Ana María Ibáñez, Andrés Moya, María Adelaida Ortega, Sandra V Rozo, Maria José Urbina
We examine the well-being effects of a regularization program offered to half a million Venezuelan forced migrants in Colombia. We collected data on more than two thousand such migrants and compared the well-being of those who arrived in Colombia before and after the date that defined program eligibility. Since this date was announced ex-post and was unknown to the public, we could credibly evaluate the program’s impact. We find that program beneficiaries experienced large improvements in well-being, including consumption per capita (a gain of 48%), monthly labor income (an increase of 22%), and health status (an increment of 1.2 standard deviations). These positive outcomes largely stemmed from improved access to services, particularly the social protection system, subsidized healthcare system, and financial services. We also find that the fiscal costs incurred by the Colombian government for a regularized migrant household are lower than those for an irregular migrant household.
{"title":"Life Out of the Shadows: The Impacts of Regularization Programs on the Lives of Forced Migrants","authors":"Ana María Ibáñez, Andrés Moya, María Adelaida Ortega, Sandra V Rozo, Maria José Urbina","doi":"10.1093/jeea/jvae044","DOIUrl":"https://doi.org/10.1093/jeea/jvae044","url":null,"abstract":"We examine the well-being effects of a regularization program offered to half a million Venezuelan forced migrants in Colombia. We collected data on more than two thousand such migrants and compared the well-being of those who arrived in Colombia before and after the date that defined program eligibility. Since this date was announced ex-post and was unknown to the public, we could credibly evaluate the program’s impact. We find that program beneficiaries experienced large improvements in well-being, including consumption per capita (a gain of 48%), monthly labor income (an increase of 22%), and health status (an increment of 1.2 standard deviations). These positive outcomes largely stemmed from improved access to services, particularly the social protection system, subsidized healthcare system, and financial services. We also find that the fiscal costs incurred by the Colombian government for a regularized migrant household are lower than those for an irregular migrant household.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-09-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142180291","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper shows that social capital increases economic growth by raising government investment in human capital through better political incentives and selection. We provide empirical evidence that a greater share of output is spent on public education where social capital is higher, both across countries and across U.S. states. We develop a theoretical model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, social capital alleviates myopic political incentives to underinvest in human capital. It also helps voters select politicians who ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility.
{"title":"Social Capital, Government Expenditures and Growth","authors":"Giacomo A M Ponzetto, Ugo Antonio Troiano","doi":"10.1093/jeea/jvae043","DOIUrl":"https://doi.org/10.1093/jeea/jvae043","url":null,"abstract":"This paper shows that social capital increases economic growth by raising government investment in human capital through better political incentives and selection. We provide empirical evidence that a greater share of output is spent on public education where social capital is higher, both across countries and across U.S. states. We develop a theoretical model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, social capital alleviates myopic political incentives to underinvest in human capital. It also helps voters select politicians who ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-07-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141771514","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Marta Boczoń, Emanuel Vespa, Taylor Weidman, Alistair J Wilson
In repeated games, where both collusive and noncollusive outcomes can be supported as equilibria, it is crucial to understand the likelihood of selection for each type of equilibrium. Controlled experiments have empirically validated a selection criterion for the two-player repeated prisoner’s dilemma: the basin of attraction for always defect. This prediction device uses the game primitives to measure the set of beliefs for which an agent would prefer to unconditionally defect rather than attempt conditional cooperation. This belief measure reflects strategic uncertainty over others’ actions, where the prediction is for noncooperative outcomes when the basin measure is full, and cooperative outcomes when empty. We expand this selection notion to multi-player social dilemmas and experimentally test the predictions, manipulating both the total number of players and the payoff tensions. Our results affirm the model as a tool for predicting long-term cooperation, while also speaking to some limitations when dealing with first-time encounters.
{"title":"Testing Models of Strategic Uncertainty: Equilibrium Selection in Repeated Games","authors":"Marta Boczoń, Emanuel Vespa, Taylor Weidman, Alistair J Wilson","doi":"10.1093/jeea/jvae042","DOIUrl":"https://doi.org/10.1093/jeea/jvae042","url":null,"abstract":"In repeated games, where both collusive and noncollusive outcomes can be supported as equilibria, it is crucial to understand the likelihood of selection for each type of equilibrium. Controlled experiments have empirically validated a selection criterion for the two-player repeated prisoner’s dilemma: the basin of attraction for always defect. This prediction device uses the game primitives to measure the set of beliefs for which an agent would prefer to unconditionally defect rather than attempt conditional cooperation. This belief measure reflects strategic uncertainty over others’ actions, where the prediction is for noncooperative outcomes when the basin measure is full, and cooperative outcomes when empty. We expand this selection notion to multi-player social dilemmas and experimentally test the predictions, manipulating both the total number of players and the payoff tensions. Our results affirm the model as a tool for predicting long-term cooperation, while also speaking to some limitations when dealing with first-time encounters.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141572388","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pierre-Olivier Gourinchas, Sebnem Kalemli-Özcan, Veronika Penciakova, Nick Sander
We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization, where firms’ borrowing capacity to smooth temporary shocks to liquidity is limited. In this framework, firm exit arises from the interaction between this financial friction and fluctuations in cash flow due to aggregate and sectoral changes in demand conditions, as well as more traditional shocks to productivity. To evaluate the implications of our model, we use firm level data on small and medium sized enterprises (SMEs) in 11 European countries. We confirm that our framework is consistent with official failure rates in 2017-2019, a period characterized by standard business cycle fluctuations. To capture a large liquidity shock, we apply our framework to the COVID-19 crisis. We find that, absent government support, SME failure rates would have increased by 6.01 percentage points, putting 3.1% of employment at risk. Our results also show that in the presence of financial frictions and in the absence of government support, the firms failing due to COVID have similar productivity and growth to firms that survive COVID.
{"title":"Sme Failures Under Large Liquidity Shocks: an Application to the Covid-19 Crisis","authors":"Pierre-Olivier Gourinchas, Sebnem Kalemli-Özcan, Veronika Penciakova, Nick Sander","doi":"10.1093/jeea/jvae041","DOIUrl":"https://doi.org/10.1093/jeea/jvae041","url":null,"abstract":"We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization, where firms’ borrowing capacity to smooth temporary shocks to liquidity is limited. In this framework, firm exit arises from the interaction between this financial friction and fluctuations in cash flow due to aggregate and sectoral changes in demand conditions, as well as more traditional shocks to productivity. To evaluate the implications of our model, we use firm level data on small and medium sized enterprises (SMEs) in 11 European countries. We confirm that our framework is consistent with official failure rates in 2017-2019, a period characterized by standard business cycle fluctuations. To capture a large liquidity shock, we apply our framework to the COVID-19 crisis. We find that, absent government support, SME failure rates would have increased by 6.01 percentage points, putting 3.1% of employment at risk. Our results also show that in the presence of financial frictions and in the absence of government support, the firms failing due to COVID have similar productivity and growth to firms that survive COVID.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141503782","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Daron Acemoglu, Tuomas Pekkarinen, Kjell G Salvanes, Matti Sarvimäki
Upon assuming power for the first time in 1935, the Norwegian Labour Party delivered on its promise for a major schooling reform. The reform raised minimum instruction time in less developed rural areas and boosted the resources available to rural schools, reducing class size and raising teacher salaries. We show that cohorts more intensively affected by the reform increased their education and experienced higher labor income. Our main result is that the schooling reform also boosted support for the Norwegian Labour Party in subsequent elections. This additional support persisted for several decades and was pivotal in maintaining support for the social democratic coalition in Norway. These results are not driven by the direct impact of education and are not explained by higher turnout, or greater attention or resources from the Labour Party targeted towards the municipalities most affected by the reform. Rather, our evidence suggests that cohorts that benefited from the schooling reform, and their parents, rewarded the party for delivering a major reform that was beneficial to them.
{"title":"The Making of Social Democracy: The Economic and Electoral Consequences of Norway’s 1936 Folk School Reform","authors":"Daron Acemoglu, Tuomas Pekkarinen, Kjell G Salvanes, Matti Sarvimäki","doi":"10.1093/jeea/jvae039","DOIUrl":"https://doi.org/10.1093/jeea/jvae039","url":null,"abstract":"Upon assuming power for the first time in 1935, the Norwegian Labour Party delivered on its promise for a major schooling reform. The reform raised minimum instruction time in less developed rural areas and boosted the resources available to rural schools, reducing class size and raising teacher salaries. We show that cohorts more intensively affected by the reform increased their education and experienced higher labor income. Our main result is that the schooling reform also boosted support for the Norwegian Labour Party in subsequent elections. This additional support persisted for several decades and was pivotal in maintaining support for the social democratic coalition in Norway. These results are not driven by the direct impact of education and are not explained by higher turnout, or greater attention or resources from the Labour Party targeted towards the municipalities most affected by the reform. Rather, our evidence suggests that cohorts that benefited from the schooling reform, and their parents, rewarded the party for delivering a major reform that was beneficial to them.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-06-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141503783","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We consider platforms that help consumers discover and transact with suppliers. Such platforms have come to dominate many sectors of the economy, raising issues about the high fees they charge suppliers, especially since they tend to commoditize the suppliers they aggregate. We show that in a baseline setting, the efficient platform fee is determined by a simple formula: it equals the platform’s marginal cost plus the difference between suppliers’ markups on the direct channel and suppliers’ markups on the platform. We explore the extent to which this simple formula provides a robust cap for regulating the platform’s fee more generally.
{"title":"Regulating Platform Fees","authors":"Chengsi Wang, Julian Wright","doi":"10.1093/jeea/jvae040","DOIUrl":"https://doi.org/10.1093/jeea/jvae040","url":null,"abstract":"We consider platforms that help consumers discover and transact with suppliers. Such platforms have come to dominate many sectors of the economy, raising issues about the high fees they charge suppliers, especially since they tend to commoditize the suppliers they aggregate. We show that in a baseline setting, the efficient platform fee is determined by a simple formula: it equals the platform’s marginal cost plus the difference between suppliers’ markups on the direct channel and suppliers’ markups on the platform. We explore the extent to which this simple formula provides a robust cap for regulating the platform’s fee more generally.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141503784","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Over the last 70 years, many advanced countries have experienced growing real house prices and an increasing housing wealth-to-income ratio. To explain these long-run patterns, this paper introduces a novel multi-sector growth model where housing services are produced using non-reproducible land and reproducible structures. Land is also employed in the non-housing sector. First, we identify two fundamental mechanisms driving the long-run increase in the real house price: (i) technological progress in the construction sector lags behind the technological progress of the rest of the economy and (ii) housing production is more land-intensive than non-housing production. Second, we study transitional dynamics for the US, UK, France, and Germany. Our calibrated model explains most of the observed increase in the housing wealth-to-income ratio since 1950. Counterfactual experiments identify initially low stocks of residential structures and non-residential capital as key exogenous drivers for this increase. The associated investment incentives led to a long-lasting construction boom and steadily increasing land scarcity, boosting residential land prices.
{"title":"Das House Kapital: a Long-Run Theory of House Prices and Housing Wealth","authors":"Volker Grossmann, Benjamin Larin, Thomas Steger","doi":"10.1093/jeea/jvae038","DOIUrl":"https://doi.org/10.1093/jeea/jvae038","url":null,"abstract":"\u0000 Over the last 70 years, many advanced countries have experienced growing real house prices and an increasing housing wealth-to-income ratio. To explain these long-run patterns, this paper introduces a novel multi-sector growth model where housing services are produced using non-reproducible land and reproducible structures. Land is also employed in the non-housing sector. First, we identify two fundamental mechanisms driving the long-run increase in the real house price: (i) technological progress in the construction sector lags behind the technological progress of the rest of the economy and (ii) housing production is more land-intensive than non-housing production. Second, we study transitional dynamics for the US, UK, France, and Germany. Our calibrated model explains most of the observed increase in the housing wealth-to-income ratio since 1950. Counterfactual experiments identify initially low stocks of residential structures and non-residential capital as key exogenous drivers for this increase. The associated investment incentives led to a long-lasting construction boom and steadily increasing land scarcity, boosting residential land prices.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-06-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141348849","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Thomas F Crossley, Yifan Gong, Ralph Stinebrickner, Todd R. Stinebrickner
Using unique longitudinal probabilistic expectations data from the Berea Panel Study, which cover both college and early post-college periods, we examine young adults’ beliefs about their future incomes. We introduce two new approaches to testing whether, ex ante, agents exhibit Rational Expectations. We show that taking into account the additional information about higher moments of individual belief distributions contained in probabilistic expectations data reveals violations of Rational Expectations that are not detected by existing mean-based tests. Empirically, we find that our subjects underestimate the level of uncertainty they face about future incomes.
{"title":"Examining Income Expectations in the College and Early Post-College Periods: New Distributional Tests of Rational Expectations","authors":"Thomas F Crossley, Yifan Gong, Ralph Stinebrickner, Todd R. Stinebrickner","doi":"10.1093/jeea/jvae036","DOIUrl":"https://doi.org/10.1093/jeea/jvae036","url":null,"abstract":"\u0000 Using unique longitudinal probabilistic expectations data from the Berea Panel Study, which cover both college and early post-college periods, we examine young adults’ beliefs about their future incomes. We introduce two new approaches to testing whether, ex ante, agents exhibit Rational Expectations. We show that taking into account the additional information about higher moments of individual belief distributions contained in probabilistic expectations data reveals violations of Rational Expectations that are not detected by existing mean-based tests. Empirically, we find that our subjects underestimate the level of uncertainty they face about future incomes.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-06-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141272081","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Policymakers’ imperfect knowledge about firms’ abatement costs leads to inefficient regulation, reducing the welfare gains from carbon markets around the world. We introduce a “smart” cap and trade system that eliminates these costs. This cap responds endogenously to technology or macroeconomic shocks, relying on the market price of certificates to aggregate information. It allows policy makers to modify existing institutions to achieve more efficient emissions reductions. The paper also shows that the slow diffusion of technology innovations typically makes the optimal carbon price a much steeper function of emissions than suggested by the Social Cost of Carbon.
{"title":"Smart Cap","authors":"Larry Karp, Christian Traeger","doi":"10.1093/jeea/jvae030","DOIUrl":"https://doi.org/10.1093/jeea/jvae030","url":null,"abstract":"Policymakers’ imperfect knowledge about firms’ abatement costs leads to inefficient regulation, reducing the welfare gains from carbon markets around the world. We introduce a “smart” cap and trade system that eliminates these costs. This cap responds endogenously to technology or macroeconomic shocks, relying on the market price of certificates to aggregate information. It allows policy makers to modify existing institutions to achieve more efficient emissions reductions. The paper also shows that the slow diffusion of technology innovations typically makes the optimal carbon price a much steeper function of emissions than suggested by the Social Cost of Carbon.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-05-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140926629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the comparative properties of voting rules based on the richness of their ballot spaces, assuming a given distribution of voting rights. We focus on how well voting rules aggregate the information dispersed among voters. We consider how different voting rules affect both voters’ decisions at the voting stage and the incentives of the agenda-setter who decides whether to put the proposal to a vote. Without agenda-setter, the voting efficiency of rules is higher when their ballot space is richer. Moreover, full-information efficiency requires full divisibility of the votes. In the presence of an agenda-setter, we uncover a novel trade-off: in some cases, rules with high voting efficiency provide worse incentives to the agenda-setter to select good proposals. This negative effect can be large enough to wash out the higher voting efficiency of even the most efficient rules.
{"title":"Voting Rights, Agenda Control and Information Aggregation","authors":"Laurent Bouton, Aniol Llorente-Saguer, Antonin Macé, Dimitrios Xefteris","doi":"10.1093/jeea/jvae035","DOIUrl":"https://doi.org/10.1093/jeea/jvae035","url":null,"abstract":"This paper examines the comparative properties of voting rules based on the richness of their ballot spaces, assuming a given distribution of voting rights. We focus on how well voting rules aggregate the information dispersed among voters. We consider how different voting rules affect both voters’ decisions at the voting stage and the incentives of the agenda-setter who decides whether to put the proposal to a vote. Without agenda-setter, the voting efficiency of rules is higher when their ballot space is richer. Moreover, full-information efficiency requires full divisibility of the votes. In the presence of an agenda-setter, we uncover a novel trade-off: in some cases, rules with high voting efficiency provide worse incentives to the agenda-setter to select good proposals. This negative effect can be large enough to wash out the higher voting efficiency of even the most efficient rules.","PeriodicalId":48297,"journal":{"name":"Journal of the European Economic Association","volume":null,"pages":null},"PeriodicalIF":3.6,"publicationDate":"2024-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140813030","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"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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