Time: 12:30-13:30, Mondays (unless noted otherwise).
Location: MS 003 (unless noted otherwise).
Format: 1 hour of presentation, questions included
Registration: If you want to present in the workshop, please send email to Ana Gazmuri and François Poinas. Please mention a date for presentation (among the dates not already allocated on the schedule below), a title and an abstract (if there is one). Students are expected to present their work in progress.
Mailing list: If you want to join the mailing list, please, send a blank email to appliedmicrotse+subscribe@googlegroups.com and follow the procedure: once you receive the invitation to join the group, reply to it. If you do not receive emails please check the options in your google groups account (you might have opted out of receiving notifications)
Sept. 24, 2018, Marie Lalanne Research Center SAFE, Goethe University of Frankfurt
Social Networks and Job Referrals in Recruitment
This paper provides the first large-scale empirical analysis of the use of social networks and job referrals in hiring for a high-skilled, high-powered position across the whole US economy. I use data on all directors of the boards of all largest listed US companies between 2004 and 2008 and combine extensive information on their social networks and detailed information on the referrals underlying new independent board appointments. The effect of sharing a social tie with a current director on the probability to be hired is around 29 percentage points, an economically relevant effect which posits the importance of job referrals for recruitment. By relating the existence of social ties to the actual occurrence of job referrals, I show that the important ties are the professional ones - social contacts from listed firms increases the likelihood to be referred by 2.8 percentage points. I finally assess the value of using recommendations for recruitment by estimating directors’ ability and find that referred directors are significantly better than non-referred ones. Furthermore, high ability incumbent directors are able to refer high ability entrant directors because they know more of them, suggesting that homophily in networks might increase inequality between individuals belonging to different social circles.
Oct. 1, 2018 Emil Palikot (Job Market Candidate)
How effective are reputation systems? A closer look into ethnic discrimination on a platform
This paper studies the impact of reputation on outcomes of minority users of a popular ride-sharing platform. Using a large unique dataset, we document that minorities achieve lower economic outcomes; compared to non-minority users, their listings are less popular, they sell fewer seats and have lower revenue. While this result confirms findings of existing literature, we also show that reputation is instrumental in reducing the ethnic bias, which is concentrated during first interactions of minority drivers, and mostly disappears after they establish a reputation. We, also, develop a model of career concerns, which allows us to show that part of the output gap is due to rationally held beliefs about expected quality. The remaining part , we attribute to discrimination. Finally, we provide a counterfactual analysis of this market without a reputation system. Our research stresses the importance of a well-designed reputation system in alleviating discrimination.
Oct. 8, 2018 Dimple Kukreja (Job Market Candidate)
Labour Market Shocks and Evolution of Dowry Payments: Evidence from India
This paper examines how economic changes affect traditional marriage institutions in India. I study how the labour market shocks influence the bride-to-groom payments or dowries in India. To do this, I exploit the 1991 trade liberalization reforms to investigate changes in female employment and earnings across districts in India and measure the impact it has on the size of marriage payments. I find that dowry decreases faster relative to the national trend in districts that are more exposed to tariff declines. The decline in dowry is explained by an improvement in the relative position of females in the labour market which increases their marriage market bargaining power. However, these labour market and marriage market results are not replicated for more exposed districts in the states with extremely high male-biased sex-ratio, at least in the short-run. This points towards the role of certain cultural norms that still dominate and limit the economic opportunities of women and consequently their value in the marriage market.
Oct. 15, 2018 Eva Raiber(Job Market Candidate)
Anticipated Fertility and Educational Investment: Evidence from the One-Child Policy in China
Does future anticipated fertility affect educational investment? The number of children planned is usually unobserved and affected by variables that are correlated with the demand for education. Theory suggests that anticipated fertility can affect the returns to education, the resources available for family consumption and the incentives to find a partner. This paper uses varying eligibility criteria for second child permits during the One-Child Policy in China as a natural experiment, which provides plausible exogenous variation in the cost of the second child. I use second child permits that are conditional on time-invariant individual characteristics and show that they have a strong positive effect on the likelihood of having a second child between 1990 and 2005. They are therefore expected to change anticipated fertility among compliers. I find that fulfilling an eligibility criterion at secondary school age increases the time invested in education and the likelihood of continuing schooling after middle school. The effect appears concentrated in the subset of compliers: individuals who increase their anticipated number of children as a response to eligibility. It can be explained by the high cost of raising children, by the second child having at most a short-term effect on parental labour supply and by a skewed sex ratio.
Oct. 22, 2018 Kaivan Munshi (University of Cambridge and TSE)
Economic Development, the Nutrition Trap, and Noncommunicable Disease (joint with Anu Alexander, Nancy Luke, and Swapnil Singh)
This research is motivated by two stylized facts: (i) the weak relationship between income and nutritional status in developing countries, and (ii) the increased prevalence of noncommunicable diseases; in particular, cardiometabolic diseases among normal weight individuals, with economic development. Our unified explanation for these stylized facts is based on a nutrition trap: a growing biomedical literature posits that there exists an epigenetically determined set point for each individual’s body weight, with metabolic and hormonal adjustments defending the set point in response to variation in energy intake (food consumption). Consumption within a range of the set point thus fails to change nutritional status, but once consumption crosses a threshold, the body can no longer defend the set point and the resulting metabolic imbalance increases the risk of cardiometabolic diseases (diabetes, hypertension, and cardiac disease). The set point in a given population is partly determined by conditions in the pre-industrial economy, allowing us to explain variation in the income-nutritional status relationship and the BMI-diabetes relationship across broad regions of the world. To establish that a set point does indeed exist, we develop a model that generates predictions for the cross-sectional relationship between current income and both nutritional status and cardiometabolic diseases when a nutrition trap is present. These predictions are tested with microdata from India, Indonesia, and Ghana. Estimation of the model’s structural parameters allows us to quantify the impact of the nutrition trap, which turns out to be substantial, explaining approximately 40% of under-nutrition in India.
Nov. 5, 2018 Yue Fei (Job Market Candidate)
Can Government Foster A Venture Capital Sector?
Using a novel dataset, this paper examines the impact of government intervention in the emergence of venture capital (VC) during 1999-2013 in China. I employ difference-in-difference methodology to explore a central government program that features experiments and staggered introduction. Evidence shows that government programs result in more investments from both government and private VCs, and lead to an increase in the number of successful companies (exit through Initial Public Offerings) by 100%. The impact is most pronounced in relatively less developed regions and in the early development of the VC sector. Connections between investors are important for inter-firm transmissions. However, government VCs underperform private VCs in terms of exit through IPO and evidence suggests that moral hazard problems can explain it.
Nov. 12, 2018 Luise Eisfeld (DEEQA)
How do online product rankings influence sellers’ pricing behavior? Model and preliminary evidence
The ordered lists of products on e-commerce platforms are known to have a substantial influence on the likelihood that consumers become aware of, consider, and ultimately purchase a given product. Less is known about how product rankings impact the supply side: When setting prices, third-party sellers are likely to anticipate how these affect their expected rank position. As a result, product rankings can intensify, or weaken the extent of price competition between sellers. To study this in practice, I analyze data on hotel searches and purchases on an online travel agent. My preliminary evidence indicates that especially promotional discounts seem to play a key role for how a hotel is ranked, as well as for their likelihood of being purchased. I provide an outline for a structural model that will allow me to perform counterfactual simulations. These simulations can shed light on how the personalization of product rankings or the increased use of mobile phones for searching hotels may influence pricing decisions and market outcomes.
Thiago Cacicedo (University of Alicante)
Frequently purchased goods and price expectation
I study how the price expectation regarding future prices affects consumer purchase behavior for frequently, non-durable, purchased goods. Using a standard dynamic model of utility maximzation I show how current purchase depends on expectation about future prices. Then, I use scanner data to provide reduced-form evidence on which type of expectation, among those commonly used in the literature, is consistent with the data. I find that, on average consumers are rational, but there is some degree of heterogeneity in price expectations.
Nov. 19, 2018 No workshop: TSE internal seminars
Nov. 26, 2018 Giulia Pavan (Job Market Candidate)
The Impact of European Carbon Market on Firm Productivity: Evidence from Italian Manufacturing Firms
The key policy adopted by the European Union to reduce greenhouse gas emissions is the Emission Trading System: a market for rights to emit. The introduction of this policy has raised concerns about possible detrimental effects on firms' production through an increase in polluting costs, unless firms change inputs or increase their productivity. In this paper, we provide evidence of the causal impact of this European policy on firms total factor productivity. We combine structural estimation of firms' production function and techniques for policy evaluation to estimate the effect of the EU ETS on Italian manufacturing firms. Our results show a positive effect of the policy on productivity with heterogeneous effects across sectors. Results also suggest that firms reacted to the policy not reducing their input or upgrading their capital but adjusting their production process.
Dec. 3, 2018 Harsh Malhotra
Why paying families to use maternal healthcare is not improving children's health: Evidence from a large CCT program in India
Dec. 10, 2018 Jasmin Fliegner (Job Market Candidate)
Large Sample Inference for a Class of Estimators Based on Unconfoundedness - a Practical Approach
Matching is a popular method to estimate the causal effect of a treatment on a set of outcomes under unconfoundedness - the assumption that the treatment is as good as random after controlling for the relevant covariates. It is crucial to estimate correct standard errors and assess the corresponding large sample distribution to draw conclusions about the statistical significance of the treatment effect. In this paper, we propose an easy-to-implement inference procedure for imputation-based matching estimators. This method is applicable to the class of estimators that impute the missing counterfactual outcomes as a weighted sum of outcomes from the opposite treatment group and therefore encompasses the vast majority of matching estimators. For that, we generalize the methodology suggested by Abadie and Imbens (2006) for nearest neighbor matching estimators. We establish root-n-asymptotic normality of the matching estimators for the population average treatment effect minus a bias term. Moreover, we propose a generalized estimator for the marginal variance. We also derive a large sample variance estimator of the matching estimator for the population average treatment effect on the treated. This versatile way of estimating the standard errors consistently is a more robust alternative to the naive bootstrap should the latter be valid. Furthermore, our estimator substantially reduces the computational costs compared to the naive bootstrap. In a Monte Carlo study, we assess the performance of our estimator for the marginal variance by using a local linear matching estimator for the population average treatment effect on the treated. We obtain precise standard errors and coverage rates that perform equally well, if not better, than the naive bootstrap.
Mar. 11, 2019 Bengt Soderlund (Stockholm School of Economics)
The Importance of Business Travel for Trade: Evidence from the Liberalization of the Soviet Airspace
Despite decades of intense globalization, empirical research provides robust evidence that the distance elasticity of trade is significant, not declining and largely unaccounted for by conventional explanations such as transport costs. One hypothesis is that face-to-face interaction through business travel is important for trade, and that transporting people is costly. I use the liberalization of Soviet airspace for civil aviation to test this hypothesis. The opening of Soviet airspace radically reduced travel time between Europe and East Asia. Using a difference-in-difference approach, I show that shorter flight routes were associated with a rapid and substantial increase in trade volumes. I also show that the increase in trade was proportional to the reduction in flight distance, that results hold for goods not typically transported by air and that the impact was larger for differentiated goods.
Mar. 18, 2019 Jean-Pierre Florens (TSE)
Econometrics of Nonlinear Pricing
We consider in this paper a model where a unique producer offers to a set of consumers a divisible good. The consumers are characterized by one or several heterogeneity partially unobserved variables by the econometricians. A non linear-tariff is proposed to the consumers. The program of the consumer in that case is to maximise the function:
u(Q)+Qε−P(Q)
where ε is a non observable, Q the quantity and P(Q) the pricing rule. Given the sample of quantities and the knowledge of the price function we analyze the non parametric estimation of the utility function u(Q) and of the distribution Fε of ε. The paper analyzes identification issues of this model. For example if two data sets are available for two pricing rules with the same u and Fε we will characterize identification conditions and an original estimation in the framework of inverse problems. An extension of this model to the case where u and P depends on exogenous variables will also be considered.
Mar. 25, 2019 Stefan Pollinger (TSE)
Kinks Know More: A Solar Energy Policy Evaluation Beyond Bunching
The quasi-experimental method developed in this paper estimates the intensive and the participation margin response of solar panel adoptions in Germany to changes in the subsidy. To know both margins is necessary and sufficient for finding the most cost-efficient subsidy. Exploiting the effect of kinks in the existing subsidy on the size-distribution of adoptions, the method estimates both margins simultaneously. To circumvent the endogeneity problems of methods relying on exogenous variation, identification relies on a testable smoothness condition on the counter-factual capacity-distribution, avoiding the difficult or impossible search for suitable instrumental and control variables. Additionally, yearly estimates allow for a continuing evaluation of the policy. I find that both margins are quantitatively important and time-variant. The method is applicable whenever existing kink methods - the regression kink design and the bunching estimator - are not applicable as both margins are present or relevant.
Apr. 1, 2019 Brecht Neyt (Ghent University)
The impact of dual apprenticeship programs on early labour market outcomes
This study examines the impact of enrolling into dual apprenticeship programs in secondary education on six early employment outcomes. Our contribution to the literature is threefold. First, we estimate – within the same, Belgian secondary education framework – the effects of two distinct types of dual programs that combine part-time school- or training centre-based instruction with an apprenticeship in a firm. Second, these effects are identified by estimating a dynamic model capturing subsequent educational and labour market outcomes to control for the dynamic selection of students into dual programs. Third, this approach enables us to distinguish between the programs’ direct effects (conditional on educational achievement) and indirect effects (via educational achievement). We find evidence for short-term labour market advantages but only for the program with the most days of in-field training. With these findings we contribute to the international discussion on the optimal design of vocational programs.
Alipio Ferreira (TSE)
When tax compliance hurts: tax audits and economic outcomes in firms
Tax audits are means to enforce compliance by taxpayers. This means paying more taxes, and also paying a fine in the case of irregular behaviour. Recent studies (such as Advani et al 2017) have found that tax audits have deterrent effects that last for several years, with audited individuals declaring more revenues than their non-audited counterparts. However, forcing compliance also increases costs of taxpayers, generating a burden that was previously avoided. Using administrative data from Senegal, this paper finds that the positive impact of audits on compliance exists, but audited firms present a worse economic performance afterwards.
Apr. 8, 2019 No workshop: TSE Internal Seminars
Apr. 15, 2019 Jakub Kastl (Princeton University)
Quantifying Delay Propagation in Airline Networks (with L. Dou and J. Lazarev)
We propose a model of aircraft scheduler who allocates effort to minimize costs of delay on a network. We further develop a framework for quantifying delay externalities in airline networks and show how the effort cost can be identified. Using a large comprehensive dataset on actual delays and a model-selection algorithm (elastic net) we estimate a weighted directed graph of delay propagation for each major airline in the US. We then use these estimates to describe how network topology and other airline network characteristics (such as aircraft fleet heterogeneity) affect the expected delays. We also use the estimated effort cost to evaluate counterfactual scenarios of investments in airport infrastructure.
May 6, 2019 Milo Bianchi (TSE)
Agency Costs and Firm Productivity
We explore how the separation between ownership and control affects firm productivity. Using Finnish administrative data on the universe of limited liability firms, we document a substantial increase in firm productivity when the CEO obtains majority ownership or when the majority owner becomes the CEO. We exploit plausibly exogenous variations to ownership and control structures, induced for example by changes in the CEO spouse’s health status. Extending the analysis beyond typical samples of large public firms, we show that our effects are stronger in medium-sized private firms. We also investigate possible mechanisms and provide suggestive evidence that increased ownership boosts CEO’s effort at work.
May 13, 2019 Vatsala Shreeti (TSE)
Evolution of the mobile handset market in India
This paper analyses the unbundled mobile handset market in India using a structural model of demand and supply. A vast majority of mobile phone users continue to use low quality devices despite increasing affordability, expanding choice set and entry of budget smartphones. The paper explores the contribution of these channels in explaining the handset demand and the lukewarm migration to smartphones, focusing particularly on the role of prices in the complementary mobile internet services market, and the entry of a new service provider in 2016 in this market. Consistent with intuition, the results find that a decline in prices of mobile internet services (as a result of increased competition) leads to positive utility additions for all types of devices. Through a counterfactual simulation exercise, I show that in the absence of this new entry, the collective market share for smartphones would have been lower in 2016 and 2017 by 7.28% and 10.8% respectively.
May 20, 2019 No workshop
May 27, 2019 Ling Zhou (TSE)
Migration and Marriage Matching
I consider a model where individuals endogenously choose marriage markets in a transferable utility context. Anticipating returns in both the marriage market and the labor market, individuals from rural and urban areas choose their location decisions. Then they match locally. Intra-household sharing rule is determined by stable match in the equilibrium. I estimate the model based on Census data in China, and simulate three counterfactuals, i.e. 1) no gain from marriage, 2) increase rural males by 10%, and 3) increase female wages by 10%.
Jun. 3, 2019 Filippo D'Arcangelo (TSE)
Environmental Policy and Investment Location Decisions: The Risk of Carbon Leakage in the EU-ETS
Firms could react to the increasing costs associated with a strict environmental policy locating their investments elsewhere. Regulators take into account this risk, providing them with compensations, but it is still unclear whether this risk of ``carbon leakage'' is a credible threat and whether the compensations are effective in limiting it. This paper investigates how the European carbon market (EU-ETS) influences manufacturing firms investment decisions. The biggest challenge to identification of a causal impact is finding a firm-level exogenous variation that reflects the additional costs of complying with the policy. I first provide a theoretical framework for carbon leakage, where investing decisions depend on the marginal rate of transformation between emissions and an output good. The insights of this theoretical model are then used to estimate a location decision model on firm-level data on worldwide greenfield investments. I estimate each firm's technological constraint that governs the relationship between emissions and the output good: such a measure is exogenous to the firm, but determines the marginal opportunity costs of emissions. It can therefore be used to build a control function strategy to establish a causal impact of the environmental policy.