This paper shows that the unequal incidence of recessions in the labor market amplifies aggregate shocks. Using administrative data from the United States, I document a positive covariance between workers' marginal propensities to consume (MPCs) and their elasticities of earnings to GDP, which is a key moment for a new class of heterogeneous-agent models. I define the matching multiplier as the increase in the multiplier stemming from this matching of high MPC workers to more cyclical jobs. I show that this covariance is large enough to increase the aggregate MPC by 20 percent over an equal exposure benchmark. (JEL E21, E23, E24, E32)
{"title":"The Matching Multiplier and the Amplification of Recessions","authors":"Christina Patterson","doi":"10.1257/aer.20210254","DOIUrl":"https://doi.org/10.1257/aer.20210254","url":null,"abstract":"This paper shows that the unequal incidence of recessions in the labor market amplifies aggregate shocks. Using administrative data from the United States, I document a positive covariance between workers' marginal propensities to consume (MPCs) and their elasticities of earnings to GDP, which is a key moment for a new class of heterogeneous-agent models. I define the matching multiplier as the increase in the multiplier stemming from this matching of high MPC workers to more cyclical jobs. I show that this covariance is large enough to increase the aggregate MPC by 20 percent over an equal exposure benchmark. (JEL E21, E23, E24, E32)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76972995","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 propose a method to estimate the effect of firm policies (e.g., bankruptcy laws) on allocative efficiency using (quasi-)experimental evidence. Our approach takes general equilibrium effects into account and requires neither a structural estimation nor a precise assumption on how the experiment affects firms. Our aggregation formula relies on treatment effects of the policy on the distribution of output-to-capital ratios, which are easily estimated. We show this method is valid for a large class of commonly used models in macrofinance. We apply it to the French banking deregulation episode of the mid- 1980s and find an increase in aggregate TFP of 5 percent. (JEL G21, G24, G28, G31, G32, H25)
{"title":"How to Use Natural Experiments to Estimate Misallocation","authors":"D. Sraer, D. Thesmar","doi":"10.1257/aer.20190609","DOIUrl":"https://doi.org/10.1257/aer.20190609","url":null,"abstract":"We propose a method to estimate the effect of firm policies (e.g., bankruptcy laws) on allocative efficiency using (quasi-)experimental evidence. Our approach takes general equilibrium effects into account and requires neither a structural estimation nor a precise assumption on how the experiment affects firms. Our aggregation formula relies on treatment effects of the policy on the distribution of output-to-capital ratios, which are easily estimated. We show this method is valid for a large class of commonly used models in macrofinance. We apply it to the French banking deregulation episode of the mid- 1980s and find an increase in aggregate TFP of 5 percent. (JEL G21, G24, G28, G31, G32, H25)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89731211","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 study the persuasive effects of slanted language, exploiting a ban on the politically charged term “illegal immigrant” by the Associated Press (AP) news wire. My empirical strategy combines the timing of the ban with variation across media outlets in their baseline reliance on AP copy. I document sizable diffusion of the ban from AP copy to media outlets. Moreover, individuals exposed to the ban through local media show significantly lower support for restrictive immigration policies. This effect is more pronounced for moderates and in locations with fewer immigrants, and does not transfer to views on issues other than immigration. (JEL D72, L82, Z13)
{"title":"Persuasion through Slanted Language: Evidence from the Media Coverage of Immigration","authors":"Milena Djourelova","doi":"10.1257/aer.20211537","DOIUrl":"https://doi.org/10.1257/aer.20211537","url":null,"abstract":"I study the persuasive effects of slanted language, exploiting a ban on the politically charged term “illegal immigrant” by the Associated Press (AP) news wire. My empirical strategy combines the timing of the ban with variation across media outlets in their baseline reliance on AP copy. I document sizable diffusion of the ban from AP copy to media outlets. Moreover, individuals exposed to the ban through local media show significantly lower support for restrictive immigration policies. This effect is more pronounced for moderates and in locations with fewer immigrants, and does not transfer to views on issues other than immigration. (JEL D72, L82, Z13)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74709805","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 paper describes the results of a policy experiment conducted in coordination with the Nigerian government. In this experiment, some communities were randomly selected to receive a new doctor. These doctors were posted to the local public health center. Prior to their arrival, health care was provided by midlevel health-care providers (MLP). To separate the effect of (ostensibly higher) quality from that of quantity, another group of communities was provided with an additional midlevel provider. A third group of communities received no additional workers. No other inputs were provided. I find a measurable decrease in mortality in communities assigned a doctor but not in communities assigned an MLP, suggesting that quality in the health-care sector is a significant constraint. (JEL I11, I12, O15, O18)
{"title":"When a Doctor Falls from the Sky: The Impact of Easing Doctor Supply Constraints on Mortality","authors":"Edward N Okeke","doi":"10.7249/wra1414-1","DOIUrl":"https://doi.org/10.7249/wra1414-1","url":null,"abstract":"This paper describes the results of a policy experiment conducted in coordination with the Nigerian government. In this experiment, some communities were randomly selected to receive a new doctor. These doctors were posted to the local public health center. Prior to their arrival, health care was provided by midlevel health-care providers (MLP). To separate the effect of (ostensibly higher) quality from that of quantity, another group of communities was provided with an additional midlevel provider. A third group of communities received no additional workers. No other inputs were provided. I find a measurable decrease in mortality in communities assigned a doctor but not in communities assigned an MLP, suggesting that quality in the health-care sector is a significant constraint. (JEL I11, I12, O15, O18)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72847510","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}
Regressions of private-sector macroeconomic forecast revisions on monetary policy surprises often produce coefficients with signs opposite to standard macroeconomic models. The “Fed information effect” argues these puzzling results are due to monetary policy surprises revealing Fed private information. We show they are also consistent with a “Fed response to news” channel, where both the Fed and professional forecasters respond to incoming economic news. We present new evidence challenging the Fed information effect and supporting the Fed response to news channel, including: regressions that control for economic news, our own survey of professional forecasters, and financial market responses to FOMC announcements. (JEL D82, E23, E27, E43, E44, E52, E58)
{"title":"An Alternative Explanation for the “Fed Information Effect”","authors":"Michael D. Bauer, Eric T. Swanson","doi":"10.1257/aer.20201220","DOIUrl":"https://doi.org/10.1257/aer.20201220","url":null,"abstract":"Regressions of private-sector macroeconomic forecast revisions on monetary policy surprises often produce coefficients with signs opposite to standard macroeconomic models. The “Fed information effect” argues these puzzling results are due to monetary policy surprises revealing Fed private information. We show they are also consistent with a “Fed response to news” channel, where both the Fed and professional forecasters respond to incoming economic news. We present new evidence challenging the Fed information effect and supporting the Fed response to news channel, including: regressions that control for economic news, our own survey of professional forecasters, and financial market responses to FOMC announcements. (JEL D82, E23, E27, E43, E44, E52, E58)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74498042","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 study the nonlinear pricing of goods whose usage generates revenue for the seller and of which buyers can freely dispose. The optimal price schedule is a multi-part tariff, featuring tiers within which buyers pay a marginal price of zero. We apply our model to digital goods, for which advertising, data generation, and network effects make usage valuable, but monitoring legitimate usage is infeasible. Our results rationalize common pricing schemes including free products, free trials, and unlimited subscriptions. The possibility of free disposal harms producer and consumer welfare and makes both less sensitive to changes in usage-based revenue and demand. (JEL D11, D21, D42, L86, M37)
{"title":"Nonlinear Pricing with Underutilization: A Theory of Multi-part Tariffs","authors":"Roberto Corrao, Joel P. Flynn, Karthik A. Sastry","doi":"10.1257/aer.20220199","DOIUrl":"https://doi.org/10.1257/aer.20220199","url":null,"abstract":"We study the nonlinear pricing of goods whose usage generates revenue for the seller and of which buyers can freely dispose. The optimal price schedule is a multi-part tariff, featuring tiers within which buyers pay a marginal price of zero. We apply our model to digital goods, for which advertising, data generation, and network effects make usage valuable, but monitoring legitimate usage is infeasible. Our results rationalize common pricing schemes including free products, free trials, and unlimited subscriptions. The possibility of free disposal harms producer and consumer welfare and makes both less sensitive to changes in usage-based revenue and demand. (JEL D11, D21, D42, L86, M37)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90825283","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 paper develops and applies a method to value water trading on a river network. The framework relies on regulatory variation in diversion caps to identify production functions for irrigated farms, then uses the estimated shadow values to assess the market’s reallocation. I apply this framework to the largest water market in human history, located in southeastern Australia. Observed water trading increased output by 4–6 percent from 2007 to 2015, equivalent to avoiding an 8–12 percent uniform decline in water resources. Reallocation and average surplus both increase substantially during drought, implying that water markets can be most valuable when climatic variability is most severe. (JEL D23, D24, Q12, Q15, Q25, Q54)
{"title":"Droughts, Deluges, and (River) Diversions: Valuing Market-Based Water Reallocation","authors":"Will Rafey","doi":"10.1257/aer.20201434","DOIUrl":"https://doi.org/10.1257/aer.20201434","url":null,"abstract":"This paper develops and applies a method to value water trading on a river network. The framework relies on regulatory variation in diversion caps to identify production functions for irrigated farms, then uses the estimated shadow values to assess the market’s reallocation. I apply this framework to the largest water market in human history, located in southeastern Australia. Observed water trading increased output by 4–6 percent from 2007 to 2015, equivalent to avoiding an 8–12 percent uniform decline in water resources. Reallocation and average surplus both increase substantially during drought, implying that water markets can be most valuable when climatic variability is most severe. (JEL D23, D24, Q12, Q15, Q25, Q54)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89098767","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}
Moral behavior is more prevalent when individuals cannot easily distort their beliefs self-servingly. Do individuals seek to limit or enable their ability to distort beliefs? How do these choices affect behavior? Experiments with over 9,000 participants show preferences are heterogeneous—30 percent of participants prefer to limit belief distortion, while over 40 percent prefer to enable it, even if costly. A random assignment mechanism reveals that being assigned to the preferred environment is necessary for curbing or enabling self-serving behavior. Third parties can anticipate these effects, suggesting some sophistication about the cognitive constraints to belief distortion. (JEL C91, D82, D83, D91)
{"title":"Enabling or Limiting Cognitive Flexibility? Evidence of Demand for Moral Commitment","authors":"Silvia Saccardo, Marta Serra-Garcia","doi":"10.1257/aer.20201333","DOIUrl":"https://doi.org/10.1257/aer.20201333","url":null,"abstract":"Moral behavior is more prevalent when individuals cannot easily distort their beliefs self-servingly. Do individuals seek to limit or enable their ability to distort beliefs? How do these choices affect behavior? Experiments with over 9,000 participants show preferences are heterogeneous—30 percent of participants prefer to limit belief distortion, while over 40 percent prefer to enable it, even if costly. A random assignment mechanism reveals that being assigned to the preferred environment is necessary for curbing or enabling self-serving behavior. Third parties can anticipate these effects, suggesting some sophistication about the cognitive constraints to belief distortion. (JEL C91, D82, D83, D91)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80785768","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}
J. Braxton, Bledi Taska, Lightcast, Kyle Herkenhoff, Jeremy Lise, David Argente, A. Bhandari, S. Birinci, J. Boerma, Kataŕına Borovičková, Nisha Chikhale, M. Nardi, Fatih Guvenen, Loukas Karabarbounis, Rasmus Lentz, Erzo G. J. Luttmer, E. Malkov, Hannes Malmberg, Paolo Martellini, Joseph Mullins, Jonathan L. Rothbaum, Larry Schmidt, Todd Schoellman, Shannon Sledz, C. Taber, Venky Venkateswaran, A. Wozniak, David Wiczer
We examine the role of technological change in explaining the large and persistent decline in earnings following job loss. Using detailed skill requirements from the near universe of online vacancies, we estimate technological change by occupation and find that technological change accounts for 45 percent of the decline in earnings after job loss. Technological change lowers earnings after job loss by requiring workers to have new skills to perform newly created jobs in their prior occupation. When workers lack the required skills, they move to occupations where their skills are still employable but are paid a lower wage. (JEL J24, J31, J63, O33)
{"title":"Technological Change and the Consequences of Job Loss","authors":"J. Braxton, Bledi Taska, Lightcast, Kyle Herkenhoff, Jeremy Lise, David Argente, A. Bhandari, S. Birinci, J. Boerma, Kataŕına Borovičková, Nisha Chikhale, M. Nardi, Fatih Guvenen, Loukas Karabarbounis, Rasmus Lentz, Erzo G. J. Luttmer, E. Malkov, Hannes Malmberg, Paolo Martellini, Joseph Mullins, Jonathan L. Rothbaum, Larry Schmidt, Todd Schoellman, Shannon Sledz, C. Taber, Venky Venkateswaran, A. Wozniak, David Wiczer","doi":"10.1257/aer.20210182","DOIUrl":"https://doi.org/10.1257/aer.20210182","url":null,"abstract":"We examine the role of technological change in explaining the large and persistent decline in earnings following job loss. Using detailed skill requirements from the near universe of online vacancies, we estimate technological change by occupation and find that technological change accounts for 45 percent of the decline in earnings after job loss. Technological change lowers earnings after job loss by requiring workers to have new skills to perform newly created jobs in their prior occupation. When workers lack the required skills, they move to occupations where their skills are still employable but are paid a lower wage. (JEL J24, J31, J63, O33)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87398019","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}
A. Banerjee, Rema Hanna, B. Olken, Elan Satriawan, S. Sumarto
We compare how in-kind food assistance and an electronic voucher-based program affect the delivery of aid in practice. The Government of Indonesia randomized across 105 districts the transition from in-kind rice to approximately equivalent electronic vouchers redeemable for rice and eggs at a network of private agents. Targeted households received 46 percent more assistance in voucher areas. For the bottom 15 percent of households at baseline, poverty fell 20 percent. Voucher recipients received higher-quality rice, and increased consumption of eggs. The results suggest moving from a manual in-kind to electronic voucher-based program reduced poverty through increased adherence to program design. (JEL H53, I18, I32, I38, O12)
{"title":"Electronic Food Vouchers: Evidence from an At-Scale Experiment in Indonesia","authors":"A. Banerjee, Rema Hanna, B. Olken, Elan Satriawan, S. Sumarto","doi":"10.1257/aer.20210461","DOIUrl":"https://doi.org/10.1257/aer.20210461","url":null,"abstract":"We compare how in-kind food assistance and an electronic voucher-based program affect the delivery of aid in practice. The Government of Indonesia randomized across 105 districts the transition from in-kind rice to approximately equivalent electronic vouchers redeemable for rice and eggs at a network of private agents. Targeted households received 46 percent more assistance in voucher areas. For the bottom 15 percent of households at baseline, poverty fell 20 percent. Voucher recipients received higher-quality rice, and increased consumption of eggs. The results suggest moving from a manual in-kind to electronic voucher-based program reduced poverty through increased adherence to program design. (JEL H53, I18, I32, I38, O12)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":null,"pages":null},"PeriodicalIF":10.7,"publicationDate":"2023-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89122047","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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