ABSTRACT: Cyclical inequality and idiosyncratic risk imply additional channels that amplify the transmission of persistent balance-sheet policies, through their effects on private sector’s expectations and consumption risk. Through these channels, unconventional monetary policy improves the central bank’s ability to anchor expectations and rule out endogenous instability. Moreover, they allow the central bank to optimally complement interest-rate policy in particular in response to financial shocks that expose the economy to the effective-lower-bound on the policy rate, and can promote a swifter exit from the liquidity trap. 

ABSTRACT: Our theoretical analysis investigates the effects of hospital mergers on patient waiting time. We first introduce a model of a publicly funded healthcare market with n competing hospitals and show that mergers can either reduce or raise patient waiting time in view to compensate for the externality exerted by every single hospital. In presence of post-merger hospital synergies, we show that merged hospitals behave more efficiently in terms of waiting times.  We test these predictions on a big dataset of merger waves that occurred in the last decades on the English NHS.

ABSTRACT: The standard way of estimating treatment effects requires the availability of a control group. Without it, the most widespread counterfactual methodologies simply cannot work. We tackle this limitation by presenting the Machine Learning Control Method (MLCM), a new causal inference methodology for aggregate data based on counterfactual forecasting via machine learning. The MLCM is suitable for the estimation of individual, average, and conditional average treatment effects in evaluation settings with a small number of pre-treatment time periods and no control group. The method is formalized within the Rubin’s Potential Outcomes Model and comes with a full set of diagnostic, performance, and placebo tests. To showcase the MLCM, we present an empirical application on the inequality impacts of the COVID-19 crisis in Italy, which reveals a striking heterogeneity in the inequality effects of the pandemic across the Italian local labor markets.

ABSTRACT: Remittances from international migrants represent the most important inflow of funds in low and middle income countries and are of interest in an increasing number of microeconomic analyses. Making use of novel data, we measure misreporting of remittances sent by migrants in the United Arab Emirates (UAE) to remittance recipients in the Philippines. Migrant-reported remittances are only 6% lower than administrative records, and we cannot reject their equality. A custom smartphone app designed for an RCT to test the effect of labeling remittances does not help raise reporting accuracy. Recipient-reported remittances are 23% lower than migrant reports on average. 

ABSTRACT: Losing a job is a stressful life event that is known to have strong effects on individual well-being. The existing literature shows that firm downsizing has externalities for the health not only of the displaced but also of workers who remain in the firm. In this paper, we examine the effect of a mass layoff displacing co-workers of a pregnant mother on her offspring’s birth outcomes. We use matched employer-employee INPS data on the universe of private-sector workers to determine both the firm-level episodes of mass layoffs and the individual gestational outcomes. Furthermore, we link the pregnancies to the fathers' job records, and for the matched birth episodes, we disentangle the role of job insecurity of fathers vs. mothers. We find that firm-level mass job losses have a negative effect on gestational age, and the effect is stronger for episodes occurring in the mothers’ firm.

ABSTRACT: Although recent studies have shown that as a consequence of the COVID19 pandemic, the gender gap in mental health has increased penalizing women, the origins of this gap remain mostly unaddressed. Genetic differences, differences in sharing personal experiences, differences in expectations in life, as well as differences in taking care of your own self, could explain the gap. Relying on an experimental setting, meant to elicit gender stereotypes in the respondents, we address if and to what extent gender norms contribute to explain the propensity to reveal status of mental distress. After running the experiment on a sample representative of the population by age groups and gender, we repeat it in two professional groups with different gender composition: the engineers and the architects. 

ABSTRACT: Recently, a strand of the international trade literature has developed measures of the positioning of countries and industries in GVCs using the global Input-Output tables. These measures allow scholars from different research fields to conduct qualitative and quantitative analyses on GVCs, at the aggregate and sectoral levels, and inform policymaking. To compute these indicators, a common approach is to consider the extent to which a country-industry pair sells its output for final use to consumers worldwide or instead sells intermediate inputs to other producing sectors in the world. Following this approach, we compute and make available to scholars a new dataset of GVC positioning indicators at the country-industry level based on the most used global Input-Output tables (WIOD, OECD, EORA, ADB). Specifically, we compute two popular measures: 1) a measure of distance or upstreamness of a production sector from final demand, which was developed by Fally (2012), Antràs et al. (2012), and Antràs and Chor (2013, 2018); 2) a measure of distance or downstreamness of a given sector from the economy’s primary factors of production (or sources of value-added), originally proposed by Fally (2012). These indicators are “ready-to-use” and can be freely downloaded from here: https://www.tradeconomics.com/position/. We also provide an international comparison, by sectors and countries, of these indicators and their evolution over time. Lastly, we provide an empirical test to illustrate the consistency of these measures with trade theory.

ABSTRACT: The basic proposition is that the formation of a new state can occur through a shift in the boundaries of another state – that is, through internal exit – when certain circumstances about ecology, population density, institutions, and political power concurrently manifest. Together, these exogenous circumstances help to define the rational-choice problem faced, which endogenizes the size of the object being contested, namely people. The more are the people in a state, the larger is the public revenue from which the state can slice off a surplus, i.e. that appropriable rent that is beyond the cost of public good supply. This rent-seeking window leads to two opposite economic forces that put pressure on state scope: the attempt of an existing state to at minimum maintain its population and the attempt of a subset of the state's population to form a new state. We characterize the interplay of these forces through a factually-grounded political economy model of state formation through internal exit that allows the derivation of novel conditions for state boundary determination. The setting is southern Africa, circa 1500-1910, where the record shows that autochthonous states formed by fission. The proposed political economy characterization is counterfactually robust. While the characterization draws inspiration mainly from southern Africa state formation, it may be valuable for other contexts too. For example, it may be applied, mutatis mutandis, to study contemporary societies with separatist movements.

ABSTRACT: We expand a conventional Real Business Cycle (RBC) model  incorporating environmental regulation and heterogeneous firms in order to investigate the interrelationships between firm heterogeneity, environmental policy, and economic uncertainty. Motivated by empirical evidence on investment patterns observed in the EU Emissions Trading System (EU-ETS), we examine the economic implications of the Cap-and-Trade regime on aggregate dynamics when firm-level productivity is heterogeneous, and firms make extensive-margin investment decisions. The findings are as follows: First, the impact of the environmental regulation on macroeconomic volatility is significantly influenced by the source of business-cycle variation. Second, firm heterogeneity has relevant implications for macroeconomic volatility, regardless of the origin of the macroeconomic shock. Finally, the dynamics of the distribution of capital stocks and productivity across productive plants cause the aggregate reaction to the strict environmental policy to be nonlinear, implying a different macroeconomic adjustment than the analogous representative agent counterpart.

ABSTRACT: This paper combines induced innovation and endogenous growth to investigate two issues: the relation between the wage share and labor productivity growth and the potential influence of the saving rate on the steady state wage share. We assume that myopic competitive firms choose the size and direction of technical change to maximize the growth rate of profits. First, we find a condition on the innovation possibility set sufficient to ensure that labor productivity growth is a positive function of the wage share. Second, we show that the steady state wage share depends on the saving rate if, and only if, R&D investment affects the marginal rate of transformation between labor and capital productivity growth. Both results have important policy implications as they clarify under what conditions any factor affecting the wage share or the saving rate will have an impact on labor productivity growth or steady-state income distribution.

ABSTRACT: The transportation sector accounts for 15 percent of global emissions (EPA). Climate change and environmental issues are prominent topics in the world’s public debate, and many pro-environmental movements developed in recent history. We analyze the impact of the Fridays for Future (FFF) climate protest movement in Italy on the local market of second-hand automobiles. We leverage data on 10 million automobile transactions that occurred before and after FFF strikes, and we also exploit variation in rainfall on the day of the rallies as an exogenous source of attendance variation. We find that local participation in FFF strikes decreases the level of CO2 per capita, increases the share of consumption of low-emission cars (green choice), and decreases the share of consumption of high-emission cars (brown choice). The effects are mainly driven by the increase in consumption of electric/petrol cars at the expense of diesel ones. Results are stronger for females and we observe some backfiring effects on youth probably due to some barriers to entry in the consumption of green goods, which are generally more expensive. All in all, our results appear relevant for policymakers willing to foster green consumption, locally and nationwide.

ABSTRACT: The regulation of State Aid is crucial for a well-functioning European Union Single Market. However, both non-compliance of Member States and subsidies from abroad can jeopardize the level playing field. This paper uses machine learning algorithms applied to financial statements data to detect the undisclosed and potentially distortive provision of public subsidies. We apply an interpretable tree-based approach that reaches a high out-of-sample predictive performance and use its predictions to flag suspect cases, defined as firms not reporting public subsidies in a given year but predicted as having received such subsidies. We also explore the characteristics of these firms and provide some examples of how to use our ML tool as a screening device preliminary to further investigations.

ABSTRACT: We focus on both the qualitative and quantitative effects of five labor policy instruments (firing tax, hiring subsidies, taxation, unemployment benefits and tax structure) in a search and matching model with endogenous separation. Comparative statics shows that some policy instruments, such as firing tax and hiring subsidies, produce an ambiguous effect on equilibrium unemployment, given that variations in the average duration of unemployment and inflows into unemployment work in opposite directions. This implies that, in order to establish which of the two effects will prevail, a quantitative analysis based on numerical simulation of the model is needed. For numerical simulation purposes, most of the economic literature assumes that the search externalities arising in the theoretical model are internalized by the market and thus play no role in the computational solution: Any labor policy instrument generates a distortion that reduces welfare. By contrast, we evaluate the role of policy when the market solution is inefficient. Following this approach, the policy maker can combine the set of labor policy instruments in order to internalize search externalities and reach the first best solution. The results highlight the crucial role of hiring subsidies and progressive taxation, not only for the achievement of the optimal solution, but also for supporting some forms of passive labor policies, mainly unemployment benefits and employment protection.

ABSTRACT: The paper investigates the link between pro-environment parties and environmental policy outcomes at the municipal level in Italy for the years 2010‐2021. We investigate whether mayors supported by pro-environment parties or civic lists manage to increase the share of recycled waste and spend more on several environmental outcomes, compared to non-pro-environmental mayors. Exploiting close elections in a regression discontinuity framework we detect a sizable and statistically significant increase in the share of recycling rates in municipalities run by a pro-environmental coalition when considering mayors professedly green. However, this impact vanishes when considering less-restrictive definitions of green mayoral candidate. At the same time, there is no evidence that pro-environmental mayors increase the budget for environmental expenditure and waste collection.

ABSTRACT: We study a repeated interaction between the purchaser of an health service and a non-altruistic provider when some aspects of the service are unverifiable or verifi able. We formalize a Pay-for-Performance Relational Contract (P4P-RC) inducing the provider to deliver positive unverifiable quality. With respect to the first best scenario where all quality components are verifiable (then contractible), the P4P-RC induces no distortion on the condition for the optimal price with the only distortions being on the conditions the quality. The incentive of the provider to cheat on the unverifiable (non-contractible) quality makes the purchaser less willing to substitute away unverifiable with verifiable quality. Also, we find that the higher the stability of the interaction between them more the optimal conditions for both price and quanti ties of the P4P-RC converge to the first best. Using political stability as a proxy for a stable interaction, we empirically test the relationship between the level of unverifi able quality and the permanence in charge of the Italian regional governments using regional data from 1996 to 2015. Running a standard OLS approach and controlling for health, socioeconomic, supply and contractual factors, we confirm the predictions of the theoretical model and find that unverifiable quality increases in contexts where regional governments are more stable.