Chinese local leaders are frequently moved across prefectures. By combining local leader rotation data and comprehensive firm land parcel purchase data across prefectures from 2006 to 2016, this paper examines how firm–politician connections affect resource allocation and finds that a firm headquartered in a leader’s previous work prefecture purchases three times more land parcels in that leader’s new governing prefecture than the prefecture-year mean, at half the unit prices. Identification is from within-firm-year variation in various prefectures through exogenous politician rotation. Land usage efficiency is lower for these follower firms’ land parcels. Land allocation distortion is also economically sizable. (JEL D22, D72, O17, O18, P25, P26)
{"title":"Go with the Politician","authors":"Yongwei Nian, Chunyang Wang","doi":"10.1257/pol.20200882","DOIUrl":"https://doi.org/10.1257/pol.20200882","url":null,"abstract":"Chinese local leaders are frequently moved across prefectures. By combining local leader rotation data and comprehensive firm land parcel purchase data across prefectures from 2006 to 2016, this paper examines how firm–politician connections affect resource allocation and finds that a firm headquartered in a leader’s previous work prefecture purchases three times more land parcels in that leader’s new governing prefecture than the prefecture-year mean, at half the unit prices. Identification is from within-firm-year variation in various prefectures through exogenous politician rotation. Land usage efficiency is lower for these follower firms’ land parcels. Land allocation distortion is also economically sizable. (JEL D22, D72, O17, O18, P25, P26)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"108 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136048792","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a difference-in-difference approach, we find that an increase to Medicaid’s minimum drug rebate under the Affordable Care Act in 2010 lowered non-Medicaid drug spending by 2.5 percent. A stylized bargaining model shows that this is likely driven by the interaction of this reform with Medicaid’s “most-favored customer” clause (MFCC). By examining the response of drugs that faced a change in incentives equivalent to the removal of Medicaid’s MFCC, we estimate that removing the Medicaid MFCC would have reduced overall 2010 non-Medicaid drug spending by an additional 3.5 percent, though it would have likely also increased Medicaid spending. (JEL C78, H51, I18, I38, L65)
{"title":"Profiting from Most-Favored-Customer Procurement Rules: Evidence from Medicaid","authors":"Josh Feng, Thomas Hwang, Luca Maini","doi":"10.1257/pol.20200688","DOIUrl":"https://doi.org/10.1257/pol.20200688","url":null,"abstract":"Using a difference-in-difference approach, we find that an increase to Medicaid’s minimum drug rebate under the Affordable Care Act in 2010 lowered non-Medicaid drug spending by 2.5 percent. A stylized bargaining model shows that this is likely driven by the interaction of this reform with Medicaid’s “most-favored customer” clause (MFCC). By examining the response of drugs that faced a change in incentives equivalent to the removal of Medicaid’s MFCC, we estimate that removing the Medicaid MFCC would have reduced overall 2010 non-Medicaid drug spending by an additional 3.5 percent, though it would have likely also increased Medicaid spending. (JEL C78, H51, I18, I38, L65)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"252 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136048793","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I examine the Coasean independence property in a large multinational cap-and-trade scheme for greenhouse gas emissions, the EU Emissions Trading System. I analyze whether emissions of power producers are independent from allowance allocations by leveraging a change in allocation policy for a difference-in-difference strategy. The evidence suggests that the independence property holds overall and for larger emitters and that firms respond to the loss in allocation by increasing allowance purchases. Suggestive evidence for small emitters indicates that trading costs or behavioral bias distorts their emission decisions. However, their small emission share leaves the independence property intact at the sector level. (JEL L94, L98, Q48, Q51, Q54, Q58)
{"title":"Coase and Cap-and-Trade: Evidence on the Independence Property from the European Carbon Market","authors":"Aleksandar Zaklan","doi":"10.1257/pol.20210028","DOIUrl":"https://doi.org/10.1257/pol.20210028","url":null,"abstract":"I examine the Coasean independence property in a large multinational cap-and-trade scheme for greenhouse gas emissions, the EU Emissions Trading System. I analyze whether emissions of power producers are independent from allowance allocations by leveraging a change in allocation policy for a difference-in-difference strategy. The evidence suggests that the independence property holds overall and for larger emitters and that firms respond to the loss in allocation by increasing allowance purchases. Suggestive evidence for small emitters indicates that trading costs or behavioral bias distorts their emission decisions. However, their small emission share leaves the independence property intact at the sector level. (JEL L94, L98, Q48, Q51, Q54, Q58)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"422 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135504449","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Can debt moratoria help countries weather negative shocks? We exploit the Debt Service Suspension Initiative (DSSI) to study the bond market effects of deferring official debt repayments. Using daily data on sovereign bond spreads and synthetic control methods, we show that countries eligible for official debt relief experience a larger decline in borrowing costs compared to similar, ineligible countries. This decline is stronger for countries that receive a larger relief, suggesting that the effect works through liquidity provision. By contrast, the results do not support the concern that official debt relief could generate stigma on financial markets. (JEL F34, G12, H63, O16)
{"title":"Borrowing Costs after Sovereign Debt Relief","authors":"Valentin Lang, David Mihalyi, Andrea Presbitero","doi":"10.1257/pol.20210166","DOIUrl":"https://doi.org/10.1257/pol.20210166","url":null,"abstract":"Can debt moratoria help countries weather negative shocks? We exploit the Debt Service Suspension Initiative (DSSI) to study the bond market effects of deferring official debt repayments. Using daily data on sovereign bond spreads and synthetic control methods, we show that countries eligible for official debt relief experience a larger decline in borrowing costs compared to similar, ineligible countries. This decline is stronger for countries that receive a larger relief, suggesting that the effect works through liquidity provision. By contrast, the results do not support the concern that official debt relief could generate stigma on financial markets. (JEL F34, G12, H63, O16)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"46 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135504450","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I use narrative historical data on site selection decisions for a subset of US colleges to identify runner-up locations that were strongly considered to become the sites of new colleges. Using runner-up counties as counterfactuals in a difference-in-difference model, I find that establishing a college causes 62 percent more patents per year. Linking patents to novel college yearbook data reveals that only 12 percent of patents in a college’s county came from that college’s alumni or faculty. I find only small differences in patenting between establishing colleges and establishing other institutions as well as between colleges with different focuses on technical fields. (JEL I23, N31, N32, N71, N72, O31, O34)
{"title":"How Do Institutions of Higher Education Affect Local Invention? Evidence from the Establishment of US Colleges","authors":"Michael J. Andrews","doi":"10.1257/pol.20200320","DOIUrl":"https://doi.org/10.1257/pol.20200320","url":null,"abstract":"I use narrative historical data on site selection decisions for a subset of US colleges to identify runner-up locations that were strongly considered to become the sites of new colleges. Using runner-up counties as counterfactuals in a difference-in-difference model, I find that establishing a college causes 62 percent more patents per year. Linking patents to novel college yearbook data reveals that only 12 percent of patents in a college’s county came from that college’s alumni or faculty. I find only small differences in patenting between establishing colleges and establishing other institutions as well as between colleges with different focuses on technical fields. (JEL I23, N31, N32, N71, N72, O31, O34)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"616 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136048797","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Treatment practices vary widely across hospitals, often with little connection to patients’ medical needs. We assess impacts of these differences in delivery practices at childbirth. We find that infants quasi-randomly delivered at hospitals with higher C-section rates are born in better shape and are less likely to be readmitted, with suggestive evidence of improved survival. These benefits are driven by avoidance of prolonged labors that pose risks to infant health. In contrast, these infants are more likely to visit the emergency department for respiratory-related problems, consistent with a large observational literature linking C-section to chronic reductions in respiratory health. (JEL I11, I12, J13, J16)
{"title":"The Health Impacts of Hospital Delivery Practices","authors":"David Card, Alessandra Fenizia, David Silver","doi":"10.1257/pol.20210034","DOIUrl":"https://doi.org/10.1257/pol.20210034","url":null,"abstract":"Treatment practices vary widely across hospitals, often with little connection to patients’ medical needs. We assess impacts of these differences in delivery practices at childbirth. We find that infants quasi-randomly delivered at hospitals with higher C-section rates are born in better shape and are less likely to be readmitted, with suggestive evidence of improved survival. These benefits are driven by avoidance of prolonged labors that pose risks to infant health. In contrast, these infants are more likely to visit the emergency department for respiratory-related problems, consistent with a large observational literature linking C-section to chronic reductions in respiratory health. (JEL I11, I12, J13, J16)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"247 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135359257","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Forward markets are believed to aggregate information about future spot prices and reduce the cost of producing the commodity. We develop a measure of the extent to which forward and spot prices agree in markets with transaction costs. Using this measure, we show that day-ahead prices better reflect real-time prices at all locations in California’s electricity market after the introduction of financial trading. We then present evidence suggesting that operating costs and input fuel use fell after the introduction of financial trading on days when the nonconvexities inherent to the production and transmission of electricity are especially relevant. (JEL D23, D24, G13, L94, L98, Q48)
{"title":"Can Forward Commodity Markets Improve Spot Market Performance? Evidence from Wholesale Electricity","authors":"Akshaya Jha, Frank A. Wolak","doi":"10.1257/pol.20200234","DOIUrl":"https://doi.org/10.1257/pol.20200234","url":null,"abstract":"Forward markets are believed to aggregate information about future spot prices and reduce the cost of producing the commodity. We develop a measure of the extent to which forward and spot prices agree in markets with transaction costs. Using this measure, we show that day-ahead prices better reflect real-time prices at all locations in California’s electricity market after the introduction of financial trading. We then present evidence suggesting that operating costs and input fuel use fell after the introduction of financial trading on days when the nonconvexities inherent to the production and transmission of electricity are especially relevant. (JEL D23, D24, G13, L94, L98, Q48)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136048796","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We contribute to the literature on the effect of taxes on the locational choices of wealthy individuals by examining the geographical sensitivity of the Forbes 400 richest Americans to state estate taxes. Though we find billionaires’ effective tax rates are only about half the statutory rate, their residential choices are highly sensitive to these taxes, as 35 percent of local billionaires leave states with an estate tax. This tax-induced mobility causes a large reduction in the aggregate tax base. Nonetheless, we find that the revenue benefit of an estate tax exceeds the cost for the vast majority of states. (JEL H24, H31, H71, R23)
{"title":"Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy","authors":"Enrico Moretti, Daniel J. Wilson","doi":"10.1257/pol.20200685","DOIUrl":"https://doi.org/10.1257/pol.20200685","url":null,"abstract":"We contribute to the literature on the effect of taxes on the locational choices of wealthy individuals by examining the geographical sensitivity of the Forbes 400 richest Americans to state estate taxes. Though we find billionaires’ effective tax rates are only about half the statutory rate, their residential choices are highly sensitive to these taxes, as 35 percent of local billionaires leave states with an estate tax. This tax-induced mobility causes a large reduction in the aggregate tax base. Nonetheless, we find that the revenue benefit of an estate tax exceeds the cost for the vast majority of states. (JEL H24, H31, H71, R23)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"86 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135658671","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
How do rising temperatures affect long-term labor reallocation in developing economies? In this paper we examine how increases in temperature impact structural transformation and urbanization within Indian districts between 1951 and 2011. We find that rising temperatures are associated with lower shares of workers in nonagricultural sectors, with effects intensifying over a longer time frame. Supporting evidence suggests that local demand effects play an important role: declining agricultural productivity under higher temperatures reduces the demand for nonagricultural goods and services, which subsequently lowers nonagricultural labor demand. Our results illustrate that rising temperatures limit sectoral and rural-urban mobility for isolated households. (JEL J61, N35, O13, O15, O18, Q54, R23)
{"title":"Climate Change and Labor Reallocation: Evidence from Six Decades of the Indian Census","authors":"Maggie Liu, Yogita Shamdasani, Vis Taraz","doi":"10.1257/pol.20210129","DOIUrl":"https://doi.org/10.1257/pol.20210129","url":null,"abstract":"How do rising temperatures affect long-term labor reallocation in developing economies? In this paper we examine how increases in temperature impact structural transformation and urbanization within Indian districts between 1951 and 2011. We find that rising temperatures are associated with lower shares of workers in nonagricultural sectors, with effects intensifying over a longer time frame. Supporting evidence suggests that local demand effects play an important role: declining agricultural productivity under higher temperatures reduces the demand for nonagricultural goods and services, which subsequently lowers nonagricultural labor demand. Our results illustrate that rising temperatures limit sectoral and rural-urban mobility for isolated households. (JEL J61, N35, O13, O15, O18, Q54, R23)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"55 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135658672","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study identifies the causal effect of pension generosity on women’s fertility behavior. It capitalizes on Brazil’s expansion of the pension system to rural workers, whose pension wealth subsequently more than tripled. Difference-in-difference, instrumental variable, and event study methods show that the pension reform reduces the propensity of childbearing of women of fertile age by 8 percent in the short run. Completed fertility declines by 1.3 children within 20 years after the reform, reducing the contribution base of the pay-as-you-go long run. The fertility response is strongest at higher birth parities, among older women, and among mothers with sons. (JEL H55, I38, J13, J16, O15)
{"title":"Pensions and Fertility: Microeconomic Evidence","authors":"Alexander M. Danzer, Lennard Zyska","doi":"10.1257/pol.20200440","DOIUrl":"https://doi.org/10.1257/pol.20200440","url":null,"abstract":"This study identifies the causal effect of pension generosity on women’s fertility behavior. It capitalizes on Brazil’s expansion of the pension system to rural workers, whose pension wealth subsequently more than tripled. Difference-in-difference, instrumental variable, and event study methods show that the pension reform reduces the propensity of childbearing of women of fertile age by 8 percent in the short run. Completed fertility declines by 1.3 children within 20 years after the reform, reducing the contribution base of the pay-as-you-go long run. The fertility response is strongest at higher birth parities, among older women, and among mothers with sons. (JEL H55, I38, J13, J16, O15)","PeriodicalId":48093,"journal":{"name":"American Economic Journal-Economic Policy","volume":"29 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135703271","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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