Economics Letters最新文献

This paper presents the findings of a randomized experiment in Haiti aimed at improving online labor market outcomes through training individuals in microworking, a type of work involving small digital tasks completed via online platforms. Six months post-program, we observe significant positive impacts on platform-related microwork outcomes and some broader labor market outcomes. The treatment increases the likelihood of having a microwork profile, the number of tasks completed, hours worked, and microwork earnings, leading to a larger percentage of monthly income from microwork. The program also enhances socioemotional skills and English ability. However, we observe no significant effects on current employment and related outcomes, possibly as participants view microwork as a supplementary activity rather than employment.

In noisy environments with adverse selection and moral hazard, dynamic contracts can induce a risk-neutral agent’s actions to deterministically implement any one-shot, incentive-compatible outcome. Thus, dynamic contracts improve upon the static second-best when the principal’s payoff is concave in output, e.g., due to risk aversion or payoff concavity. We bring out a new intuition that applies to both principal–agent and limited commitment settings (such as Kyle, 1985)—in both settings, the informed agent can be induced to reveal all his private information.

The paper documents a positive association between political participation, measured by the number of citizens voting at national elections, and awareness of the tradeoffs behind both private and public decisions that indicators of basic financial education can capture. The association is robust to the inclusion of a range of controls, stronger for the most difficult concepts of risk diversification and interest compounding, and consistent with the hypothesis that in countries where financial education is higher due to national cultural traits, voter turnout at national elections is higher.

This paper investigates the effect of sovereign debt default on foreign direct investment (FDI) transactions by US firms into Argentina following the Argentine sovereign default in 2019–20. Using the synthetic control approach, we find that the number of FDI transactions decreased by approximately 60% after the Argentine default with a particularly pronounced decline in the non-manufacturing sector. By examining the changes in the number of transactions, we provide a more precise picture of the cost of sovereign default, capturing the FDI activity of small firms better.

We investigate whether firms adjust their financing policies in response to a negative shock affecting their product market. Focusing on the pharmaceutical industry, we leverage the U.S. Inflation Reduction Act (IRA) of 2022 as an exogenous shock, marking the government's inaugural authority to negotiate drug prices. Using a matrix completion approach, a supervised machine-learning methodology that allows to compare treatment outcomes against predicted counterfactual values in absence of the treatment, our analysis reveals that pharmaceutical firms react to this regulatory intervention by issuing more equity. This finding suggests that firms raise fresh capital to mitigate the adverse impact of IRA on the product market.

This paper studies the malleability of individuals’ political attitudes to simple anchors. Using an online survey experiment, we provide participants with the policy preference of one anonymous previous survey respondent. We exogenously vary whether participants are shown a Republican-aligned or Democrat-aligned response. We demonstrate that anchoring has a significant effect on an individual’s stated political attitudes even with this minimal anchor. Our results support the susceptibility of individuals to be easily persuaded through strategic anchoring.

Equity finance is used to fund innovative and growth-oriented businesses because of its resilience during economic downturns and investors' willingness to undertake higher risks compared to other financing. During the pandemic, 6500 equity-funded firms obtained government-guaranteed loans from traditional banks and new lenders. Our analysis of the determinants of loan default revealed that new lenders experienced a significantly higher default rate than the main banking sector. Additionally, firms funded by equity crowdfunding have a higher loan default rate than those backed by other equity providers. We explore the factors influencing defaults and variations by lender and investor type.

We note that the proofs of Bird (1984), the first to show group strategy-proofness of top trading cycles (TTC), require correction. We provide a counterexample to a critical claim and present corrected proofs in the spirit of the originals. We also present a novel proof of strong group strategy-proofness using the corrected results.

Climate change and the escalation of extreme weather events jeopardize every corner of the globe. This paper investigates the impact of extreme high temperatures on the spread of newly issued municipal corporate bonds (MCBs) in China, which serves as a crucial instrument for local governments to meet the financial demands. We find that relative to the reference temperature range of 16 °C–20 °C, the issuing spread of MCBs increases by 2.48 basis points for each extra day where the mean temperature surpasses 32 °C. The findings highlight the risk-increasing effects of extreme temperatures in financial markets.

This study sheds new light on ESG performance and financial characteristics of companies that are constituents of portfolios of U.S. socially responsible investing (SRI) funds. We categorize SRI fund participation into three distinct types: debt-only, equity-only, and dual ownership of debt and equity. Companies with dual ownership tend to be held by relatively bigger and more concentrated SRI funds. Our holdings-based analysis reveals that these investee companies deliver superior ESG performance across all dimensions and have larger size, higher degree of financial safety, and higher profitability compared to those in equity-only or debt-only categories.