Alesina A., Gennaioli C. and Lovo S. (2018 forthcoming). Public Goods and Ethnic Diversity: Evidence from Deforestation in Indonesia. Economica.
This paper shows that the level of deforestation in Indonesia is positively related to the degree of ethnic fractionalization at the district level. To identify a causal relation we exploit the exogenous timing of variations in the level of ethnic heterogeneity due to the creation of new jurisdictions. We provide evidence consistent with a lower control of politicians, through electoral punishment, in more ethnically fragmented districts. Our results bring a new perspective on the political economy of deforestation. They are consistent with the literature of (under) provision of public goods and social capital in ethnically diverse societies and suggest that when the underlying communities are ethnically fractionalized, decentralization can reduce deforestation.
De Neve JE., Ward G., Van Landeghem B., De Keulenaer F., Kavetsos G. & Nor- ton M. (2018). The asymmetric experience of positive and negative economic growth: Global evidence using subjective well-being data. Review of Economics & Statistics, Volumen 100, Issue 2, pp. 362-375.
Are individuals more sensitive to losses than gains in terms of economic growth? We find that measures of subjective well-being are more than twice as sensitive to negative as compared to positive economic growth. We use Gallup World Poll data from over 150 countries, BRFSS data on 2.3 million U.S. respondents, and Eurobarometer data that cover multiple business cycles over four decades. This research provides a new perspective on the welfare cost of business cycles, with implications for growth policy and the nature of the long-run relationship between GDP and subjective well-being.
Kemeny, T., & Osman, T. (2018). The wider impacts of high-technology employment: Evidence from US cities. Research Policy, Volume 47, Issue 9, pp. 1729-1740
Innovative, high-technology industries are commonly described as drivers of regional development. ‘Tech’ workers earn high wages, but they are also said to generate knock-on effects throughout the local economies that host them, spurring growth in jobs and wages in nontradable activities. At the same time, in iconic high-tech agglomerations like the San Francisco Bay Area, the home of Silicon Valley, the success of the tech industry creates tensions, in part as living costs rise beyond the reach of many non-tech workers. Across a large sample of U.S. cities, this paper explores these issues systematically. Combining annual data on wages, employment and prices from the Quarterly Census of Employment and Wages, the Department of Housing and Urban Development and the Consumer Price Index, it estimates how growth in tradable tech employment affects the real, living-cost deflated wages of local workers in nontradable sectors. Results indicate that high-technology employment has significant, positive, but modest effects on the real wages of workers in nontradable sectors. These effects appear to be spread consistently across different kinds of nontradable activities. In terms of substantive wider impacts, tech appears benign, though fairly ineffectual.
Ladi, S., Lazarou, E. & Hauck, J. (2018). Brazilian Think-Tanks and the Rise of Austerity Discourse. Policy & Society, Volume 37, Issue 2, pp. 222-242.
This article discusses the role of think tanks in the production of ideas guiding recent change in Brazil’s economic policy. It claims that think tanks are significant policy-making agents preparing the society for change – via their communicative discourse – but also attempting to influence the interaction between political elites – via their coordinative discourse. The polarization of think tanks’ communicative discourse in regard to austerity during two critical junctures for Brazil is analysed. Discursive institutionalism is applied in order to interpret data from four Brazilian think tanks: the Institute of Applied Economic Research, the Inter-Union Department of Statistics and Socioeconomic Studies, the Fernand Braudel Institute and the Brazilian Institute of Economy. These think tanks have very different organizational and ideological characteristics but a polarization of the discussion around austerity can be observed in the discourse of all four of them. The scale ranges from an active defence of the Brazilian development model to a full-scale endorsement of austerity.
Adler M., Dolan P., and Kavetsos G. (2017). Would you choose to be happy? Trade- offs between happiness and the other dimensions of life in a large population survey. Journal of Economic Behavior & Organization, 139, 60-73.
A large literature documents the determinants of happiness. Butis happiness all that people want from life; and if so, what type of happiness matters to them? Or are they willing to sacrifice happiness (however it is defined) for other attributes in their lives? We show direct evidence that individuals trade-off levels of happiness with levels of income, physical health, family, career success and education in a large sample of UK and US individuals. On average, all types of happiness are preferred to other attributes except health. People prefer affective happiness (feeling good) over evaluative (life satisfaction) and eudaimonic (worthwhileness) components. This result is robust to methodological innovations, such as the use of vignettes and judgements of the lives described.
Bagnai, A., Granville, B. & Mongeau, C. (2017). Withdrawal of Italy from the euro area: stochastic simulations of a structural macroeconometric model. Economic Modelling, 64, pp. 524-538.
This paper assesses the impact on the Italian economy of Italy withdrawing from the euro area by means of stochastic simulations of a macroeconometric model. The model considers the effect of devaluation on output, sovereign debt valuation, and the development of bilateral economic relations between Italy and its major trade partners. The simulation results are consistent with the findings of recent applied research: the Italian economy would follow the V-shaped pattern observed in most currency crises. After an initial period of stress, and provided an appropriate set of countercyclical policy measures is implemented, real GDP would recover and resume growth at a reasonable pace. In particular, while the expected positive impact of nominal exchange rate realignment on external balance would be transitory, higher nominal growth would bring about a persistent reduction in unemployment and the public debt-to-GDP ratio. These results are robust to a set of sensitivity checks, considering a number of adverse circumstances such as exchange rate overshooting, financial panic, supply-side constraints, and the application of retaliatory tariffs.
Bjorkman-Nyqvist, M., Corno, L., de Walque, D. & Svensson, J. (2017 forthcoming). Incentivizing safer sexual behaviour: Evidence from a randomized control trial on HIV prevention. American Economic Journal: Applied Economics.
We investigate the effect of a financial lottery program in Lesotho with relatively low expected payments but a chance to win a high prize conditional on negative test results for sexually transmitted infections. The intervention resulted in a 21.4% reduction in HIV incidence over two years. Lottery incentives appear to be particularly effective in targeting individuals with ex-ante risky sexual behaviour, consistent with the hypothesis that lotteries are more valued by individuals willing to take risks.
Borra, C., González, L. & Sevilla, A. (2017). The Impact of Scheduling Birth Early on Infant Health. Journal of the European Economic Association.
Granville, B. & Hussain, S. (2017). Eurozone cycles: an analysis of phase synchronization. International Journal of Finance and Economics, 22, pp. 83-114.
This paper analyses synchronization, both across and between business and financial cycles (growth and classical) in a subset of 10 countries representative of the Economic and Monetary Union. Employing an extended data set from 1960 to 2013, we find evidence of synchronization across financial cycles. In case of business cycles, we find contrasting results: There is significant synchronization across growth cycles but no evidence of a common classical cycle. This confirms, first, that economic and financial variables in the Economic and Monetary Union behave differently and, second, that synchronization in business cycles arises from synchronized deviations from the trend, but the underlying macroeconomic fundamentals are not in synch. Furthermore, we adopt a novel approach to break down our full sample period into smaller subperiods to follow the evolution of synchronization over time. Our results highlight the role played by the monetary union in further increasing macroeconomic divergences.
Granville, B. (2017). Lessons from the collapse of the Ruble Zone and the transferable Ruble system. CESifo Forum, 17(4), pp. 19-26.
Gutiérrez-Romero, R. & Oviedo M. (2017). The good the bad and the ugly: The socio-economic impact of drug cartels and their violence in Mexico. Journal of Economic Geography.
This paper assesses the impact that drug cartels and their associated violence have had on development in Mexico. For this purpose, we monitored official and media reports to identify where cartels have operated with and without drug related homicides. Using the difference-in-difference kernel matching method, we find that on the one hand, inequality declined in areas where cartels were active without incidents of drug related homicides. On the other, poverty increased in areas that had both the lowest and the highest rates of drug related homicides. Two reasons could explain this increase in poverty. In the most violent areas, production, profits, remunerations per employee, the number of establishments and employees declined in key industries, such as manufacturing. In the least violent areas remunerations in manufacturing also declined, and people migrated from the more violent places. Most of these migrants were mainly of low income.
Gutiérrez-Romero, R. and Méndez, L. (2017). Does inequality foster or hinder the growth of entrepreneurship in the long run? Research on Economic Inequality, 25.
This article assesses the extent to which historical levels of inequality affect the creation and survival of businesses over time. To this end, we use the Global Entrepreneurship Monitor (GEM) survey across 66 countries over 2005–2011. We complement this survey with data on income inequality dating back to early 1800s and current institutional environment, such as the number of procedures to start a new business, countries’ degree of financial inclusion, corruption and political stability. We find that although inequality increases the number of firms created out of need, inequality reduces entrepreneurial activity as in net terms businesses are less likely to be created and survive over time. These findings are robust to using different measures of inequality across different points in time and regions, even if excluding Latin America the most unequal region in the world. Our evidence then supports theories that argue early conditions, crucially inequality, influence development path.
Ladi, S. & Tsarouhas, D. (2017). The International Diffusion of Regulatory Governance: EU Actorness in Public Procurement. Regulation and Governance, Volumen 11, Issue 4, pp.388-403.
This paper attempts to go beyond actor‐centered explanations of the European Union’s (EU) presence in regulatory politics by examining the role of the EU in the diffusion of regulatory norms and practices. We explore the international diffusion of public procurement policy, to which multiple organizations and especially the EU and the World Trade Organization have made an active contribution. Using the “opportunity‐presence‐capability” scheme, we argue that the EU is actively co‐shaping the global agenda on public procurement, mainly as a result of the “opportunity” and “presence” dimensions of its global actorness and its role in the horizontal diffusion of public procurement regulations between international organizations. For “EU as a global actor” literature to offer valuable explanations, an in‐depth analysis of its relationship with other international organizations, such as the World Trade Organization, reveals significant interactions and the co‐shaping of policy agendas.
Borra, C., Gonzalez, L. and Sevilla, A. (2016). Birth Timing and Neonatal Health. American Economic Review, 106(5): 329-32.
We take advantage of a new natural experiment to evaluate the health effects of scheduling birth early for non-medical reasons on infant health. In 2010, the cancellation of a generous child benefit in Spain led may families to schedule birth early in order to remain eligible for the subsidy. We document that the affected cohort of children did not suffer any increase in birth complications or medical conditions right at birth, but were significantly more likely to be admitted to hospital during their second and third weeks of life, suggesting potentially persistent negative health effects.
Dolan P. & Kavetsos G. (2016). Happy talk: Mode of administration effects on subjective well-being. Journal of Happiness Studies, 17(3), 1273-1291.
There is increasing interest in subjective well-being (SWB) both in academic and policy circles. As a result, considerable research efforts are now being directed at the validity and reliability of SWB measures. This study examines how SWB reports differ by survey mode. Using data from the April 2011–March 2012 Annual Population Survey in the UK we find that individuals consistently report higher SWB over the phone compared to face-to-face interviews. We also show that the determinants of SWB differ significantly by mode, with life circumstances tending to matter more in face-to-face interviews. These results have substantial implications for research and policy purposes.
Gennaioli, C. & Tavoni, M. (2016). Clean or Dirty Energy; Evidence of Corruption in the Renewable Energy Sector. Public Choice, 166:3.
This paper studies the link between public policy and corruption for the case of wind energy. We show that publicly subsidized renewable energy can attract criminal appetites and favor the formation of criminal associations between entrepreneurs and politicians able to influence the licensing process. The insights of a simple model of political influence by interest groups are tested empirically using Italian data for the period 1990-2007. Using a diference in diference approach we quantify the impact of a Green Certificate policy aimed at supporting renewables, and find robust evidence that criminal association activity increased more in windy provinces after the introduction of the generous policy regime. The magnitude of the effect is large: the construction of an average wind park is associated with an increase of criminal association activity of 6% in the treatment compared to the control group. Our findings show that in the presence of poor institutions, even well designed market-based policies can have an adverse impact. The analysis is relevant for countries which are generally characterized by heavy bureacracies, weak institutions and by large renewable potential.
Gutiérrez-Romero, R. (2016). Estimating the impact of Mexican drug cartels and drug-related homicides on crime and perceptions of safety. Journal of Economic Geography, 16:(4).
We estimate the impact of drug cartels and drug-related homicides on crime and perceptions of security in Mexico. Since the location where drug cartels operate might be endogenous, we combine the difference-in-difference estimator with instrumental variables. Using surveys on crime victimization we find that people living in areas that experienced drug-related homicides are more likely to take extra security precautions. Yet, these areas are also more likely to experience certain crimes, particularly thefts and extortions. In contrast, these crimes and perceptions of insecurity do not change in areas where cartels operate without leading to drug-related homicides.
Nollenberger, N., Rodriguez-Planas, N. and Sevilla, A. (2016). The Math Gender Gap: The Role of Culture. American Economic Review, 106(5): 257-261.
This paper investigates the effect of gender-related culture on the math gender gap by analysing math test scores of second-generation immigrants, who are all exposed to a common set of host country laws and institutions. We find that immigrant girls whose parents come from more gender-equal countries perform better (relative to similar boys) than immigrant girls whose parents come from less gender-equal countries, suggesting an important role of cultural beliefs on the role of women in society on the math gender gap. The transmission of cultural beliefs accounts for at least two thirds of the overall contribution of gender-related factors.
Ugur, M., Trushin, E., Solomon, E. & Guidi, F. (2016). R&D and productivity in OECD firms and industries: A hierarchical meta-regression analysis. Research Policy, 45(10), pp. 2069-2086.
The relationship between R&D investment and firm/industry productivity has been investigated widely following seminal contributions by Zvi Griliches and others from late 1970s onwards. We aim to provide a systematic synthesis of the evidence, using 1253 estimates from 65 primary studies that adopt the so-called primal approach. In line with prior reviews, we report that the average elasticity and rate-of-return estimates are positive. In contrast to prior reviews, however, we report that: (i) the estimates are smaller and more heterogeneous than what has been reported before; (ii) residual heterogeneity remains high among firm-level estimates even after controlling for moderating factors; (iii) firm-level rates of return and within-industry social returns to R&D are small and do not differ significantly despite theoretical predictions of higher social returns; and (iv) the informational content of both elasticity and rate-of-return estimates needs to be interpreted cautiously. We conclude by highlighting the implications of these findings for future research and evidence-based policy.
Ugur, M., Trushin, E. & Solomon, E. (2016). Inverted-U relationship between R&D intensity and survival: evidence on scale and complementarity effects in UK data. Research Policy, 45(7), pp. 1474-1492.
Existing evidence on the relationship between R&D intensity and firm survival is varied and often conflicting. We argue that this may be due to overlooking R&D scale effects and complementarity between R&D intensity and market concentration. Drawing on Schumpeterian models of competition and innovation, we address these issues by developing a formal model of firm survival and using a panel dataset of 37,930 of R&D-active UK firms over 1998–2012. We report the following findings: (i) the relationship between R&D intensity and firm survival follows an inverted-U pattern that reflects diminishing scale effects; (ii) R&D intensity and market concentration are complements in that R&D-active firms have longer survival time if they are in more concentrated industries; and (iii) creative destruction as proxied by median R&D intensity in the industry and the premium on business lending have negative effects on firm survival. Other findings concerning age, size, productivity, relative growth, Pavitt technology classes and the macroeconomic environment are in line with the existing literature. The results are strongly or moderately robust to different samples, stepwise estimations, and controls for frailty and left truncation.
Zenko Z., Ekkekakis P. & Kavetsos G. (2016). Changing minds: Bounded rationality and heuristic processes in exercise-related judgments and decisions. Sport, Exercise, and Performance Psychology, 5(4), 337-351.
Theories currently used to understand, predict, and promote physical activity and exercise represent information-processing models of the mind. A fundamental assumption underpinning these theories is that human judgment and decision-making processes are rational. Thus, interventions derived from these models are aimed to enhance “data input” (e.g., provide complete, accurate, and compelling information about health benefits) with the expectation that the rational evaluation of these data will result in the desired behavioral “output.” Given the modest effectiveness of interventions based on these models, we designed 2 experiments testing the validity of the assumption of rationality, focusing specifically on exercise-related judgments and decisions. In Experiment 1, exercise judgments were altered by shifting an arbitrary anchor, whose presence should have had no bearing on these judgments. In Experiment 2, the preference between a target exercise session and an alternative was increased by the mere addition of a third “decoy” exercise option. Together, these experiments demonstrate that important motivational variables, including the perceived desirability of exercise, affective attitude, intention, affective forecasts, and exercise choices can be manipulated in a predictable direction without providing any new relevant information, but by merely targeting specific, well-characterized heuristics. Therefore, these data provide evidence that the “bounded” nature of human rationality also manifests itself in exercise judgments and decisions. Researchers and exercise practitioners should consider incorporating heuristic processes within dual-process theoretical models of physical activity and exercise behavior. (PsycINFO Database Record (c) 2016 APA, all rights reserved)