International Economic Review最新文献

We consider a worker's job search problem in which firms arrive sequentially, observe the worker's unemployment duration, and conduct an interview to learn about her unobservable productivity. Firms engage in fully flexible information acquisition subject to a uniformly posterior-separable cost function. We provide a closed-form characterization of equilibrium job search dynamics and demonstrate that endogenous information amplifies the “stigma” effect of long unemployment duration relative to exogenous information. We also show that lowering firms' information-acquisition costs has ambiguous implications for a worker's unemployment duration.

2020 official recession figures ignore the costs associated with the loss of human life due to COVID-19. This article constructs full recession measures that consider the death toll. Our model features nonexpected utility, leisure, age-specific survival rates, and tractable heterogeneity. We find an average full recession of 10.7%, which reflects the net value of an aggregate drop in consumption of 2.7%, an average increase of 197 leisure hours and about 540,000 lives lost in the first pandemic year. The full recession for a utilitarian planner is 14.5%, which aligns with that of individuals in their late 50s.

This article presents a theory that explains the rise of foot-binding in historical China, in response to a gender-asymmetric social mobility shock that dispersed men's quality distribution in the marriage market. The theory characterizes the marriage market equilibrium and women's competition strategies before and after the shock. Empirical evidence using archival data corroborates the theoretical predictions that greater men's social mobility opportunities encouraged foot-binding and that a greater cost of women's labor discouraged foot-binding. The article thus highlights that costly gender norms can be traced back to gender asymmetry in social mobility opportunities.

After-school tutoring has risen globally despite limited evidence of effectiveness. We implement a randomized after-school tutoring program in rural China where many children are left-behind by parents in care of grandparents. Compared to tutees cared for by parents, those in care of grandparents reported much smaller home-tutoring reductions but larger test-score gains. We interpret our data analysis with a model with tutoring efficacy and substitution between private and public inputs both differing by family background: Increased public tutoring generates larger test-score gains for children who experience greater tutoring efficacy and lesser substitution with household inputs, consistent with our estimates.

We study why Social Security benefit claiming is concentrated at two ages, 62 and the full retirement age, and provide three main findings. First, we show that claiming behavior can be well explained by a parsimonious life-cycle model with fully rational agents. The two key mechanisms are (i) the strong unwillingness to hold annuities and (ii) the effects of the earnings test. Second, we show that current rules distort claiming and labor supply decisions, and eliminating these distortions results in large welfare gains. Finally, we show that claiming decisions can be used to sharpen the identification of important preference parameters.

We develop a Bayesian method for estimating the dynamics of COVID-19 deaths and discover four key findings that expose the limitations of current structural epidemiological models . (i) Death growth rates declined rapidly from high levels during the initial 30 days of the epidemic worldwide. (ii) After this initial period, these rates fluctuated substantially around 0%. (iii) The cross-location standard deviation of death growth rates decreased rapidly in the first 10 days but remained high afterward. (iv) These insights apply to both effective reproduction numbers and their cross-location variability through epidemiological models. Our method is applicable to studying other epidemics.

I study the effectiveness of temporary cuts to consumption tax rates as fiscal stimulus instruments during recessions using a structural life-cycle model with multiple consumption categories. I find tax elasticities of 0.4 for nondurable luxuries and of 10.5 for durables. I show that the tax cut on nondurables has an intratemporal substitution effect, whereas the tax cut on durables acts through an intertemporal substitution mechanism that is stronger for high-income, liquidity-unconstrained, and younger households. This mechanism is amplified in less persistent recessions and dampened in absence of recessions due to durables' partial irreversibility and precautionary saving motives.

We investigate equilibrium impacts of federal policies such as free-college proposals, taking into account that human capital is cumulative and that state governments have resource constraints. In our model, a state government cares about household welfare and aggregate educational attainment. The government chooses income tax rates, per-student expenditures on K-12 and college education, college tuition, and the provision of other public goods. We estimate the model using U.S. data. Our simulations suggest that free-college policies would decrease state expenditure on education. More students would obtain college degrees. Most households would “pay” for the free-college policies through negative welfare effects.

We study the effect of the discovery of precious metals in America from 1500 to 1810 on international trade. Around 1500, there was a simultaneous discovery of precious metals and new trading routes. We construct a counterfactual of new routes but no precious metals. The discovery of precious metals increased the stock of precious metals more than 10-fold. We show that Euro-Asian trade at its peak increased up to 20 times compared with the counterfactual. Our simulations match the observed price dynamics. We find that precious metals were at least as important as the new routes.