Francisca Antman
Elderly Care and Intrafamily Resource Allocation when Children Migrate, Journal of Human Resources, forthcoming.
Abstract
This paper considers the intrafamily allocation of elderly care in the context of international migration where migrant children may be able to provide financial assistance to their parents, but are unable to offer physical care. To investigate the interaction between siblings, I take a non-cooperative view of family decision-making and estimate best response functions for individual physical and financial contributions as a function of siblings' contributions. I address the edogeneity of siblings' contributions and individual migration decisions by using siblings' characteristics as instrumental variables as well as models including family fixed effects. For both migrants and non-migrants, I find evidence that financial contributions function as strategic complements while siblings' time contributions operate as strategic substitutes. This suggeststhat children's contributions toward elderly care may be based on both strategic bequest and public good motivations.
Francisca Antman
International Migration and Gender Discrimination among Children Left Behind, American Economic Review (Papers and Proceedings), 101(3): 645-49, May 2011.
Abstract
This paper considers how international migration of the head of household affects the allocation of resources toward boys relative to girls within households remaining in the home country. I address the endogeneity of migration with a differences-in-differences style regression model that compares those households in which migrants have already returned home with those in which migrants are still away. The evidence suggests that while the head of household is away a greater fraction of resources are spent on girls relative to boys, but upon his return, this pattern is reversed.
Francisca Antman
The Intergenerational Effects of Paternal Migration on Schooling and Work: What Can We Learn from Children's Time Allocations? Journal of Development Economics, 96(2): 200-208, November 2011.
Abstract
This paper explores the immediate effects of a father's U.S. migration on his children's schooling and work outcomes in Mexico. To get around the endogeneity of paternal migration, I use individual fixed effects and IV estimation where the instrumental variables are based on U.S. city-level employment statistics in two industries popular with Mexican immigrants. Overall, the estimates suggest that children reduce study hours and increase work hours in response to a father's U.S. migration. Decomposing the sample into sex- and age-specific groups shows that the main group driving these results are 12-15 year-old boys. These results are consistent with a story in which the immediate aftermath of a father's migration is one of financial hardship that is borne in large part by relatively young children.
Tania Barham
Providing a Healthier Start to Life: The Impact of Conditional Cash Transfer Programs on Infant Mortality, Journal of Development Economics, 94(1), 74-85. 2011
Abstract
Conditional cash transfer programs seek to break the intergenerational transmission of poverty by building the human capital of poor children. Despite their popularity throughout the developing world, relatively little is known about their effect on children’s health outcomes. This paper evaluates the impact of the Mexican conditional cash transfer program, Progresa, on two important health outcomes: infant and neonatal mortality. It exploits the phasing-in of Progresa over time throughout rural Mexico to identify the impact of the program. The paper shows that Progresa led to a large 17 percent decline in rural infant mortality among the treated, but did not reduce neonatal mortality on average. The benefit-cost ratio is between 1.3 to 3.6. Tests for heterogeneity show larger declines for some groups including those municipalities whose pre-program levels of mortality were above the median, those that prior to the program had higher illiteracy rates and less access to electricity.
Yongmin Chen
Dynamic Pricing: When to Entice Brand Switching and When to Reward Consumer Loyalty (with Jason Pearcy), RAND Journal of Economics, 41, 674-685, 2010.
Abstract
This paper develops a theory of dynamic pricing in which firms may offer separate prices to different consumers based on their past purchases. When commitment to future prices is infeasible, each firm offers lower prices to its rival's customers than to its repeat customers, and the price difference is larger when consumer preferences across periods are more dependent. With commitment to future prices, the equilibrium outcome rewards loyalty if preference dependence is low but entices switching if dependence is high. Our theory provides a unified treatment of the two pricing policies, and sheds light on observed pricing practices across industries.
Yongmin Chen
Ex ante Investment, Ex post Remedy, and Product Liability (with Xinyu Hua), International Economic Review, forthcoming.
Abstract
Low-quality products may cause consumer harm. A firm can reduce the probability of low quality through ex ante investment before sales, and can take remedy actions such as product recalls if it learns after sales that product quality is low. An increase in the firm's product liability increases its incentive for ex post remedy; more ex post remedy, however, may reduce the firm's ex ante quality investment. On the other hand, higher product liability increases consumer demand for the product, resulting in high output and hence greater return to ex ante investment. The trade-off between these two effects, the "substitution effect" and the "output effect", can lead to an inverted U-shaped relationship between ex ante investment and product liability. We find that the firm always prefers full liability whereas consumers might be better off with less than full liability. Full product liability tends to be socially optimal when the potential consumer loss from low quality is sufficiently high; otherwise partial liability can be socially optimal.
Yongmin Chen
Paid-Placement: Advertising and Search on the Internet (with Chuan He), Economic Journal, Vol. 121, F309-F328, 2011.
Abstract
Paid placement, where advertisers bid payments to a search engine to have their products appear next to keyword search results, has emerged as a predominant form of advertising on the Internet. This paper studies a product-differentiation model where consumers are initially uncertain about the desirability of and valuation for different sellers' products, and can learn about a seller's product through a costly search. In equilibrium, a seller bids more for placement when his product is more relevant for a given keyword, and the paid placement of sellers by the search engine reveals information about the relevance of their products. This results in efficient (sequential) search by consumers and increases total output.
Yongmin Chen and Scott Savage
The Effects of Competition on the Price for Cable Modem Internet Access, Review of Economics and Statistics, forthcoming
Abstract
Theory suggests that a firm facing competition will raise price as consumer preferences become more diverse, and with high enough diversity a duopolist under product differentiation may price higher than a monopolist. Focusing on the price for cable modem Internet access, with or without DSL competition, and using the standard deviation of education attainment as a proxy for preference diversity, we find empirical support for these results. In markets where cable competes with DSL, the cable Internet price increases with preference diversity. Moreover, the cable Internet price under DSL competition can exceed that without competition when preferences are sufficiently diverse.
Thibault Fally
Global Sourcing under Imperfect Capital Markets (with Juan Carluccio), Review of Economics and Statistics, forthcoming.
Abstract
We develop a simple model to study the interactions between a supplier's financial constraints and contract incompleteness in a vertical relationship. Production complexity increases the extent of contract incompleteness and the hold-up problem, which generates a cost when the supplier needs financial participation from the downstream firm. Vertical integration alleviates the impact of financial constraints but reduces the supplier's incentives. We apply the model to an analysis of multinational firms' sourcing strategies and predict that (1) complex and specific inputs are more likely to be sourced from financially developed countries and (2) multinationals are more likely to integrate suppliers located in countries with poor financial institutions, especially when trade involves complex goods. We examine and validate these predictions using firm-level trade data on multinational firms with operations in France. We provide evidence that financial development generates a comparative advantage in the supply of complex goods. Moreover, we find higher shares of intra-firm imports of complex inputs from countries with a lower level of financial development. The findings are robust to different measures of complexity and specificity, and are not driven by industry differences in fixed costs or traditional measures of external financial dependence. Quantitatively, we find that financial development is as important as contract enforcement in alleviating hold-up problems.
Jin-Hyuk Kim
International Convergence of Copyright Production, Review of Economics and Statistics 93(4), 2011, 1432-1439.
Abstract
The production of copyrighted materials varies widely across countries, and how it evolves over time has important policy implications. I propose a simple dynamic model of copyrights and the public domain, which predicts conditional convergence of per capita copyright production among countries. Using book and film production data for the period 1975 to 1995, I test and confirm the model's prediction that copyright-poor countries tend to grow faster than copyright-rich countries in terms of per capita copyright production.
Xiaodong Liu
Learning from Peers in Signaling Game Experiments (with John H. Kagel and Lung-fei Lee), Journal of Applied Econometrics, forthcoming 2011.
Abstract
We investigate peer group effects in laboratory experiments based on Milgrom and Roberts' (1982, Econometrica50: 443–459) entry limit pricing game. We generalize Heckman's (1981, in Structural Analysis of Discrete Data with Econometric Applications. MIT Press: Cambridge, MA) dynamic discrete-choice panel data models by introducing time-lagged social interactions, using the unbiased GHK simulator to implement the computationally cumbersome maximum likelihood estimation. We find that subjects' decisions are significantly influenced by past decisions of peers on several dimensions, including potential entrants' choices and strategic play of like-type monopolists. The proposed model and estimation method may be applicable to other experiments where peer group effects are likely to play an important role.