Program for the year 2022-2023
September 27
Mike Tsionas, Montpellier Business School
Title: Convex or Non-Convex? Tests for discrimination
Abstract: Non-convexities abound in practice but convexifications are often used. This results in a loss of accuracy for the approximation and makes feasible some infeasible parts of the production set. In this paper we attempt a formal comparison of convex and non-convex technologies in the light of the data.
October 4
Shekhar Tomar, Indian School of Business
Title: Reshoring and Trade Collapse
Abstract: Can temporary trade disruptions lead to a persistent collapse in trade? Using plant level administrative data, we show that COVID-19 induced shutdown in March 2020 led to a collapse in domestic trade across states in India, which strikingly continues even after the movement restrictions across state borders were lifted. Reshoring explains this phenomenon as plants more dependent on inter-state sales (inputs) shift from inter- to intra-state sales (input-sourcing). The extent of reshoring depends on the product basket at the state level and is captured by a novel measure, Scope for Home Expansion, that combines both demand and supply side constraints. Overall, the reshoring channel accounts for 7.6 percent of the sales growth in the last quarter of 2020.
October 11
Margherita Comola, University Paris Saclay
Title: Experimental Evidence on Multilateral Blind Bargaining (with M. Fafchamps)
Abstract: We conduct a laboratory experiment to study a decentralized market where players engage in multiple simultaneous trading games. We implement different trading protocols which allow players to keep all information private, and revise their bids if they wish so. We show that protocols allowing for bargaining dramatically improve efficiency with respect to the benchmark scenario of a multilateral sealed-bid auction, mainly to the benefit of players (and in particular buyers) rather than the silent auctioneer. This is because participants adopt a gradual bidding-up strategy that favors bargaining environments. Aggregate efficiency nonetheless suffers from the fact that participants raise their bids gradually, buyers bargain harder than sellers, and some players over-bargain to appropriate a larger share of the unknown surplus.
October 18
Arnab Bhattacharjee, Heriot-Watt University
Title: NiReMS: A regional model at household level combining spatial econometrics with dynamic microsimulation (with Adrian Pabst, Tibor Szendrei and Geoffrey Hewings)
November 8
Marc Gurgand, Paris School of Economics
Title: Take-up of Social Benefits: Experimental Evidence from France (with Laura Castell, Clément Imbert, Todor Tochev)
Abstract: We report on two nationwide experiments with job seekers in France. We first show that a meeting with social services to assess eligibility and help with application to social benefits increased new benefit take-up by 31 %. By contrast, an online simulator that gave personalized information on benefit eligibility had no effect on take-up. Marginal treatment effects from the first experiment show that individuals who benefit the most from the meetings are the least likely to attend. Overall, our results suggest that transaction costs deter eligible people from applying to benefits and from accessing government’s assistance to help them apply.
November 15
Simone Bertoli, Université Clermont Auvergne, CERDI
Title: Border Apprehensions and Federal Sentencing of Hispanic Citizens in the United States (with Morgane Laouenan and Jérôme Valette)
Abstract: We provide evidence that Hispanic citizens receive significantly longer sentences than non-Hispanic citizens in the Federal Criminal Justice System when a higher number of illegal aliens are apprehended along the southern border. Apprehensions increase the salience of Hispanic ethnic identity, which is associated with persistent negative stereotypes in the United States, and can deteriorate judges' attitudes towards Hispanic defendants. Our estimated effect is only at play for defendants without a heavy previous criminal record.
November 22
Johannes Boehm, Sciences Po Paris
Title: Growth and the Fragmentation of Production (with Ezra Oberfield)
Abstract: How much do changes in the fragmentation of production contribute to growth? Using detailed plant-level data on the manufacturing sector in India between 1990 and 2014, we study a version of Smithian growth, the link between greater fragmentation of supply chains and productivity. We propose a measure of a plant's vertical span, which corresponds roughly to the number of stages in a supply chain that the plant performs in-house; when plants have smaller vertical spans, production is more fragmented. We find that fragmentation increases with development in both the cross-section and time series. Further, within locations at a point in time, larger plants tend to have smaller vertical spans, and those that increase sales tend to decrease vertical span. Using changes in demand during the tariff liberalization in the 1990s, we provide evidence that increased demand causes specialization. We find evidence from economies of scale in specialization. We construct a general equilibrium model to rationalize these findings and estimate the sources and magnitude of scale economies. Goods are produced in a succession of steps, each combining labor and a set of intermediate inputs, giving rise to a tree-like structure. Firms exert effort to find suppliers for inputs, and choose the set of production stages (and thereby inputs) to produce the output at lowest cost. The structure implies that the returns to searching are more strongly diminishing for inputs that are further upstream. Firms with high productivity draws are therefore more likely to choose to be more vertically specialized.
November 29
Michal Kejak, CERGE-EI (Charles University and the Economics Institute of the Czech Academy of Sciences)
Title: Limited Liability, Asset Price Bubbles and Credit Cycle: The Role of Monetary Policy (with Jakub Mateju)
Abstract: This paper suggests that the dynamics of the non-fundamental component of asset prices are one of the drivers of the credit cycle. The presented model builds on the financial accelerator literature by including a stock market where investors with limited liability trade stocks of productive firms with stochastic productivities. Investors borrow funds from the banking sector and can go bankrupt. Their limited liability induces a moral hazard problem which shifts demand for risk and drives prices of risky assets above their fundamental value. Embedding the contracting problem in a New Keynesian general equilibrium framework, the model shows that expansionary monetary policy induces loose credit conditions and leads to a rise in both the fundamental and non-fundamental components of stock prices. A positive shock to the non-fundamental component triggers a credit cycle: collateral value rises, and lending and default rates decrease. These effects reverse after several quarters, inducing a credit crunch. The credit boom lasts only while stock market growth maintains sufficient momentum. However, monetary policy does not reduce the volatility of inflation and the output gap by reacting to asset prices.
December 6 (ONLINE SEMINAR; the speaker will be on Zoom; a broadcast will be provided in the Salle du conseil)
Jonathan de Quidt, Stockholm University
Title: Implicit Preferences (with Tom Cunningham)
Abstract: We show how simple decisions can, by themselves, reveal two layers of preference. Consider a hiring manager who always chooses a woman over a man with the same qualifications, but always chooses the man if their qualifications differ. Intuitively, these intransitive choices reveal an explicit preference for women, but an implicit preference for men. More generally, we define an implicit preference for an attribute as one whose influence increases the more the attribute is mixed with other attributes (“dilution”). We show that implicit preferences arise under a diverse set of psychological foundations: rule-based decision-making, signaling motives, and implicit associations. We prove a representation theorem for the model and show how implicit preferences can be identified from binary choices or from joint evaluation data. We apply the model to two published datasets, finding evidence for implicit risk preferences, implicit selfishness, and implicit discrimination.
January 17
Pierre-Philippe Combes, Sciences Po Paris
Title: "Measuring land use changes by (machine) learning from historical maps" and "The emergence, growth, and stagnation of cities: France c. 1760-2020" (with G. Duranton, L. Gobillon and C. Gorin)
Abstract: The two papers study the evolution of urbanization in France over 250 years using information extracted from historical maps.
The first paper uses machine learning technics to extract land use information from historical military maps of the whole France around 1860. A detailed 4-meter x 4-meter gridded data set is produced for entire country. Land uses are obtained from Random Forest algorithms, first applied to the 4-meter by 4-meter pixels of the raw maps to extract built-up. The classification of other land uses (forests, crops, pastures, vineyards, water) is based on a Quickshift aggregation of the raw information into superpixels to which a second set of Random Forest algorithms is applied. The accuracy of the classification is very high. A matrix of land-use changes over 1860-2020 is produced.
The second paper uses both built-up and population information on a 200-meter x 200-meter grid to delineate cities at four points in time, 1760, 1860, 1960 and 2015. We describe the process of urbanization in France over 250 years. In particular, we document the increasing urban share for population and land and the evolution of cities, those that lose urban status, those that emerge, and those that remain. We also describe the evolution of urban concentration, both within- and between-city. Over time, population concentrates in much fewer but larger cities and the population size concentration among surviving cities increases. Within-city population and building density gradients from centre to periphery are shown to decline over time.
January 24
Johannes Abeler, University of Oxford
Title: The effect of childhood social environment on adults’ preferences (with Toke Fosgaard and Lars Hansen)
Abstract: Preferences are key for shaping decision-making, yet it remains an open question where preferences originate from. We investigate the causal effect of childhood social environment on adults’ preferences. We utilize a natural experiment in Denmark, which randomized refugees to different neighbourhoods in the 1990s. We experimentally measure risk, time and social preferences of adult refugees who were children at the time of arrival in Denmark. Using rich administrative register data on the entire Danish population, we can identify their childhood peers and follow their life paths until today. We find that the randomly allocated childhood environment significantly affects adults’ preferences.
January 31
John Morrow, King's College London
Title: Technological Distance: Grow Up or Grow Out?
Abstact: Using multiproduct sales patterns and transitive production relationships across firms, we recover a continuous measure of distance between every pair of products and firms to uncover disjoint firm-product clusters. Within clusters, products closest to a firm are the most likely to be adopted and firms closer to potential new products grow and increase their scope faster. In higher sales clusters firms grow up with higher sales and less scope; in higher entrant clusters, firms grow out with lower sales and more scope. Firms with close competitors grow up more slowly but grow out more quickly, and are more likely to merge with these same competitors. Each extra rank of product distance decreases the frequency of adoption by one per cent relative to the base rate and one third of product adoptions are in the Top 10 closest products.
February 7 (ONLINE SEMINAR)
Stefanie Stantcheva, Harvard University
Title: Wealth and Property Taxation in the United States (joint work with Sacha Dray and Camille Landais)
Abstract: We study the history and geography of wealth accumulation in the US, using newly collected historical property tax records since the early 1800s. The property tax in the US was a comprehensive tax on all kinds of properties (real estate, personal property, and financial wealth), making it one of the first “wealth taxes.” Drawing on a multitude of historical records, we construct wealth series at the city, county, and state levels over time offering a consistent, high-frequency, and long-term database of wealth in the US. We first document the long-term evolution of household wealth in the US since the early 1800s, showing that the US experience an extraordinary spur of wealth accumulation after the Civil war and until the Great Depression. Before the Civil war, enslaved people were assessed as personal property of the enslavers, which is both morally abhorrent and implies wrongly counting forced labor income flows as capital. The regional distribution of wealth and the effects of the Civil war look very different if we do not count enslaved people as property. Second, we study the spatial inequality in the US over the long run. The initial distribution of property and subsequent growth over 60 years are strongly correlated with geographic, economic, and demographic factors. In particular, wealth inequality has a robust negative correlation with growth in property over the long run. Finally, we study the role of public policy, specifically the property tax (i.e., a “wealth tax”) on local capital accumulation, using the large and long variation in property tax rates across more than 300 municipalities. We find significant elasticities on the intensive and extensive (migration) margins, as well as evidence for tax competition between cities.
February 28
Giordano Mion, ESSEC Business School
Title: Dream Jobs in a Globalized Economy: Wage Dynamics and International Experience
Abstract: We provide both a theoretical framework and a number of empirical results highlighting how jobs in internationally active firms differ from those in domestic firms in terms of their impact on a worker's lifetime wage income profile through wage jumps occurring upon changing job (`static effects') or through increases in the wage growth rate (`dynamic effects'). First, in internationally active firms the experience-wage profile is much steeper than in other firms, especially for managers as opposed to blue-collar workers. Second, the higher lifetime wage income for managers in internationally active firms relies on the stronger accumulation of experience that these firms allow for and on the (almost) perfect portability of the accumulated dynamic wage gains to other firms. Static effects are instead much more important for blue-collar workers. Finally, the distinction between jobs in internationally active and domestic firms is relevant also at a more aggregate level to explain cross-sectional differences in wages among workers and spatial differences in average wages across regions within a country.
March 7 (ONLINE SEMINAR)
Thierry Verdier, Paris School of Economics
Title: Culture, Institutions & the Long Divergence (joint work with Alberto Bisin, Jared Rubin and Avner Seror)
Abstract: During the medieval and early modern periods the Middle East lost its economic advantage relative to the West. Recent explanations of this historical phenomenon—called the Long Divergence—focus on these regions’ distinct political economy choices regarding religious legitimacy and limited governance. We study these features in a political economy model of the interactions between rulers, secular and clerical elites, and civil society. The model induces a joint evolution of culture and political institutions converging to one of two distinct stationary states: a religious and a secular regime. We then map qualitatively parameters and initial conditions characterizing the West and the Middle East into the implied model dynamics to show that they are consistent with the Long Divergence as well as with several key stylized political and economic facts. Most notably, this mapping suggests non-monotonic political economy dynamics in both regions, in terms of legitimacy and limited governance, which indeed characterize their history.
March 14
Pierre Dubois, Toulouse School of Economics
Title: Bargaining and International Reference Pricing in the Pharmaceutical Industry (joint work with Ashvin Gandhi and Shoshana Vasserman)
Abstract: The United States spends twice as much per person on pharmaceuticals as European countries, in large part because prices are much higher in the US. This fact has led policymakers to consider legislation for price controls. This paper assesses the effects of a US international reference pricing policy that would cap prices in US markets by those offered in reference countries. We estimate a structural model of demand and supply for pharmaceuticals in the US and reference countries like Canada where prices are set through a negotiation process between pharmaceutical companies and the government. We then simulate the counterfactual equilibrium under such international reference pricing rules, allowing firms to internalize the cross-country externalities introduced by these policies. We find that in general, these policies would result in much smaller price decreases in the US than price increases in reference countries. The magnitude of these effects depends on the number, size and market structure of references countries. We compare these policies with a direct bargaining on prices in the US.
March 21
Gabrielle Fack, PSL-Université Paris Dauphine
Title: How do Students Respond to Partial Information on Graduation Chances? Evidence from University Admissions in France (joint work with Julien Grenet, Yinghua He and Marion Monnet)
Abstract: This paper tests if and how students react to partial information provision in France’s centralized university admissions. We exploit the Orientation Active policy, which provides applicants to some non-selective programs with a negative, positive, or mixed assessment of their program-specific graduation chance, based on the students’ past academic performance and the programs’ cutoffs. We use these cutoffs to develop a regression discontinuity design to examine testable predictions derived from a theoretical model. Our results reject the hypothesis that students have full information about their graduation chances at all programs, as they change their application behavior and/or enrollment decision upon receiving a positive or negative assessment. These behavioral responses, however, do not lead to improved student outcomes in the first two years of higher education. In explaining these results, we present evidence consistent with the hypothesis that upon receiving information from a specific program, students fail to fully consider the correlation between graduation chances across all programs. Taken together, our findings uncover the potential pitfalls of partial information provision. We discuss implications for the design of information interventions in education settings.
March 28 (ONLINE SEMINAR)
Marc Fleurbaey, Paris School of Economics
Title: Efficiency and equity in a socially-embedded economy (joint work with Ravi Kanbur and Dennis Snower)
Abstract: A model that only focuses on economic relations, and in which efficiency and equity are defined in terms of resource allocation may miss an important part of the picture. We propose a canonical extension of the standard general equilibrium model that embeds economic activities in a larger game of social interactions. Such a model combines general equilibrium effects with social multiplier effects and considerably enriches the analysis of efficiency and equity. Efficiency involves coordination between economic and social interactions, may depend on social norms, and may strongly interact with the distribution of resources. Equity can be defined in a comprehensive, socioeconomic way, and a decomposition into an economic and a social component is possible.
April 4
Eric Bonsang, Université Paris Dauphine-PSL
Title: Inherited Gender Norms and Cognitive Functioning in Later Life: An Analysis of Second-Generation Immigrants (joint with Adèle Lemoine)
Abstract: This paper investigates the impact of gender norms on the gender gap in cognitive functioning among older individuals. We utilize data from the Survey of Health, Ageing and Retirement in Europe (SHARE) and measures of gender norms from the World Value Survey (WVS) and the European Values Study (EVS) to examine the gender difference in cognitive functioning of second-generation immigrants in relation to the gender norms of their parents' country of birth. Our results indicate that more conservative gender norms in the parents' country of birth are associated with a decrease in cognitive test scores for women compared to men. We also find that these differences in cognitive functioning may have implications for the limitations with instrumental activities of daily living.
April 11 (ONLINE SEMINAR)
Ghazala Azmat, Sciences Po Paris
Title: Socio-Emotional Development during Adolescence: Evidence from a Large Macro Shock (joint with Katja Kaufmann and Yasemin Ozdemir)
Abstract: We exploit a large exogenous shock to study socioemotional development (SED) during adolescence and the consequences on long-term behavior and labor market outlook. Using novel, longitudinal, microdata on cohorts of East German adolescents before and after a large macro shock (the German Reunification), we causally estimate the impact on SED, finding substantial negative effects in the short run. These effects are substantially larger among those affected by the shock in their early adolescence (13-14 years old), relative to older adolescence (16-17 years old). Changes in socio-emotional skills have a lasting (negative) impact on them as adults, especially among those affected early in their adolescence, in terms of their expressions of externalizing behavior (i.e., anger related issues) and behavioral control problems (i.e., substance abuse), as well as internalizing behavior (i.e., mental health) and in their (labor-market) optimism and expectations.