International Economic Review最新文献

Integration agreements (IAs) are contracts between the employment agency and the unemployed, nudging the latter to comply with rules on search behavior. We designed and implemented a randomized controlled trial involving thousands of newly unemployed workers, randomizing at the individual level both the timing of the IA and whether it is announced in advance. Administrative records provide outcomes. Novel theoretical and methodological insights provide tools to detect anticipation and suggest estimation by individual baseline employability. The positive effect on entering employment is driven by individuals with adverse prospects. For them, early IA increase reemployment within a year from 53% to 61%.

We present a macro view of China's financial system where a monopolistic banking sector coexists endogenously with bonds and private loans. In equilibrium smaller firms raise finance from private lending, larger firms through bank loans, and the largest by issuing bonds. The model predicts that expanding credit supply increases bank loans but reduces bond finance and private lending, in absolute terms and relative to total credit. In addition, removing the interest rate ceiling on bank lending—a recent reform in China—induces larger loans and higher lending rates, lowering the share of bank loans in total credit. Empirical evidence is presented to support these predictions.

Entry-order effects on economic profits have not been extensively studied due to data limitations. This article empirically examines these effects on revenues and costs using a structural approach without requiring information on accounting profits and costs. Utilizing panel data from Japan's convenience-store industry, I apply a two-step estimator for many geographic markets. The results reveal that whereas early entrants gain 4.8% more revenue at the outlet level, subsequent entrants benefit from a 7.6% and 5.8% reduction in variable and expansion costs. Simulations suggest initial benefits from delayed entry, but these may dissipate over time, particularly in rapidly growing markets.

The elasticity of substitution between clean and dirty energy lies at the center of leading economic analyses of climate policy. Despite the importance, empirical assessments of this key parameter remain scarce. This article estimates the clean-dirty elasticity of substitution using data on French manufacturing firms. Using the elasticity estimates, I then measure the bias in technical change at the firm level and find that technical change was largely biased toward dirty energy, despite a recent shift toward clean technologies. Finally, I recover the aggregate elasticity that combines substitution within firms and reallocation across firms from the micro elasticity estimates.

I study the macroeconomic implications of firm heterogeneity in the presence of financial frictions. I build a business cycle model in which firm size is jointly determined by idiosyncratic productivity and collateral constraints. I estimate skewed idiosyncratic shocks and align the model with the evidence on firm size, leverage, and investment moments. The extent of resource misallocation is driven by a small number of highly productive but financially constrained firms. A credit shock severely affects such firms, further constraining their ability to borrow. This generates a large and persistent economic downturn that is comparable to the Great Recession.

I estimate a dynamic location choice model using data on 3.7 million seniors from 2001 to 2013. Choices depend on preferences and beliefs regarding longevity and the future evolution of health and wealth in different locations. The model accommodates heterogeneous preferences. Willingness-to-pay (WTP) estimates for milder winters are relatively uniform and positive. WTP for cooler summers exhibits heterogeneity. Under a “business as usual” climate change counterfactual, 1.9% of individuals would change their location choices. Annual WTP to avoid the climate change counterfactual varies across locations and types from −$1,191 to $3,944 with an average of $1,855 (USD 2000).

In a model with robots, automatable and nonautomatable production, we study robot-labor substitutions and show how they are influenced by a country's “innovation system.” Substitution depends on demand and production elasticities, the country's innovation capabilities, and openness. Making use of World Economic Forum data, we estimate the relationship for 13 countries and find that countries with poor innovation capabilities substitute robots for workers much more than countries with richer innovation capabilities, which might complement them. Innovation capabilities play a bigger role in the high-tech electronics sector than in other manufacturing and play a limited role in nonmanufacturing.

We study arbitration mechanisms where two parties to the dispute have single-peaked preferences over outcomes, represented by concave utility functions. The most preferred outcome of each party is her private information. By participating in an arbitration mechanism, the parties forfeit the default outcome, which is set without consideration of private preferences. We show that the ideal default outcome for efficient dispute resolution maximizes the sum of the reservation payoffs of the most difficult agent types to persuade to participate in the mechanism. This result is contrary to the conventional wisdom that an unattractive default could force the parties to agree.

How do war-related expenditures affect economically relevant outcomes at a war's conclusion (e.g., prevailing side, duration, and casualties)? I present a model of attrition and characterize the effects of resources at a military conclusion (one side cannot fight anymore) and a political conclusion (one side quits). I analyze the Pacific War through the lenses of the model, both theoretically and empirically. I find that a parsimonious parameterization reproduces the aggregate patterns of destruction, measured in ship tonnage, for both belligerents.