We study disappointment and platform exit among new bidders in an online auction marketplace. In particular, we study a hybrid auction format with a “Buy-It-Now” option which, when executed, will abruptly end the auction and cancel any standing bids. When this happens, if the formerly leading bidder is new to the platform, then they are 6 percentage points more likely to exit the marketplace for every

Italy and Germany have similar geographical differences in firm productivity—with the North more productive than the South in Italy and the West more productive than the East in Germany—but have adopted different models of wage bargaining. Italy sets wages based on nationwide contracts that allow for limited local wage adjustments, while Germany has moved toward a more flexible system that allows for

Services, which are less traded than goods, rose from 55% of world expenditure in 1970 to 75% in 2015. Using a Ricardian trade model incorporating endogenous structural change, we quantify how this substantial shift in consumption has affected trade. Without structural change, we find that the world trade to GDP ratio would be 13 percentage points higher by 2015, about half the boost delivered from

AbstractWe quantify the implications of voter bias and electoral competition for politicians’ gender composition. Unfavorable voters’ attitudes toward women and local gender earnings gap correlate negatively with the share of female candidates in Parliamentary elections. Using within-candidate variation across the different polling stations of an electoral district in a given election year, we find

AbstractThis paper investigates the distributional consequences of monetary policy across generations. We use a life-cycle model with a rich asset structure as well as nominal and real rigidities, calibrated to the euro area using both macroeconomic aggregates and microeconomic evidence from the Household Finance and Consumption Survey. We show that the life-cycle profiles of income and asset accumulation

In the late 2000s, a regulatory reform dramatically strengthened the incentives of French nonprofit hospitals to attract patients. Exploiting exhaustive data for surgery treatments between 2005 and 2008, and modeling hospitals as supplying utility to patients, we show that increased competitive pressure on nonprofit hospitals caused them to perform more procedures, but did not inflate overall activity

We study heterogeneity in the transmission of monetary shocks across euro-area countries using a dynamic factor model and high-frequency identification. Deploying a novel methodology to assess the degree of heterogeneity, we find it to be low in financial variables and output but significant in consumption, consumer prices, and variables related to local housing and labour markets. We show that a large

Previous work on transportation investments has focused on average impacts in high- and middle-income countries. We estimate average and heterogeneous effects in a poor continent, Africa, using roads and cities data spanning 50 years in 39 countries. Using changes in market access due to distant road construction as a source of exogenous variation, we estimate a 30-year elasticity of city population

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter’s currency. We then study the relationship between invoicing currencies and the response of import unit values to exchange rate changes. We find that for transactions invoiced in a vehicle

We elicit numerical expectations for late-onset dementia and long-term care (LTC) outcomes in the Health and Retirement Study. We provide the first empirical evidence on dementia-risk perceptions among dementia-free older Americans and establish important patterns regarding imprecision of subjective probabilities. Our elicitation distinguishes between precise and imprecise probabilities, while accounting

This article investigates the medium to long-term effects on refugee labour market outcomes of the temporary employment bans being imposed on asylum seekers in many countries. Using a newly collected dataset on employment restrictions together with individual data for refugees entering European countries between 1985 and 2012, our empirical strategy exploits the geographical and temporal variation

This paper investigates whether wage losses after job displacement are driven by lost firm wage premiums or worker productivity depreciations. We estimate losses in wages and firm wage premiums, the latter being measured as firm effects from a two-way fixed-effects wage decomposition. Using new German administrative data on displacements from small and large employers, we find that wage losses are

AbstractIn 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

This paper studies the political determinants of inequalities in government interventions under majoritarian (MAJ) and proportional representation (PR) systems. We propose a probabilistic voting model of electoral competition with highly targetable government interventions and heterogeneous localities. We uncover a novel relative electoral sensitivity effect that affects government interventions only

We study the consequences of policy interventions when social norms are endogenous but costly to change. In our environment a group faces a negative externality that it partially mitigates through incentives in the form of punishments. In this setting policy interventions can have unexpected consequences. The most striking is that when the cost of bargaining is high introducing a Pigouvian tax can

How do events that highlight a policy issue impact political preferences? In this paper, I analyze the impact of mass shootings on voter behavior. I show that, conditional on population, mass shootings are largely random events. Using a Difference-in-Differences strategy, I find that mass shootings result in a 1.7 percentage point loss in Republican vote share in counties where they occur. Identification

We use detailed administrative data to study the adjustment of local labor markets to industrial robots in Germany. Robot exposure, as predicted by a shift-share variable, is associated with displacement effects in manufacturing, but those are fully offset by new jobs in services. The incidence mostly falls on young workers just entering the labor force. Automation is related to more stable employment

Climate change is likely to affect economies not only through warming, but also via an increase in prolonged extreme events like heat waves. However, the impacts of heat waves on economic output are not well captured by standard empirical approaches that ignore when hot days occur. Using a global dataset spanning 1979–2016, we show agricultural losses from past heat waves are up to an order of magnitude

AbstractI study the long-term consequences of an effective free school choice program that targeted disadvantaged students in Israel two decades ago. I show that the program led to significant gains in post-secondary education through increased enrolment in academic and teachers’ colleges without any increase in enrolment in research universities. Free school choice also increased earnings at the adulthood

People in our experiment choose between two information sources with opposing biases in order to inform their guesses about a binary state. By varying the nature of the bias, we vary whether it is optimal to consult information sources biased towards or against prior beliefs. Even in our deliberately-abstract setting, there is strong evidence of confirmation-seeking and to a lesser extent contradiction-seeking

AbstractWe address the question in the title in a heterogeneous-agent incomplete-market model featuring exogenous idiosyncratic risk, endogenous skill investment, and flexible labor supply. The tax and transfer schedule is restricted to being log-linear in income, a good description of the US system. Rising inequality is modeled as a combination of skill-biased technical change and growth in residual

AbstractWe use a model of precautionary savings with housing and mortgages to study the effects of a deleveraging shock on consumer spending. We focus on the deleveraging caused by a contraction in home values, and compute numerically the partial-equilibrium effect of the shock. Our simulations show that household deleveraging is associated with a long and protracted weakness in consumption. These

Recent research has pointed to large gaps in labor productivity between the agricultural and non-agricultural sectors in low-income countries, as well as between workers in rural and urban areas. Most estimates are based on national accounts or repeated cross-sections of microsurvey data, and as a result typically struggle to account for individual selection between sectors. This paper uses long-run

Who are “protest voters” and do they affect elections? We study this question using the introduction of a pure protest option (“None Of The Above” (NOTA)) on Indian ballots. Using structural estimation, we find that in elections without NOTA, most protest voters simply abstain. Protest voters who turn out scatter their votes among many candidates and consequently have little impact on election results

AbstractWe study how the technological importance of inputs—measured by cost shares—is related to the decision to “make” or “buy” that input. Using detailed French international trade data and an instrumental variable approach based on self-constructed input–output tables, we show that multinationals vertically integrate technologically important inputs. A stylized incomplete contracting model with

This paper studies how voters’ selective ignorance interacts with policy design by political candidates. It shows that the selectivity empowers voters with extreme preferences and small groups, that divisive issues attract most attention, and that public goods are underfunded. Finer granularity of information increases these inefficiencies. Rational inattention can also explain why competing opportunistic

We reexamine the role of incomplete contracts in a dynamic model of renegotiation that endogenizes the timing of investments and trade. The interaction between bargaining and investment significantly alters the lessons learned from static models. When the opportunity to trade is expected to be long lasting, contracts that exacerbate the parties’ absolute vulnerability to hold-up—especially following

Results from international standardized tests show large cross-country differences in students' performances. Where do these gaps come from? This paper argues that differences in cultural environments and parental inputs may be of great importance. We show that the school performance of second-generation immigrants is similar to that of native students in their parents' countries of origin. This holds

AbstractImpact evaluations can help to inform policy decisions, but they are rooted in particular contexts and to what extent they generalize is an open question. I exploit a new data set of impact evaluation results and find a large amount of effect heterogeneity. Effect sizes vary systematically with study characteristics, with government-implemented programs having smaller effect sizes than academic

We study distributional preferences in “large†groups. While most prior experi- ments have focused on exploring attitudes toward inequality in two- or three-person groups, we field a series of experiments via Mechanical Turk in which subjects choose between two income distributions, each with seven (or nine) individuals, with hypo- thetical incomes that aim to approximate the actual distribution