés functioned as “bridging nodes” that facilitated emigration to their own destination. We also distinguish between three kinds of social networks – family, community, or professional networks and study their relative importance. Lastly, we provide some of the first empirical evidence of decay in social ties over time.

Dan Bernhardt, Kostas Koufopoulos and Giulio Trigilia

Classical security design papers equate competitive capital markets to securities being fairly priced in expectation. We revisit Nachman and Noe (1994)'s adverse selection setting, modeling capital-market competition as free entry of investors, and allowing firms to propose prices of securities, as happens in private securities placements and bank lending. We show that separating equilibria exist in which high types issue under-priced debt, while low types issue more informationally-sensitive securities (e.g., equity). We also uncover pooling equilibria in which firms issue under-priced debt. These results provide foundations for the pecking-order theory of external finance, and positive profits for uninformed lenders.

Dan Bernhardt, Kostas Koufopoulos and Giulio Trigilia

We provide theoretical foundations for positive lender profits in competitive credit markets with asymmetric information, where potential borrowers have scarce collateralizable assets. Strikingly, when some borrowers have negative net present value projects, an equilibrium always exists in which lenders make positive profits, despite their lack of `soft' information and free entry of competitors. We then establish that greater access to collateral for borrowers reduces lender profits, and we relate our findings to the empirical evidence on micro-credit, payday lending, and, more broadly, retail and small business financing.

Dan Bernhardt , Kostas Koufopoulos and Giulio Trigilia

We show that when borrowers are privately informed about their creditworthiness and lenders have a soft budget constraint, efficient investment requires a limit on the fraction of a firm's cash flows that can be pledged to outsiders. That is, pledgeability should neither be too low nor too high. An increase in pledgeability, or, more broadly, creditor rights, can either promote re-investment in zombie firms, which increases other firms' cost of capital, or it can lead to insufficient underinvestment, depending on the composition of equilibrium credit demand. Thus, greater pledgeability can reduce net social surplus, and even trigger a Pareto loss.

Emmanouil Benetos, Alessandro Ragano, Daniel Sgroi & Anthony Tuckwell

We propose a new measure for national happiness based on the emotional content of a country’s most popular songs. Using machine learning to detect the valence of the UK’s chart-topping song of each year since the 1970s, we find that it reliably predicts the leading survey-based measure of life satisfaction. Moreover, we find that music valence is better able to predict life satisfaction than a recently-proposed measure of happiness based on the valence of words in books (Hills et al., 2019). Our results have implications for the role of music in society, and at the same time validate a new use of music as a measure of public sentiment.

Carlo Perroni, Kimberley Scharf, Oleksandr Talavera & Linh Vi

We explore the link between online attention and charitable donations. Using a unique dataset on phone text donations that includes detailed information on the timing of cash gifts to charities, we link donations to time variation online searches for words that appear in those charities’ mission statements. The results suggest that an increase in the online salience to donors of the activities pursued by different charities affects the number and volume of donations made to those charities and to charities that pursue different goals. We uncover evidence of positive own salience effects and negative cross salience effects on donations.

Marcus Miller

Could experiencing a health pandemic aid in understanding the nature of financial crisis? It might, for example, help to discriminate between different narratives that claim to do so. In this spirit, two influential accounts of the near-collapse of shadow banking in the US financial crisis of 2008 are analysed: one developed by Mark Gertler and Nobuhiro Kiyotaki and the other presented by the Financial Crisis Inquiry Commission of the US Congress. Using a common two-sector framework, key features of these contrasting accounts of the market for banking services are presented, along with their corresponding diagnoses of what precipitated financial crisis. To see what the experience of Covid might imply about their relative credibility, four aspects of the current pandemic are considered: how it began from a small biological shock; how it gets spread by contagion; the significance of externalities; and how it may end with a vaccine. But the reader is left to form his or her own judgement

Qianxue Zhang

Global supply chains have become increasingly important in international trade over the past decade. Nevertheless, it remains di cult to quantify the role of supply-chain trade in transmitting and amplifying shocks, given the challenge of identifying and tracing the exogenous shocks across economies. This paper argues that the lockdown of Hubei province in China due to the Coronavirus (COVID-19) outbreak provides a natural experiment to study the importance of China's role in global value chains. Since the lockdown started during the Lunar New Year, Hubei's migrant workers who went home could not return to workplaces in other provinces, resulting in a massive labor supply shock. I feed the supply shock through a Ricardian model with intermediate goods and sectoral linkages to study trade and welfare effects across several economies. While welfare in China is the most strongly affected, the shock also has sizeable implications for the US and the UK. However, close neighbours such as South Korea and Japan gain from the shock. There are large variations regarding the sectoral contributions to the aggregate welfare changes. The model also performs well in predicting bilateral export changes.

Sascha O. Becker & Cheongyeon Won

In the mid 19th century, pre-colonial Korea under the Joseon dynasty was increasingly isolated and lagging behind in its economic development. Joseon Korea was forced to sign unequal treaties with foreign powers as a result of which Christian missionaries entered the country and contributed to the establishment of private schools. We show that areas with a larger presence of Christians have higher literacy rates in 1930, during the Japanese colonial period. We also show that a higher number of Protestants is associated with higher female literacy, consistent with a stronger emphasis on female education in Protestant denominations.

Arun Advani

We use administrative tax data from audits of self-assessment tax returns to understand what types individuals are most likely to be non-compliant. Non-compliance is common, with one-third of taxpayers underpaying by some amount, although half of aggregate under-reporting is done by just 2% of taxpayers. Third party reporting reduces non-compliance, while working in a cash-prevalent industry increases it. However, compliance also varies significantly with individual characteristics: non-compliance is higher for men and younger people. These results matter for measuring inequality, for understanding taxpayer behaviour, and for targeting audit resources.

Latika Chaudhary & James Fenske

We study the effect of railroads, the single largest public investment in colonial India, on human capital. Using district-level data on literacy, we find railroads had positive effects on literacy, in particular on male and English literacy. We employ two identification strategies. First, we exploit synthetic panel variation contained in cohort-specific literacy rates due to differences in the timing of railroad exposure of different cohorts within the same district and census year. We find a one standard deviation increase in railroad exposure raises literacy by 0.29 standard deviations. Second, we use distance from an early railway plan as an instrument for district railway exposure in the cross section and find results of similar magnitude. We show that railroads increased literacy by raising secondary, rather than primary, schooling. Our mediation analysis suggests that non-agricultural income and opportunities for skilled employment are important mechanisms, while agricultural income is not.

Mark Dincecco, James Fenske & Anil Menon

Difference in difference and event study analyses in a panel of Asian grid cells over nine centuries demonstrate that greater agricultural potential due to New World crops increased violent conflict after 1500. Rising caloric potential in a typical grid cell increased conflict by roughly its mean. The result holds across several New World crops and conflict types. It is largely driven by South Asia, a densely populated, diverse region with several competing historical states. The evidence supports a rapacity effect – increases in the gains from appropriation to Asian and non-Asian belligerents – as a mechanism. Population density, urbanization, and British imperialism significantly mediate the impact of the Columbian Exchange.

Manuel Bagues & Christopher Roth

We study the long-run effects of contact with individuals from other regions on beliefs, preferences and national identity. We combine a natural experiment, the random assignment of male conscripts to different locations throughout Spain, with tailored survey data. Being randomly assigned to complete military service outside of one’s region of residence fosters contact with conscripts from other regions, and increases sympathy towards people from the region of service, measured several decades later. We also observe an increase in identification with Spain for individuals originating from regions with peripheral nationalism. Our evidence suggests that intergroup exposure in early adulthood can have long-lasting effects on individual preferences and national identity.

James Fenske & Shizhuo Wang

Mortality of twins relative to singletons is no greater today among African ethnicities that once practiced twin infanticide. We introduce data on historic twin infanticide and merge it with birth records from 23 African countries. We use the full sample, a border sample of adjacent societies with and without past twin infanticide, and a sample of twins. All three samples provide no evidence that past twin infanticide predicts greater differential twin mortality today. Twin infanticide and negative attitudes towards twins were suppressed by Africans, missionaries, and colonial governments. Where these channels were weak, we find evidence of greater twin mortality today.

Christa N. Brunnschweiler and Samuel Kwabena Obeng

We examine how local governments' political alignment with central government affects subnational fiscal outcomes. In theory, alignment could be rewarded with more intergovernmental transfers, or swing voters in unaligned constituencies could be targeted instead. We analyze data from Ghana, which has a complex decentralized system that seeks to preclude political alignment effects. District Chief Executives (DCEs) are centrally-appointed local administrators loyal to the ruling party, while district Members of Parliament (MPs) may belong to another party. A formula for central transfer distribution aims to limit the influence of party politics. Using a new dataset for 1994-2014 and a regression discontinuity design we find that despite this system, districts with aligned MP and DCE receive more transfers, have higher district expenditure, and more internally generated funds. Results are strongest for a subsample of constant districts over the period, suggesting that repeated municipal fragmentation has weakened political alignment effects. We also show strong electoral cycle effects, and find a crowd-in effect for Ghanaian districts.

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.

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.

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.

Thiemo Fetzer

This paper documents that a large-scale government subsidy aimed at encouraging people to eat out in restaurants in the wake of the first 2020 COVID19 wave in the United Kingdom has had a large causal impact in accelerating the subsequent second COVID19 wave. The scheme subsidized 50% off the cost of food and non-alcoholic drinks for an unlimited number of visits in participating restaurants on Mondays-Wednesdays from August 3 to August 31, 2020. Areas with higher take-up saw both, a notable increase in new COVID19 infection clusters within a week of the scheme starting, and again, a deceleration in infections within two weeks of the program ending. Areas that exhibit notable rainfall during the prime lunch and dinner hours on days the scheme was active record lower infection incidence – a pattern that is also measurable in mobility data – and non-detectable on days during which the discount was not available or for rainfall outside the core lunch and dinner hours. A back of the envelope calculation suggests that the program is accountable for between 8 to 17 percent of all new local infection clusters during that time period.

Minu Philip , Debraj Ray & S. Subramanian

India’s case fatality rate (CFR) under covid-19 is strikingly low, with a current level of around 1.7%. The world average rate is far higher. Several observers have noted that this difference is at least partly due to India’s younger age distribution. We use age-specific fatality rates from 17 comparison countries, coupled with India’s distribution of covid-19 cases, to “predict" India’s CFR. In most cases, those predictions yield even lower numbers, suggesting that India’s CFR is, if anything, too high rather than too low. We supplement the analysis with a decomposition exercise, and we additionally account for time lags between case incidence and death for a more relevant perspective under a growing pandemic. Our exercise underscores the importance of careful measurement and interpretation of the data, and emphasizes the dangers of a misplaced complacency that could arise from an exclusive concern with aggregate statistics such as the CFR.

Peter J Hammond

Roberts' "weak neutrality" or "weak welfarism" theorem concerns Sen social welfare functionals which are de ned on an unrestricted domain of utility function pro les and satisfy independence of irrelevant alternatives, the Pareto condition, and a form of weak continuity. Roberts (1980) claimed that the induced welfare ordering on social states has a one-way representation by a continuous, monotonic real-valued welfare function defined on the Euclidean space of interpersonal utility vectors | that is, an increase in this welfare function is sufficient, but may not be necessary, for social strict preference. A counter-example shows that weak continuity is insufficient; a minor strengthening to pairwise continuity is proposed instead and its sufficiency demonstrated.

Ceren Bengu Cibik & Daniel Sgroi

We investigate the relationship between self-awareness and dishonesty in a preregistered experiment with 1,260 subjects. In a first experiment, we vary the level of awareness of subjects' own past dishonesty and explore the impact on behaviour in tasks that include the scope to lie. We find that in single-person non-interactive tasks, self-awareness of dishonesty helps to lower dishonesty in the future. However, in tasks that are competitive in nature becoming more aware of past dishonesty raises the likelihood of dishonesty. We argue that this behaviour is consistent with cognitive dissonance. In a second experiment we vary the degree of competitiveness in one of our core tasks to further explore the interactions between self-awareness, (dis)honesty and competition. Our results show when and why pointing out those who have been (dis)honest in the past can be an effective way to induce honesty in the future and when it might back- re badly, and perhaps also shed some light on perceived increases in dishonesty in politics, the media and everyday life

Andrew Harkins

This paper develops a framework for analyzing the effect of arbitrary changes to network structure in linear-quadratic games on networks. Changes to network structure which increase total activity and total utility are studied for the case of strategic complements and strategic substitutes. Changes which are welfare increasing are found to depend on a new measure of centrality which counts the total length of walks from a node. Two optimal network design problems are then considered. Total activity is found to be a convex function of the edge weights of the network, which allows for convex optimization techniques to be applied to minimize total activity as in the traditional ‘key player’ problem. Welfare maximizing network structures are also studied and previous results which associate optimal networks with nested split graphs are generalized.

Arun Advani, Felix Koenig, Lorenzo Pessina & Andy Summers

In this paper we study the contribution of migrants to the rise in UK top incomes. Using administrative data on the universe of UK taxpayers we show migrants are over-represented at the top of the income distribution, with migrants twice as prevalent in the top 0.1% as anywhere in the bottom 97%. These high incomes are predominantly from labour, rather than capital, and migrants are concentrated in only a handful of industries, predominantly finance. Almost all (85%) of the growth in the UK top 1% income share over the past 20 years can be attributed to migration.

Ao Wang

We develop a semi-nonparametric approach to identify and estimate the demand for differentiated products. The proposed method adopts a random coefficients discrete choice logit model (i.e., mixed logit model) in which the distribution of random coefficients is nonparametrically specified. Our method minimizes misspecification error in this distribution to which routinely used parametric approach is subject. In addition, it overcomes the practical challenge of dimensionality in the number of products that remains the main hurdle in the nonparametric estimation of demand functions. We propose a sieve estimation procedure (referred to as sieve BLP) that remains simple to implement. Extensive Monte Carlo simulations show its robust finite-sample performance under various data generating processes. We use our method to investigate the welfare implications of a sugar tax in the ready-to-eat cereal industry in the US. This illustrative application underscores the advantages of sieve BLP in predicting the distributional effects of a policy change such as introducing a sugar tax.

Adam Nowakowski & Andrew J Oswald

Economists have proposed a variety of sophisticated climate-change interventions. But do our citizens care enough about climate change to enact such policies? This paper provides evidence that suggests they do not. Two kinds of findings are presented. Using data on 40,000 Europeans from the 2016 European Social Survey, the paper shows that only 5% of people say they are extremely worried about climate change. The cooler European countries express particularly low levels of worry. Using data on 30,000 citizens from the 2019 Eurobarometer Surveys, the paper demonstrates that climate change is viewed as a less important problem than parochial issues such as (i) health and social security, (ii) inflation, (iii) unemployment, and (iv) the economic situation. Other results, from regression equations, are provided. This paper’s conclusions seem to have exceptionally serious implications for our unborn great grandchildren -- and imply that economic policy should now focus on how to alter feelings rather than upon the design of complicated theoretical interventions. An analogy with successful anti-tobacco policy is discussed.

Ludovica Gazze

Several states require owners to mitigate lead hazards in old houses with children present. I estimate the mandates’ effects on housing markets. My empirical strategy exploits differences by state, year, and housing vintage. The mandates decrease the prices of old houses by 7.1 percent, acting as a large tax on owners. Moreover, families with children become 11.3 percent less likely to live in old houses. Increases in rents for family-friendly houses suggest that the mandates have important distributional consequences. These findings are relevant for evaluating similar mandates such as healthy homes standards.

Ludovica Gazze

I study the determinants of childhood lead screening using all Illinois birth records (2001-2014), matched to lead testing records and geocoded housing age data. Housing age measures lead risk, as older houses disproportionally have lead paint. Changes in providers’ availability, inferred from testing data, provide variation in non-monetary costs of testing. Travel costs reduce screening among low- and high-risk households alike. Thus, self-selection based on travel costs does not appear to improve targeting, even though high-risk households are willing to pay $29-389 more than low-risk households for screening. Screening incentives would be cost-effective for reasonable values of lead poisoning externalities.

Wanyu Chung & Carlo Perroni

We study how domestic content requirements in Free Trade Areas (FTAs) affect market power and market structure in concentrated intermediate goods markets. We show that content requirements increase oligopolistic markups beyond the level that would obtain under an equivalent import tariff, and we document patterns in Canadian export data and US producer price data that align with the model’s predictions: producers of intermediate goods charge comparatively higher prices when the associated final goods producers are more constrained by FTA origin requirements and by Most Favoured Nation (MFN) tariffs for both intermediate and final non-FTA goods.

Robert Akerlof & Luis Rayo

We augment Becker’s classic model of the family by assuming that, in addition to caring about consumption, the family wishes to further a subjective story, or narrative, that captures its deeply held values. Our focus is on two stories that in many ways are polar opposites. The first one—the protector narrative—gives rise to a type of traditional family where gender roles are distinct, men and women are pushed towards “separate spheres,” and men are expected to be tough and authoritarian. The second one—the fulfillment narrative—gives rise to a type of modern family where roles are less distinct, family members have greater latitude in their decisions, and marriages are based to a greater extent on romantic love. We derive a rich bundle of behaviors associated with each story, and using survey data, we show that our findings are consistent with a variety of empirical patterns.

Nicholas Crafts & Terence C. Mills

We investigate a structural model of demographic-economic interactions for England during 1570 to 1850. We estimate that the annual rate of population growth consistent with constant real wages was 0.4 per cent before 1760 but 1.5 per cent thereafter. We find that exogenous shocks increased population growth dramatically in the early decades of the Industrial Revolution. Simulations of our model show that if these demographic shocks had occurred before the Industrial Revolution the impact on real wages would have been catastrophic and that these shocks were largely responsible for very slow growth of real wages during the Industrial Revolution.

Tommaso Porzio , Federico Rossi & Gabriella Santangelo

We show that the global human capital increase during the 20th century contributed to structural transformation. We document that almost half of the decline in aggregate agricultural employment was driven by new birth cohorts entering the labor market. We use data on educational attainment and compile a comprehensive list of policy reforms to interpret the differences in agricultural employment across cohorts. We find that the increase in schooling led to a sharp reduction in the agricultural labor supply by equipping younger cohorts with skills more valued out of agriculture. Interpreted through a model of frictional labor reallocation, these facts imply that human capital growth accounts for about 20% of the global decline in agricultural employment.

Abhinay Muthoo

We lay down a simple (game-theoretic) model of a state-of-anarchy involving three players. We focus attention on the following question: Which subset of players (if any) will agree to cooperate amongst each other? Will all three players agree to do so, or only two of the three players (and if so, which two players)? Or will no player agree to cooperate with any other player? We show that the socially optimal outcome is for all three players to agree to cooperate with each other. We also show that due to the presence of positive externalities, in equilibrium, cooperation may only be established between two of the three players (which is sub-optimal).

Nicholas Crafts

From 1871 to 1913, German economic growth was faster than that of the UK. This represented a successful catch-up of the leading European economy but there was still a significant productivity gap at the end of the period. Slower UK growth should be seen as largely unavoidable but there was a serious weakness in the national innovation system. On the whole, the greater openness of the British economy was advantageous and a move to protectionist policies would have been damaging. The expansion of German industrial production and exports only had a small negative impact on UK national income.

Nicola Mastrorocco & Arianna Ornaghi

Does media content influence local institutions? We study this question by looking at how a negative shock to local crime-related news, induced by the acquisition of local TV stations by the Sinclair Broadcast Group, affects U.S. municipal police departments. In particular, we implement a triple differences-in-differences design that exploits the staggered timing of acquisitions 2010-2017, together with cross-sectional variation in whether municipalities are covered by local news at baseline, a proxy for exposure to the shock. First, using a newly collected dataset of 300,000 transcripts of local newscasts, we document that once acquired by Sinclair, TV stations decrease news coverage of local crime. Second, we find that after Sinclair enters a media market, municipalities that were likely to be in the news at baseline experience 8% lower violent crime clearance rates with respect to municipalities that were very rarely in the news in the first place. The main mechanism we propose is that the change in content induces police officers to decrease the effort allocated to clearing violent crimes, due to a decline in the salience of crime as an issue in the public opinion.

Robert Akerlof, Anik Ashraf, Rocco Macchiavello and Atonu Rabbani

Conflicts between management and workers are common and can have significant impacts on productivity. We study how workers in a large Bangladeshi sweater factory responded to management’s decision to lay off about a quarter of the workers following a period of labor unrest. Our main finding is that the mass layoff resulted in a large and persistent reduction in the productivity of surviving workers. Moreover, it is specifically the firing of peers with whom workers had social connections – friends – that matters. We also provide suggestive evidence of deliberate shading of performance by workers in order to punish the factory’s management, and a corresponding deliberate attempt by the factory to win the angry workers back by selectively giving them tasks that are more rewarding. By combining ethnographic and survey data on the socialization process with the factory’s internal records, the paper provides a rare glimpse into the aftermath of an episode of labor unrest. A portrait of the firm emerges as a web of interconnected relational agreements supported by social connections.

Daniele Condorelli and Balazs Szentes

We characterize equilibria of oligopolistic markets where identical firms with constant marginal cost compete a’ la Cournot. For given maximal willingness to pay and maximal total demand, we first identify all combinations of equilibrium consumer and producer surplus that can arise from arbitrary demand functions. Then, as a further restriction, we fix the average willingness to pay above marginal cost (i.e., first best surplus) and identify all possible triples of consumer surplus, producer surplus and deadweight loss.

Claudia Rei

The rise of the modern state in Western Europe, saw the emergence of national identities in the nineteenth century. This paper evaluates the association between historical religious and state capacity in Portugal proxied by priests and postmen in 1875, and current measures of national identity proxied by voter turnout in democratic elections from 1975 to 2017. I find that places with a stronger historical presence of postmen vote more in any election, but they vote less in local elections relative to national elections. This result suggests a persistent association of historical state presence with national identity. Historical religious presence is also positively associated with voter turnout but in smaller magnitude. There is however no negative association with local elections: in contrast with historical state capacity, historical religious capacity is connected with the local rather than the national unit.