Showing papers in "Journal of Political Economy in 2018"
TL;DR: In this paper, the authors study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product …rms, and entry/exit.
Abstract: We study how exploration versus exploitation innovations impact economic growth through a tractable endogenous growth framework that contains multiple innovation sizes, multi-product …rms, and entry/exit. Firms invest in exploration R&D to acquire new product lines and exploitation R&D to improve their existing product lines. We model and show empirically that exploration R&D does not scale as strongly with …rm size as exploitation R&D. The resulting framework conforms to many regularities regarding innovation and
212 citations
TL;DR: The authors proxy for students non-cognitive skill using non-test score behaviors using non -test score score behaviors to measure noncognitive skills of students in the context of teachers.
Abstract: Teachers affect a variety of student outcomes through their influence on both cognitive and noncognitive skill. I proxy for students’ noncognitive skill using non–test score behaviors. These behavi...
203 citations
TL;DR: The authors provided a theoretical framework for analyzing the question of how to pay subjects in experiments with multiple tasks. But they did not consider the effect of the number of tasks on their performance.
Abstract: Experimental economists currently lack a convention for how to pay subjects in experiments with multiple tasks. We provide a theoretical framework for analyzing this question. Assuming statewise mo...
192 citations
TL;DR: In this article, the authors show how data from online social networking services can help researchers better understand the effects of social interactions on economic decision making, and combine anonymized data from Facebo...
Abstract: We show how data from online social networking services can help researchers better understand the effects of social interactions on economic decision making. We combine anonymized data from Facebo...
182 citations
TL;DR: The increasing availability of data derived from linked consumer financial accounts has the potential to dramatically expand the potential for research as mentioned in this paper, and the most comprehensive existing data sets can be found in the literature.
Abstract: The increasing availability of data derived from linked consumer financial accounts has the potential to dramatically expand the potential for research. Examining the most comprehensive existing se...
176 citations
TL;DR: The authors examined heterogeneous treatment effects of a universal child care program in Germany by exploiting variation in attendance caused by a reform that led to a large expansion staggered across municipalities, finding that children with lower (observed and unobserved) gains are more likely to select into child care than children with higher gains.
Abstract: We examine heterogeneous treatment effects of a universal child care program in Germany by exploiting variation in attendance caused by a reform that led to a large expansion staggered across municipalities. Drawing on novel administrative data from the full population of compulsory school entry examinations, we find that children with lower (observed and unobserved) gains are more likely to select into child care than children with higher gains. Children from disadvantaged backgrounds are less likely to attend child care than children from advantaged backgrounds but have larger treatment effects because of their worse outcome when not enrolled in child care.
159 citations
TL;DR: In this article, a dynamic spatial growth theory with realistic geography is developed, and the authors characterize the model and its balanced growth path and propose a methodology to analyze equilibria with different levels of...
Abstract: We develop a dynamic spatial growth theory with realistic geography. We characterize the model and its balanced-growth path and propose a methodology to analyze equilibria with different levels of ...
144 citations
TL;DR: In this article, the authors model the choice between auctions and posted prices as a trade-off between competitive price discovery and convenience, and show that the decline in auctions was not driven by compositional shifts in seller experience or items sold, but by changing seller incentives.
Abstract: Auctions were very popular in the early days of internet commerce, but today online sellers mostly use posted prices. We model the choice between auctions and posted prices as a trade-off between competitive price discovery and convenience. Evidence from eBay fits the theory. We then show that the decline in auctions was not driven by compositional shifts in seller experience or items sold, but by changing seller incentives. We estimate the demand facing sellers and document falling sale probabilities and falling relative demand for auctions. Both favor posted prices; our estimates suggest the latter is more important for the auction decline. Survey evidence provides further support.
131 citations
TL;DR: The authors explore a model in which heterogeneous entrepreneurs, broadly defined as individuals, broadly compete for top income inequality in the United States over the last 40 years but increase only slightly in France and Japan.
Abstract: Top income inequality rose sharply in the United States over the last 40 years but increased only slightly in France and Japan. Why? We explore a model in which heterogeneous entrepreneurs, broadly...
129 citations
TL;DR: In this paper, a dynamic model of educational choice is proposed that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced form treatment effect literature, which is an empirically robust middle ground between the two approaches which estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and non-cognitive skills and the continuation values of educational choices.
Abstract: This paper estimates returns to education using a dynamic model of educational choice that synthesizes approaches in the structural dynamic discrete choice literature with approaches used in the reduced form treatment effect literature. It is an empirically robust middle ground between the two approaches which estimates economically interpretable and policy-relevant dynamic treatment effects that account for heterogeneity in cognitive and non-cognitive skills and the continuation values of educational choices. Graduating college is not a wise choice for all. Ability bias is a major component of observed educational differentials. For some, there are substantial causal effects of education at all stages of schooling.
119 citations
TL;DR: In this article, the role of distance in international trade has been investigated and it is shown that if the distribution of firm sizes is Pareto, the average squared distance of a firm's exports is an increasing power function of its size, and a parameter restriction holds, then the distance elasticity of trade is constant for long distances.
Abstract: The gravity equation in international trade states that bilateral exports are proportional to economic size and inversely proportional to geographic distance. While the role of size is well understood, that of distance remains mysterious. I offer an explanation for the role of distance: If (i) the distribution of firm sizes is Pareto, (ii) the average squared distance of a firm’s exports is an increasing power function of its size, and (iii) a parameter restriction holds, then the distance elasticity of trade is constant for long distances. When the firm size distribution follows Zipf’s law, trade is inversely proportional to distance.
TL;DR: In this article, the authors study favoritism via hometown ties, a common source of favor exchange in China, in the selection of the Chinese Academies of Sciences and Engineering (AcSeed).
Abstract: We study favoritism via hometown ties, a common source of favor exchange in China, in fellow selection of the Chinese Academies of Sciences and Engineering. Hometown ties to fellow selection commit...
TL;DR: In this paper, the authors show that in the presence of admissions reserves, the effect of the precedence order (i.e., the order in which different types of seats are filled) is comparable to adjusting reser...
Abstract: We show that in the presence of admissions reserves, the effect of the precedence order (i.e., the order in which different types of seats are filled) is comparable to the effect of adjusting reser...
TL;DR: A model in which referrals relax a limited liability constraint by allowing the firm to punish the referral provider if the recipient has low output is developed.
Abstract: I argue that firms use referrals from current workers to mitigate a moral hazard problem. I develop a model in which referrals relax a limited liability constraint by allowing the firm to punish th...
TL;DR: The authors show that oil production from existing wells in Texas does not respond to oil prices, while drilling activity and costs respond strongly, and they reformulate Hotelling's classifier to explain these facts.
Abstract: We show that oil production from existing wells in Texas does not respond to oil prices, while drilling activity and costs respond strongly. To explain these facts, we reformulate Hotelling’s class...
TL;DR: In this article, when evaluating two alternatives x and y by means of a parametric utility function, low values of the parameter indicate a preference for x and high values indicate preference for y.
Abstract: Suppose that, when evaluating two alternatives x and y by means of a parametric utility function, low values of the parameter indicate a preference for x and high values indicate a preference for y...
TL;DR: The authors evaluate the impact of a randomized educational intervention on children's intertemporal choices and find that the intervention aims to improve the ability to imagine future selves and encourage forward-loo...
Abstract: We evaluate the impact of a randomized educational intervention on children’s intertemporal choices. The intervention aims to improve the ability to imagine future selves and encourages forward-loo...
TL;DR: In this article, the authors exploit the discontinuity in advertising along the borders of television markets, and estimate that television advertising of prescription antidepressants exhibits significant positive spillovers from discontinuity.
Abstract: Exploiting the discontinuity in advertising along the borders of television markets, I estimate that television advertising of prescription antidepressants exhibits significant positive spillovers ...
TL;DR: In this paper, the authors estimate the effect of foreign supermarket entry on household welfare and its underlying channels, and find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living.
Abstract: The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new and unique collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare and its underlying channels. The richness of the data allows us to estimate a general expression for the welfare gains from retail FDI, and to decompose the total effect into several distinct components. To base our estimates on plausibly exogenous variation in foreign retail entry we propose an event study design that exploits data on the universe of foreign store locations and opening dates in combination with high frequency data on barcode-level store prices, consumption quantities, and household incomes in those same locations over the period 2002-2014. We find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living. A substantial share of this price index effect is due to pro-competitive effects on consumer prices charged by domestic stores. We find little evidence of significant changes in average municipality level incomes, wages or employment. We do, however, find evidence of store exit and adverse effects on domestic store profits and the incomes of traditional retail sector workers. Finally, we present evidence that the gains from retail FDI are on average positive for all income groups but strongly regressive, and quantify the opposing forces that underlie this finding.
TL;DR: In this article, empirical evidence suggests the presence of substantial differences in firm pay controlling for worker skill, and these differences are uncorrelated with ski ski skill, which is not the case in this paper.
Abstract: Why do firms pay different wages? Empirical evidence suggests the presence of substantial differences in firm pay controlling for worker skill. Moreover, these differences are uncorrelated with ski...
TL;DR: In this article, the authors introduce an amplification mechanism to reconcile the discrepancy between house price acceleration and the positive autocorrelation in price changes, which is not explained by existing theories.
Abstract: House prices exhibit substantially more momentum, positive autocorrelation in price changes, than existing theories can explain. I introduce an amplification mechanism to reconcile this discrepancy...
TL;DR: In this paper, the authors examine the extent to which government audits of public resources can reduce corruption by enhancing political and judiciary accountability, and they do so in the context of Brazil's anticorr...
Abstract: This paper examines the extent to which government audits of public resources can reduce corruption by enhancing political and judiciary accountability. We do so in the context of Brazil’s anticorr...
TL;DR: In this article, the authors employ a unique dataset on members of an elite service club in Germany to investigate how social connections in elite networks affect the allocation of resources, with weakly aligned incentives engaging most actively in crony lending.
Abstract: We employ a unique dataset on members of an elite service club in Germany to investigate how social connections in elite networks affect the allocation of resources Specifically, we investigate credit allocation decisions of banks to firms inside the network Using a quasi-experimental research design, we document misallocation of bank credit inside the network, with bankers with weakly aligned incentives engaging most actively in crony lending Our findings, thus, resonate with existing theories of elite networks as rent extractive coalitions that stifle economic prosperity
TL;DR: In this paper, the authors show that some factors that contribute to entrepreneurship decline with age, but business skills increase with experience in high-lifestyle environments, and that entrepreneurship requires energy and creativity as well as business acumen.
Abstract: Entrepreneurship requires energy and creativity as well as business acumen. Some factors that contribute to entrepreneurship decline with age, but business skills increase with experience in high-l...
TL;DR: This article examined how a 16-week cut in potential unemployment insurance (UI) duration in Missouri affected search behavior of UI recipients and the aggregate labor market using a regression discontinuity model.
Abstract: We examine how a 16-week cut in potential unemployment insurance (UI) duration in Missouri affected search behavior of UI recipients and the aggregate labor market. Using a regression discontinuity...
TL;DR: In this paper, the authors study how sellers manage search incentives through their disclosure strategies (e.g., product trials, revie... ) and find that buyers often search across sellers to learn which product best fits their needs.
Abstract: Buyers often search across sellers to learn which product best fits their needs. We study how sellers manage these search incentives through their disclosure strategies (e.g., product trials, revie...
TL;DR: This work analyzes how academic experts and nonexperts forecast the results of 15 piece-rate and behavioral treatments in a real-effort task to find the average forecast of experts closely predicts the experiment.
Abstract: We analyze how academic experts and nonexperts forecast the results of 15 piece-rate and behavioral treatments in a real-effort task. The average forecast of experts closely predicts the experiment...
TL;DR: The authors found that Israeli attacks are more likely to occur when US news on the following day is dominated by important predictable events, and that strategic timing applies to attacks that bear risk of civilian casualties and are not too costly to postpone.
Abstract: Politicians may strategically time unpopular measures to coincide with newsworthy events that distract the media and the public. We test this hypothesis in the context of the Israeli-Palestinian conflict. We find that Israeli attacks are more likely to occur when US news on the following day is dominated by important predictable events. Strategic timing applies to attacks that bear risk of civilian casualties and are not too costly to postpone. Content analysis suggests that Israel’s strategy aims at minimizing next-day coverage, which is especially charged with negative emotional content. Palestinian attacks do not appear to be timed to US news.
TL;DR: The authors study the link between market forces, cross-sectional inequality, and intergenerational mobility, emphasizing complementarities in the production of human capital, and show that wealthy parents tend to be more likely to have children with upward mobility.
Abstract: We study the link between market forces, cross-sectional inequality, and intergenerational mobility. Emphasizing complementarities in the production of human capital, we show that wealthy parents i...
TL;DR: In this paper, the authors assess the bias of technological change by measuring, at the level of the individual firm, how much of it is labor augmenting and how much is factor neutral.
Abstract: Technological change can increase the productivity of the various factors of production in equal terms, or it can be biased toward a specific factor. We directly assess the bias of technological change by measuring, at the level of the individual firm, how much of it is labor augmenting and how much is factor neutral. To do so, we develop a framework for estimating production functions when productivity is multidimensional. Using panel data from Spain, we find that technological change is biased, with both its labor-augmenting and its factor-neutral components causing output to grow by about 1.5 percent per year.