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21 мая, 15:58

The Political Impact of Immigration: Evidence from the United States -- by Anna Maria Mayda, Giovanni Peri, Walter Steingress

In this paper we study the impact of immigration to the United States on the vote for the Republican Party by analyzing county-level data on election outcomes between 1990 and 2010. Our main contribution is to separate the effect of high-skilled and low-skilled immigrants, by exploiting the different geography and timing of the inflows of these two groups of immigrants. We find that an increase in the first type of immigrants decreases the share of the Republican vote, while an inflow of the second type increases it. These effects are mainly due to the local impact of immigrants on votes of U.S. citizens and they seem independent of the country of origin of immigrants. We also find that the pro-Republican impact of low-skilled immigrants is stronger in low-skilled and non-urban counties. This is consistent with citizens' political preferences shifting towards the Republican Party in places where low-skilled immigrants are more likely to be perceived as competition in the labor market and for public resources.

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21 мая, 15:58

How Effective is Energy-Efficient Housing? Evidence from a Field Experiment in Mexico -- by Lucas W. Davis, Sebastian Martinez, Bibiana Taboada

Despite growing enthusiasm, there is little empirical evidence on how well energy efficiency investments work. Evidence is particularly lacking from low- and middle-income countries, despite a widespread view that these countries have many of the best opportunities. This paper evaluates a field experiment in Mexico in which a quasi-experimental sample of new homes was provided with insulation and other energy-efficient upgrades. A novel feature of our study is that we deploy large numbers of data loggers which allow us to measure temperature and humidity at high frequency inside homes. We find that the upgrades had no detectable impact on electricity use or thermal comfort, with essentially identical temperature and humidity levels in upgraded and non-upgraded homes. These results stand in sharp contrast to the engineering estimates that predicted up to a 26% decrease in electricity use. Part of the explanation is that air conditioner ownership is lower than expected, thus reducing the potential for reductions in energy use. In addition, we document that most households have their windows open on hot days, nullifying the thermal benefits of roof and wall insulation. Overall, we conclude that the benefits from these investments are unlikely to exceed the costs, which added $400-$500 USD to the cost of each home. Our results underscore the urgent need to fully incorporate socioeconomic conditions and human behavior into engineering models of energy use.

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21 мая, 15:58

Banking on Deposits: Maturity Transformation without Interest Rate Risk -- by Itamar Drechsler, Alexi Savov, Philipp Schnabl

We show that maturity transformation does not expose banks to significant interest rate risk--it actually hedges banks' interest rate risk. We argue that this is driven by banks' deposit franchise. Banks incur large operating costs to maintain their deposit franchise, and in return get substantial market power. Market power allows banks to charge depositors a spread by paying deposit rates that are low and insensitive to market rates. The deposit franchise therefore works like an interest rate swap where banks pay the fixed-rate leg (the operating costs) and receive the floating-rate leg (the deposit spread). To hedge the deposit franchise, banks must therefore hold long-term fixed-rate assets; i.e., they must engage in maturity transformation. Consistent with this view, we show that banks' aggregate net interest margins have been highly stable and insensitive to interest rates over the past six decades, and that banks' equity values are largely insulated from monetary policy shocks. Moreover, in the cross section we find that banks match the interest-rate sensitivities of their income and expenses one-for-one, and that banks with less sensitive interest expenses hold substantially more long-term assets. Our results imply that forcing banks to hold only short-term assets ("narrow banking") would make banks unhedged and, more broadly, that the deposit franchise is what allows banks to lend long term.

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21 мая, 15:58

Cognition and SES Relationships Among the Mid-Aged and Elderly: A Comparison of China and Indonesia -- by John Strauss, Firman Witoelar, Qinqin Meng, Xinxin Chen, Yaohui Zhao, Bondan Sikoki, Yafeng Wang

In this paper, we use a measure of fluid intelligence, an adaptive number series test, to measure that part of cognition for respondents in two developing countries: China and Indonesia, both with very low educated elderly populations. This test was specially adapted by us and our collaborators from measures used in the United States to better fit such populations. We also use a measure of episodic memory and one measuring mental state intactness and examine their distributions and then the socio-economic gradients associated with each, concentrating on gender differences and how those change as SES and variables measuring community development are added. We find large variation in our cognition measures in both countries, even among those 60 and over with no schooling. We explore the bivariate socio-economic gradients for these measures, separately for different age groups: 45-59 and 60 and above. We find strong gender, education and rural-urban gradients. Of these, the education gradient is the strongest, followed by the rural-urban gradient. China has a stronger rural-urban gradient than Indonesia, which is associated with the hukou residential permit system in China. We find a significant, negative multivariate differential for women, that is significantly larger in China than Indonesia. The gender differential in both countries is smaller for the mid-aged, 45-59, for whom the gender schooling differentials are smaller. The gender differential declines substantially, and the China-Indonesia differential disappears once we control for SES characteristics. Adding community measures related to mean schooling and asset levels does not affect the gender differential. Schooling levels are monotonically and significantly related to higher levels of cognition for all three of the variables we use. The magnitudes of the schooling coefficients are relatively large. Higher log of household per capita expenditure (pce) is positively associated with cognition, more so in China. Other SES characteristics such as height, are also positively related to the cognition measures, again more strongly so in China. Rural respondents have substantially lower levels of cognition measures, with a significantly stronger gradient in China. Mean community level schooling and log pce are also positively related to cognition outcomes, especially for elderly women.

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21 мая, 15:58

Social Security Programs and Retirement Around the World: Working Longer - Introduction and Summary -- by Courtney Coile, Kevin S. Milligan, David A. Wise

This is the introduction and summary to the eighth phase of an ongoing project on Social Security Programs and Retirement Around the World. This project, which compares the experiences of a dozen developed countries, was launched in the mid 1990s following decades of decline in the labor force participation rate of older men. The first several phases of the project document that social security program provisions can create powerful incentives for retirement that are strongly correlated with the labor force behavior of older workers. Subsequent phases of the project have explored disability program provisions and their effects on retirement as well as potential obstacles to promoting work at older ages, including whether there is a link between older employment and youth unemployment and whether older individuals are healthy enough to work longer. In the two decades since the project began, the dramatic decline in men's labor force participation has ended and been replaced by sharply rising participation rates. Older women's participation has been rising as well. In this eighth phase of the project, we explore this phenomenon of working longer. We document trends in participation and employment and also consider factors that may help to explain these changes in behavior. We conclude that social security reforms as well as other factors such as the movement of women into the labor force have likely played an important role.

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21 мая, 15:58

Douglass C. North: Transaction Costs, Property Rights, and Economic Outcomes -- by Gary D. Libecap

Douglass North asked why some societies historically and contemporarily have rising per-capita incomes and individual welfare, whereas others do not? He argued that successful economies had property rights that encouraged markets, trade, and investment in new production and organizational methods. In other economies, transaction costs, especially those due to the political process, blocked more efficient property rights. Property rights grant decision making over valuable resources and are the basis for investment, and market exchange. They mold the economy and the distribution of wealth and political power. Politicians and coalitions of privileged elites with stakes in the status quo join to preserve it. Inefficiencies create their own constituencies. There is no clear remedy for general citizens in North's cases. Despite the power of North's argument, transaction costs are not clear in aggregate studies of economies. They are more apparent in US common-pool resource problems with large, continuing losses in resource rents. This evidence runs counter to the facile arguments in the welfare and environmental economics literatures for addressing externalities that are reminiscent of the simplistic recommendations in the growth and economic history literatures that North challenged. If the observed costly political response to open access losses is characteristic of regulation in general, then welfare losses permeate developed economies as well and are more pervasive than the dramatic examples of development failure examined by North and others. Mitigation requires competitive interest groups that benefit from more secure property rights and greater resource rents to offset powerful elites that align with politicians and capture bureaucratic agencies to achieve particularistic benefits that undermine general welfare.

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21 мая, 15:58

Riding the Credit Boom -- by Christopher Hansman, Harrison Hong, Wenxi Jiang, Yu-Jane Liu, Juan-Juan Meng

Research on leverage and asset-price fluctuations focuses on the direct effect of lax bank lending enabling financially-constrained investors to take excessive risks. Ignored are unconstrained investors speculating on higher prices during credit booms. To identify these two effects, we utilize China's staggered liberalization of stock-margin lending from 2010-2015--which encouraged a bank/brokerage-credit-fueled stock-market bubble. The direct effect is a 25 cent increase in a stock's market capitalization for each dollar of margin debt. Unconstrained investors led to an even larger increase in valuations of an additional 32 cents as they speculated on stocks likely to qualify for lending.

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21 мая, 15:58

Unions and Inequality Over the Twentieth Century: New Evidence from Survey Data -- by Henry S. Farber, Daniel Herbst, Ilyana Kuziemko, Suresh Naidu

It is well-documented that, since at least the early twentieth century, U.S. income inequality has varied inversely with union density. But moving beyond this aggregate relationship has proven difficult, in part because of the absence of micro-level data on union membership prior to 1973. We develop a new source of micro-data on union membership, opinion polls primarily from Gallup (N ≈ 980, 000), to look at the effects of unions on inequality from 1936 to the present. First, we present a new time series of household union membership from this period. Second, we use these data to show that, throughout this period, union density is inversely correlated with the relative skill of union members. When density was at its peak in the 1950s and 1960s, union members were relatively less-skilled, whereas today and in the pre-World War II period, union members are equally skilled as non-members. Third, we estimate union household income premiums over this same period, finding that despite large changes in union density and selection, the premium holds steady, at roughly 15-20 log points, over the past eighty years. Finally, we present a number of direct results that, across a variety of identifying assumptions, suggest unions have had a significant, equalizing effect on the income distribution over our long sample period.

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21 мая, 15:58

Structural Estimation of a Model of School Choices: the Boston Mechanism vs. Its Alternatives -- by Caterina Calsamglia, Chao Fu, Maia Gueell

We model household choice of schools under the Boston mechanism (BM) and develop a new method, applicable to a broad class of mechanisms, to fully solve the choice problem even if it is infeasible via the traditional method. We estimate the joint distribution of household preferences and sophistication types using administrative data from Barcelona. Counterfactual policy analyses show that a change from BM to the Deferred Acceptance mechanism would decrease average welfare by 1,020 euros, while a change to the top trading cycles mechanism would increase average welfare by 460 euros.

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21 мая, 15:58

Deposit Inflows and Outflows in Failing Banks: The Role of Deposit Insurance -- by Christopher Martin, Manju Puri, Alexander Ufier

Using unique, daily, account-level balances data we investigate deposit stability and the drivers of deposit outflows and inflows in a distressed bank. We observe an outflow of uninsured depositors from the bank following bad regulatory news. We find that government deposit guarantees, both regular deposit insurance and temporary deposit insurance measures, reduce the outflow of deposits. We also characterize which accounts are more stable (e.g., checking accounts and older accounts). We further provide important new evidence that, simultaneous with the run-off, gross funding inflows are large and of first-order impact -- a result which is missed when looking at aggregated deposit data alone. Losses of uninsured deposits were largely offset with new insured deposits as the bank approached failure. We show our results hold more generally using a large sample of banks that faced regulatory action. Our results raise questions about depositor discipline, widely considered to be one of the key pillars of financial stability, raising the importance of other mechanisms of restricting bank risk taking, including prudent supervision.

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21 мая, 15:58

Spinning the Web: The Impact of ICT on Trade in Intermediates and Technology Diffusion -- by Reka Juhasz, Claudia Steinwender

This paper studies how information and communication technology (ICT) improvements affect trade along the value chain and international technology diffusion. We examine the impact of a revolutionary technology, the roll-out of the global telegraph network, on the 19th century cotton textile industry. First, we show that connection to the telegraph disproportionately increased trade in intermediate goods relative to final goods. We document that this was due to differences in codifiability; that is, the extent to which product specifications could be communicated at a distance using only words (and thus by sending telegrams) as opposed to inspecting a sample of the product. Second, adoption of the telegraph also facilitated international technology diffusion through the complementary mechanisms of importing machinery and acquiring knowledge of the production process and local demand through importing intermediates. These results shed light on how ICT facilitates the formation of global value chains and the diffusion of frontier technology.

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21 мая, 15:58

Death of the Salesman, but not the Sales Force: Reputational Entrepreneurship and the Valuation of Scientific Achievement -- by Pierre Azoulay, J. Michael Wahlen, Ezra W. Zuckerman Sivan

Using citations as a measure of valuation and death as a shock that affects efforts to "sell" scientific work but not the quality of the work itself, we estimate the importance of "reputational entrepreneurship" on the valuation of life scientists' research. Insofar as reputational entrepreneurship is impactful, it is unclear whether the most effective reputational entrepreneurs are those selling their own work ("salesman") or those promoting the work of others (the "sales force"). While the salesman has more incentive to promote her work, the sales force is larger and may be seen as more credible. We find that by commemorating the death of a scientist, the sales force boosts the valuation of the deceased's work relative to what the salesman could have done had she remained alive. This suggests that while science seeks to divorce the researcher's identity from their work, scientists' identities nonetheless play an important role in determining scientific valuations.