College education, intelligence, and disadvantage: policy lessons from the UK in 1960-2004 (with A. Ichino and A. Rustichini)
Abstract. University access has greatly expanded during past decades and further growth figures prominently in political agendas. We study possible consequences of historical and future expansions in a stochastic, general equilibrium Roy model where intelligence and disadvantage from socioeconomic and psychological factors determine higher education attainment. The enlargement of university access enacted in the UK following the 1963 Robbins Report provides an ideal case study to draw lessons for the future. We find that this expansion is associated with a decline of the average intelligence of graduates and of the college wage premium across cohorts, and that it mainly benefited relatively less intelligent students from advantaged socioeconomic backgrounds. Our structural estimates and counterfactual simulations suggest that the implemented policy was unfit to reach high-ability individuals as Robbins had instead advocated, and that a meritocratic selection of university students would have attained that goal and would have also been more egalitarian.
Abstract. I study causal pathways that link prison work programs to convict rehabilitation, leveraging administrative data from Italy and combining quasi-experimental and structural econometric methods in a novel way to achieve both a credible identification and the isolation of mechanisms. I find that 1 additional standard deviation of work time in unskilled prison jobs reduces the re-incarceration rate by about 7 percentage points (i.e., by about 22%) three years of release, thanks to a predominant training effect. Cost-effectiveness requires lower prison wage rates. By dampening a detrimental liquidity effect that weakens deterrence, reduced earnings would also boost the average treatment effect.
Science under Inquisition: the allocation of talent in early modern Europe (with E. Dewitte, F. Drago, and R. Galbiati)
Abstract. We study how an ideologically repressive authority, the Roman (or Italian) Inquisition, affected high-talent individuals. Descriptive analysis produces prima facie evidence that after its establishment in 1542, notable individuals born in Roman Inquisition states became less likely to undertake scientific careers. We then build and estimate a structural dynamic model of occupational and location choices to investigate causal pathways. The drivers of Italy's relative scientific decline after 1542 turn out to be the Inquisition's deterrence effect, which pushed scientists away from places under its grip, a (less important) cultural effect, whereby the Inquisition weakened the willingness to embrace a scientific career in the first place, and the human capital effect stemming from the consequent reduced availability of science masters. A counterfactual historical experiment indicates that absent the Inquisition, the share of notable Italians engaging in science would have remained at the pre-1540s level of 16% instead of dropping to 12%.
Historical anti-fascism and right-wing voting in Italy (with L. Panza, M. Lecci, and E. Swee)
Abstract. We study how the experience of anti-fascism during Mussolini's dictatorship affects post-war political preferences for right-wing parties. Using newly-digitized historical data, we construct a measure of anti-fascism from the universe of regime opponents recorded in the Casellario Politico Centrale, and an instrumental variable that leverages the random assignment of judges of the Tribunale speciale per la difesa dello Stato and that resolves the simultaneity between the supply of opposition and the demand for repression of opponents. We find that stronger opposition to fascism before and during WWII weakens the support for the post-fascist party in democratic elections by between 0.3 and 1.2 percentage points. Weaker effects are detected for post-1992 conservative right-wing parties not directly tied to the Partito Nazionale Fascista.
The perils of survey measures of culture in historical economics (with M. Bellani) -- Online Appendix
Abstract. Measures of values and beliefs derived from answers to survey questions are often used to investigate the cultural roots of long-term economic development, based on the idea that cultural attitudes are persistent traits shaped by historical factors. We show that these survey proxies are not persistent and result into fragile historical correlations. These points are illustrated by analyzing proxies for cultural attitudes derived from the World Values Survey and the Afrobarometer, and by revisiting analyses carried out in two early, influential studies in historical economics that use these data sources. Diagnostic tools and possible solutions are discussed.
Multi-cutoff RD designs with observations located at each cutoff: problems and solutions (with M. Fort, A. Ichino, and E. Rettore) -- Online Appendix
Abstract. In RD designs with multiple cutoffs, the identification of an average causal effect across cutoffs may be problematic if a marginally exposed subject is located exactly at each cutoff. This occurs whenever a fixed number of treatment slots is allocated starting from the subject with the highest (or lowest) value of the score, until exhaustion. Exploiting the "within" variability at each cutoff is the safest and likely efficient option. Alternative strategies exist, but they do not always guarantee identification of a meaningful causal effect and are less precise. To illustrate our findings, we revisit the study of Popeleches and Urquiola (2013).
WORK IN PROGRESS
Unconventional active labor market policy: insights from new policy experiments (with R. Salomone)
Statistical profiling back to work: a machine learning algorithm for assignment to active labor market programs (with V. Bramante)
Providing government assistance online: a field experiment on employment assistance (with G. Briscese and V. Quinn)
Abstract. Welfare programs often consist of mandated in-person assistance services. This feature can introduce an engagement barrier for some beneficiaries. Offering some of these services online can address this problem while also reducing administrative costs. In a field experiment with about 2,700 beneficiaries of unemployment benefits, we evaluate the effectiveness of a self-directed website that supplements assistance traditionally delivered by job center staff. Tracking employment outcomes for nearly two years, we find that the intervention significantly increased job-finding rates for some groups. Towards the end of the first year, the effect is still 7 percentage points (25% higher than in the control group) for prime-age job seekers (35-50 years old) and 9 percentage points (35% higher than the control group) for women, reversing the job-finding gender gap. We discuss opportunities for governments to scale up similar low-cost interventions to assist social insurance and welfare beneficiaries online.
Abstract. Exploiting admission thresholds to the Bologna daycare system, we show using RD that one additional daycare month at age 0-2 reduces IQ by 0.5% (4.7% of a s.d.) at age 8-14 in a relatively affluent population. The magnitude of this negative effect increases with family income. Similar negative impacts are found for personality traits. These findings are consistent with the hypothesis from psychology that children in daycare experience fewer one-to-one interactions with adults, with negative effects in families where such interactions are of higher quality. We embed this hypothesis in a model which lends structure to our RDD.
Abstract. We provide first-pass evidence that the legalization of the cannabis market across US states may be inducing a crime drop. Exploiting the recent staggered legalization enacted by the adjacent states of Washington (end of 2012) and Oregon (end of 2014) we find, combining county-level difference-in-differences and spatial regression discontinuity designs, that the legalization of recreational marijuana caused a significant reduction of rapes and thefts on the Washington side of the border in 2013-2014 relative to the Oregon side and relative to the pre-legalization years 2010-2012. We also find evidence that the legalization increased consumption of marijuana and reduced consumption of other drugs and both ordinary and binge alcohol.
Abstract. Working-age grandparents supply large amounts of child care, an observation that raises the question of how having grandchildren affects grandparents’ own labor supply. Exploiting the unique genealogical design of the PSID and the random variation in the timing when the parents of first-born boys and girls become grandparents, we estimate a structural labor supply model and find a negative effect on employed grandmother’s hours of work of about 30% that is concentrated near the bottom of the hours distribution, i.e., among women less attached to the labor market. Implications for the evaluation of child care and parental leave policies are discussed.
Abstract. Discussions of immigration policy are typically framed in the context of their economic effects in receiving countries, notably labor market and fiscal effects. In this paper we characterize immigration policy in a richer model where migrants are also a source of cultural externalities stemming from either preferences or the functioning of formal and informal institutions in receiving countries. While in terms of pure economic effects immigrants do not generally have any more incentives than low-skilled natives to allow for more immigration in the future, this is not the case when accounting for cultural externalities. Therefore, insofar as past immigrants have a voice in affecting future policies, a time-consistent immigration policy entails back-loading, as natives attempt at limiting voice of immigrants in the future, the economic effects of immigration flows as well as the cultural externality they introduce. Furthermore, natives exploit any precommitment device to limit immigration flows, e.g., building "walls", limiting immigrants' political rights, or accumulating fiscal surpluses.
Abstract. The degree of intergenerational altruism is estimated in a benchmark Barro-type OLG framework with imperfect altruism, exploiting the quasi-experimental variation generated by reforms of the tax treatment of bequests and inter vivos real estate donations enacted in Italy between 2000 and 2001. Using a panel data set containing information on the housing stock and house prices in 13 large Italian cities between 1993 and 2004, the structural parameter of interest is estimated via the effect of the reform on house prices. We identify a lower bound of 0.27, an estimate that agrees with existing ones for the US economy.
Abstract. We study a dynamic natural experiment involving nearly 3,000 American women of age 50--64 to understand how a woman's propensity to receive an annual mammography changes over time after a co-worker is diagnosed with breast cancer. We find that in the year this event occurs the probability of screening drops by about 6 percentage points, off a base level of 70%. This impact effect is persistent for at least two years. Underlying mechanisms and implications for health policy are discussed.
Abstract. For the youngest cohorts whose entire working life can be observed, hours start falling much earlier than wages. Wages do not fall (if they fall at all) until one's late 60's. The data suggest that many workers start a smooth transition into retirement by working progressively fewer hours while still facing an upward-sloping wage profile. This pattern is not an artifact of staggered abrupt retirement or selection. This evidence imposes restrictions on dynamic models of the aggregate economy, and provide updated numerical profiles that can be readily used in quantitative macroeconomic analysis to incorporate this new pattern into aggregate models.
Abstract. This paper is an empirical investigation into the effect of bequest taxes (estate or inheritance tax, in the US) and inter vivos real estate donations taxes (gift tax, in the US) on (i) house prices, (ii) house donations, and (iii) market transactions. In a simple model with intergenerational altruism, a lower tax rate unambiguously increases (i) and has an ambiguous effect on (ii) and (iii). We test these predictions using an original and unique data set containing information on sales, donations and real estate prices in 13 large Italian cities between 1993 and 2004. This period spans a major reform that first decreased and then abolished the inter vivos real estate donations tax and bequest tax in Italy. We find that the reform is associated with cumulative real appreciation of about 5% between 2001 and 2004, an increase in donations, and a decrease in market transactions over the same period.
Abstract. We estimate social externalities of tax evasion in a model where congestion of the auditing resources of local tax authorities generates a social multiplier. Identification is based on a contrast of the variance of tax evasion at different levels of aggregation. We use a unique data set that contains audits of about 80,000 small businesses and professionals in Italy and also provides an exact measure of reference groups in our model. We find a social multiplier of about 3, which means that the equilibrium response to a shock that induces an exogenous variation in mean concealed income is about 3 times the initial average response. This is a short-run effect that persists to the extent that auditing resources are not adjusted to internalize the congestion externality.
Abstract. We show that the aggregate Frisch elasticity of labor supply can greatly exceed the corresponding individual-level parameter, and we illustrate the “anatomy” of the former in terms of intensive and extensive margins. The methodology consists of using micro data from the PSID to construct a panel of individuals and an aggregate time series obtained by aggregating these individuals each year. These two data sets represent exactly the same sample at different levels of aggregation, and we use them to identify the parameters of two distinct MaCurdy-type micro and macro equations. We find a micro elasticity of about 0.1 and a much larger macro elasticity that ranges from 1.1 to 1.7. There is no conflict between the two estimates: the micro one reflects only the intensive margin while the macro one reflects, in addition, the much more volatile extensive margin. Furthermore, aggregation of only continuously employed individuals allows us to provide a reliable estimate of the intensive margin elasticity in the range 0.3–0.4. This implies an extensive margin elasticity in the range 0.8–1.4. These findings suggest that micro evidence is not a benchmark for assessing how large the Frisch elasticity of labor supply should be in a model of the aggregate economy.
Abstract. Contrary to common perceptions, today both property and violent crimes (with the exception of homicides) are more widespread in Europe than in the United States, while the opposite was true thirty years ago. We label this fact as the ‘reversal of misfortunes’. We investigate what accounts for the reversal by studying the causal impact of demographic changes, incarceration, abortion, unemployment and immigration on crime. For this we use time series data (1970–2008) from seven European countries and the United States. We find that the demographic structure of the population and the incarceration rate are important determinants of crime. Our results suggest that a tougher incarceration policy may be an effective way to contrast crime in Europe. Our analysis does not provide information on how incarceration policy should be made tougher nor does it provide an answer to the question whether such a policy would also be efficient from a cost-benefit point of view. We leave this to future research.
Abstract. As empirical work in identifying social effects becomes more prevalent, researchers are beginning to struggle in identifying the composition of social interactions within any given reference group. In this article, we present a simple econometric methodology for the separate identification of multiple social interactions. The setting under which we achieve separation is special but is likely to be appropriate in many applications.
Abstract. This paper is about selection of neighbors in models of social interactions. I study a general equilibrium model of behavior subject to endogenous social influences when heterogeneous individuals can choose whom to associate with, buying associations on a “memberships market”. Social effects in behavior turn out to be a stratifying force: The desire for valuable interactions induces inefficient sorting and may lead to the endogenous emergence of “social traps”. The theory is then used to suggest identification strategies that may solve, in a microfounded way, identification and selection problems that typically affect empirical work on social interactions. Such strategies offer a viable alternative when valid instrumental variables or randomized experiments are not available.
How does grandparents' child care affect labor supply? IZA World of Labor, 2016
Offerta di lavoro. Manuale di Economia del Lavoro, Pepi De Caleo and Brucchi Luchino, eds, Il Mulino, 2015
Allocazione del tempo. Rivista di Politica Economica, 101(1-3), 2012.
Tremonti, istruzioni per il disuso (with A. Bisin, M. Boldrin, S. Brusco, A. Moro, and A. Rustichini). Ancora del Mediterraneo. First edition: 2010. Second edition: 2011.
Crimen e inmigración: cómo entender diferentes pautas. In Efectos Económicos de la Inmigración en España, Marcial Pons y FEDEA, 2009. English version: Immigration and crime: making sense of multiple patterns.
Review of 'Economics and Social Interaction: Accounting for Interpersonal Relations', B, Gui and R. Sugden, eds." Journal of Economics, 88(1), 2006.
Comportamento economico e relazioni sociali. In Teoria Economica e Relazioni Interpersonali, P. Sacco and S. Zamagni eds, Il Mulino, 2006.
Partecipazione con avversione al rischio: [...] sintesi dei modelli di Weitzman e Meade. Rivista di Politica Economica, 91(1), 2001.