Francisca Antman 

Francisca Antman

 

  • For Want of a Cup: The Rise of Tea in England and the Impact of Water Quality on Mortality, Review of Economics and Statistics, Conditional Accepted.
    This paper explores the impact of water quality on mortality by exploiting a natural experiment -- the rise of tea consumption in 18th century England. This resulted in an unintentional increase in consumption of boiled water, thereby reducing mortality rates. The methodology uses two identification strategies tying areas with lower initial water quality to larger declines in mortality rates after tea drinking became widespread and following larger volumes of tea imports. Results are robust to the inclusion of controls for income and access to trade. The hypothesis is further bolstered by suggestive evidence from cause-specific deaths and early childhood mortality.


Brian Cadena 

Brian Cadena

 

  • Investment over the Business Cycle: Insights from College Major Choice, (with Erica Blom and Benjamin J. Keys) Journal of Labor Economics 39(4), 2021.
    Abstract: How does presonal exposure to economic contidions affect individual human capital investment choices? Focusing on bachelor’s degree recipients, we find that cohorts exposed to higher unemployment rates during typical schooling years select majors that earn higher wages, have better employment prospects, and lead to work in a related field. Conditional on expected earnings, recessions also encourage women to enter male-dominated fields, and students of both genders pursue more difficult majors. We conclude that economic environments change how students select majors, and we find evidence that students who respond to the business cycle enjoy earnings typical of their new majors.
  • Performance Pay, Productivity, and Strategic Opt-Out: Evidence from a Community Health Center, (with Austin C. Smith) Journal of Public Economics, forthcoming.
    Abstract: We use data from a Federally Qualified Health Center to examine changes in med- ical providers’ output in response to a change from a salary-based compensation plan to one that rewarded providers for seeing more patients each month. Leveraging the staggered rollout of the plan and provider-level productivity data, we find an 18 per- cent increase in observed productivity overall, with only a small portion resulting from individual responses to the change in incentives. The small incentive effect is consistent with experimental evidence that effort is less sensitive to financial incentives when in- dividuals work for an organization whose mission is aligned with their values. Further, we demonstrate a less-studied response to piece rates – strategic non-compliance. We find that lower-productivity providers were slower to join the piece-rate plan and that providers managed to time their entry into the plan based on within-person differences in productivity.


Yongmin Chen 

Yongmin Chen

 

  • Experience Goods and Consumer Search, (with Zhuozheng Li and Tianle Zhang) American Economic Journals: Microeconomics, forthcoming
    Abstract:  We introduce a search model where products differ in variety and unobserved quality ('experience goods'), and firms can establish quality reputation. We show that the inability of consumers to observe quality before purchase significantly changes how search frictions affect market performance. In equilibrium, higher search costs hinder consumers' search for better-matched variety and increase price, but can boost firms' investment in product quality. Under plausible conditions, both consumer and total welfare initially increase in search cost, whereas both would monotonically decrease if quality were observable. We apply the analysis to online markets, where low search costs coexist with low-quality products.
  • International protection of consumer data, (with Xinyu Hua and Keith Maskus) Journal of International Economics, Volume 132, September 2021.
    Abstract:  We study the international protection of consumer data in a model where data from product sales generate additional revenue to firms but disutility to consumers. When data usage lacks transparency, a firm suffers a commitment problem and overuses consumer data. Greater transparency enables the firm to commit to less data usage, which boosts consumer demand and leads to a higher price but also higher output if the firm operates only in one country. A multinational firm faces more challenges when balancing the trade-offs in data usage across countries that differ in consumer preferences for privacy. Contrary to the result for a single country, more transparency can exacerbate data-usage and output distortions in the global economy, and unilateral data regulation by a country may reduce global welfare. There can be substantial gains from international coordination—though not necessarily uniformity—of data regulations.
  • Competitive Differential Pricing, (with Jianpei Li and Marius Schwartz) RAND Journal of Economics, 2021.
    Abstract: This paper analyzes welfare under differential versus uniform pricing across oligopoly markets that differ in costs of service. We establish general demand conditions for differential pricing by symmetric firms to increase consumer surplus, profit, and total welfare. The analysis reveals why competitive differential pricing is generally beneficial more than price discrimination but not always, including why profit may fall, unlike for monopoly. The presence of more competitors tends to enlarge consumersíshare of the gain from differential pricing, though profits often still rise. When firms have asymmetric costs, however, profit or consumer surplus can fall even with ësimpleílinear demands.


Jonathan Edward Hughes 

Jonathan Hughes

 

  • The Value of Rarity: Evidence from a Collectible Good, Journal of Industrial Economics, Forthcoming.
    Markets for art, coins and other collectibles, culinary delicacies and eco-tourism suggest consumers value the rarity of many goods. While empirical evidence supports higher prices for rare goods, isolating the value of rarity has proven difficult. I analyze prices for a collectible card game and show goods that are designated as rare trade at higher prices than functionally-equivalent substitutes. Importantly, I use novel features of this market to account for scarcity, observed and unobserved product characteristics and separately identify rarity effects. These results have important implications for markets ranging from luxury goods to conservation of endangered species.


Daniel Kaffine

 

Daniel Kaffine

 

  • Emissions, Transmission, and the Environmental Value of Renewable Energy, (with Harrison Fell and Kevin Novan) American Economic Journal: Economic Policy 13 (2): 241-72, 2021.
    Abstract: Growth in renewable electricity generation has spurred substantial private and public interest in increasing transmission capacity to export electricity from renewable-rich, demand-poor regions to urban demand centers. While the primary motives for these transmission investments are market-based (e.g., arbitraging regional electricity prices), they can also have large non-market impacts (e.g., altering the level and location of emissions). In this paper, we examine how transmission congestion alters the environmental benefits provided by renewable generation. Using hourly data from the Texas and Mid-Continent electricity markets, we find that relaxing transmission constraints between the wind-rich areas and the demand centers of the respective markets increases the non-market value of a MWh of wind by 31% for Texas and 13% for Mid-Continent markets, conservatively. Much of this increase in the non-market value arises from a redistribution in where emissions are avoided – which transmission is not constrained, wind offsets much more pollution from fossil fuel units located near highly populated demand centers.
  • Private monitoring and public enforcement: Evidence from complaints and regulation of oil and gas wells, (with Peter Maniloff) Journal of Environmental Economics and Management, 2021.
    Abstract: The traditional theory of firm regulatory compliance examines the interplay of firms and regulator, with the general public as passive consumers of goods or providers of votes. However, members of the public can play an important role in monitoring for compliance, which we analyze with a novel dataset of Colorado regulatory activities. We find regulators frequently conduct follow-up inspections of people’s complaints, and these complaint-driven inspections are at least as likely to be followed by regulatory action as “normal” scheduled inspections. However, regulators do not increase inspection activity of other assets owned by a firm that was complained about, consistent with regulators treating these complaints as “one-offs”. An inspector conducting a complaint inspection crowds out two regular inspections at the daily level, but we find no evidence of crowd-out at time scales of one month or greater. Finally, heterogeneity across complaint types suggests people are more adept at identifying nuisance-related violations (e.g. noise, smell), but are less adept at identifying more technical violations.


Wolfgang Keller 

Wolfgang Keller

 

  • Capital Markets in China and England, 18th and 19th Century: Evidence from Grain Prices, (with Carol H. Shiue and Xin Wang) American Economic Journal: Applied Economics 13(3): 31-64, 2021.
    Abstract: Based on the most comprehensive grain prices available, we employ a storage model to estimate consistent interest rates and compare capital market development in Britain and China. Interest rates for Britain were lower than China’s on average by about three percentage points from 1770 to 1860. Regional capital market integration in the Yangzi Delta comes close to the British average at distances below 200 kilometers, but at larger distances interest rate correlations in Britain are twice those of the Delta, and three or more times as high as elsewhere in China. Overall, our results suggest capital market divergence at an early date.
  • Globalization, Gender, and the Family, (with Hale Utar), Review of Economic Studies, Forthcoming.
    Abstract: This paper shows that in the presence of labor market shocks, child-bearing and child-rearing have far-reaching implications for gender inequality, household specialization and family structure. Using population register data on all births, marriages, and divorces together with employer-employee linked data for Denmark, we show that reduced labor market opportunities due to Chinese import competition lead to a move towards family, with higher rates of fertility, parental leave, and marriage, as well as lower rates of divorce. This move is driven by women, not men. We document substantial long-run earnings losses concentrated on women, and gender inequality increases. The gender-specific effects are due to a woman’s ability to give birth during a fixed period of life–her biological clock. Women have a higher reservation value for staying in the labor market when young, and a negative trade shock induces women to substitute more to family activities than men. High-earning women in their late 30s contribute strongly to the gender difference in fertility because switching to new comparable employment would require high initial commitment which is incompatible with having a newborn in the short time remaining on the biological clock. There is no gender difference (1) for workers past their fertile age, (2) in the size of the negative labor shock, and (3) due to occupational composition since we exploit within-worker variation. Despite lower labor earnings, positive family responses in Denmark are also sustained by insurance payments and government transfers so that workers can afford the shift to family.


Jin-Hyuk Kim 

Jin-Hyuk Kim

 

  • Local Network Effects in the Adoption of a Digital Platform, (with Peter Newberry, Liad Wagman, and Ran Wolff) Journal of Industrial Economics, forthcoming.
    Abstract: We examine the extent to which the network effects that lead to the adoption of an online social platform are local. Focusing on the fantasy sports market in the US, we find that the size of a county's existing user base on the platform significantly impacts the number of new users who join the platform in that county. However, the size of the user base in nearby counties does not impact adoption, suggesting a local network effect. We also find evidence of heterogeneous network effects, as the impact of the user base is stronger in higher-income counties. Using simulations, we demonstrate that the initial distribution of users across counties can significantly influence the growth of the network over time. We draw implications for optimal seeding based on county population and income.


Miles Kimball

 

Miles Spencer Kimball

 

  • Liquidity Constraints and Precautionary Saving, (with Martin Holm and Christopher Carroll) Journal of Economic Theory Volume 195, 2021.
    Abstract: We provide the analytical explanation of the interactions between precautionary saving and liquidity constraints. The effects of liquidity constraints and risks are similar because both stem from the same source: a concavification of the consumption function. Since a more concave consumption function exhibits heightened prudence, both constraints and risks strengthen the precautionary saving motive. In addition, we explain the apparently contradictory results that constraints and risks in some cases intensify, but in other cases weaken the precautionary saving motive. The central insight is that the effect of introducing an additional constraint or risk depends on whether it interacts with preexisting constraints or risks. If it does not interact with any preexisting constraints or risks, it intensifies the precautionary motive. If it does interact, it may reduce the precautionary motive in earlier periods at some levels of wealth.


Keith Maskus 

Keith Maskus

 

  • International protection of consumer data, (with Yongmin Chen and Xinyu Hua) Journal of International Economics, Volume 132, September 2021.
    Abstract:  We study the international protection of consumer data in a model where data from product sales generate additional revenue to firms but disutility to consumers. When data usage lacks transparency, a firm suffers a commitment problem and overuses consumer data. Greater transparency enables the firm to commit to less data usage, which boosts consumer demand and leads to a higher price but also higher output if the firm operates only in one country. A multinational firm faces more challenges when balancing the trade-offs in data usage across countries that differ in consumer preferences for privacy. Contrary to the result for a single country, more transparency can exacerbate data-usage and output distortions in the global economy, and unilateral data regulation by a country may reduce global welfare. There can be substantial gains from international coordination—though not necessarily uniformity—of data regulations.


Adam McCloskey

 

Adam McCloskey

 

  • Inference After Estimation of Breaks, (with Isaiah Andrews and Toru Kitagawa) Journal of Econometrics 224(1), 2021.
    Abstract:  In an important class of econometric problems, researchers select a target parameter by maximizing the Euclidean norm of a data-dependent vector. Examples that can be cast into this frame include threshold regression models with estimated thresholds and structural break models with estimated break dates. Estimation and inference procedures that ignore the randomness of the target parameter can be severely biased and misleading when this randomness is non-negligible. This paper studies conditional and unconditional inference in such settings, accounting for the data-dependent choice of target parameters. We detail the construction of quantile-unbiased estimators and confidence sets with correct coverage, and prove their asymptotic validity under data generating process such that the target parameter remains random in the limit. We also provide a novel sample splitting approach that improves on conventional split-sample inference.


Scott Savage 

Scott Savage

 

  • Tariff Pass-Through and Welfare in the Tablet Computer Market,  (with R. Scott Hiller) Journal of Industrial Economics 69(2), 2021.
    Abstract:  This paper estimates the short-run effects of tariffs on United States tablet computer prices and welfare. Market-level data are used to estimate a model of demand, supply and trade policy and to simulate equilibria prices and sales in scenarios with tariffs on Chinese production. A 25 percent tariff on firms assembling in China results in a tariff elasticity of consumer prices of 1.108, a 29.6 percent decline in profits for firms assembling in China, and a deadweight loss of 28.8 percent of total economic surplus. Firms assembling elsewhere benefit from the reduction in rival’s competitiveness by increasing their prices, market shares and profits. A long-run implication is that firms may be incented to shift production from “uncompetitive” facilities in China to lower-cost countries that are politically favored by the United States.


Carol Shiue 

Carol Shiue

 

  • Capital Markets in China and England in the 18th and 19th Centuries: Evidence from Grain Prices, (with Wolfgang Keller and Wang Xin) American Economic Journal: Applied Economics 13(3), 2021.
    Abstract: Based on the most comprehensive grain prices available, we employ a storage model to estimate consistent interest rates and compare capital market development in Britain and China. Interest rates for Britain were lower than China’s on average by about three percentage points from 1770 to 1860. Regional capital market integration in the Yangzi Delta comes close to the British average at distances below 200 kilometers, but at larger distances interest rate correlations in Britain are twice those of the Delta, and three or more times as high as elsewhere in China. Overall, our results suggest capital market divergence at an early date.