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Friday, April 8, 2016

Work in progress

Does Employment Protection Raise Stress? A Cross-Country and Cross-Province Analysis

Nicolas Lepage-Saucier & Etienne Wasmer

Journal of Human Capital, Spring 2016, Pages 33-66

Abstract:
This paper investigates the effects of employment protection legislation (EPL) on workers' stress and well-being. EPL increases job security, but it may also have adverse effects on workers, even in partial equilibrium: costly separations may induce firms to exert pressure on workers or raise the intensity of monitoring. Using several individual surveys, we obtain positive and significant effects of EPL on stress in high-turnover sectors relative to low-turnover sectors, with causal interpretation. As to the net effect of EPL, it raises workers' stress in high-turnover sectors while it generally reduces it in lower-turnover sectors.

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'No More Credit Score': Employer Credit Check Bans and Signal Substitution

Daniel Shoag & Robert Clifford

Harvard Working Paper, February 2016

Abstract:
In the past decade, most states have banned or have considered banning the use of credit checks in hiring decisions, a screening tool that is widely used by employers. Using new Equifax data on employer credit checks, the Federal Reserve Bank of New York Consumer Credit Panel/Equifax, and the LEHD Origin-Destination Employment data, we show that these bans increased employment of residents in the lowest credit score areas. The largest gains occurred in higher-paying jobs and in the government-sector. At the same time, using a large database of job postings, we show that employers increased their demands for other signals of applicants' job performance, like education and experience. On net, the changes induced by these bans generate relatively worse outcomes for those with mid-to-low credit scores, for those under 22 years old, and for Blacks, groups commonly thought to benefit from such legislation.

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The State of American Entrepreneurship: New Estimates of the Quantity and Quality of Entrepreneurship for 15 US States, 1988-2014

Jorge Guzman & Scott Stern

NBER Working Paper, March 2016

Abstract:
While official measures of business dynamism have seen a long-term decline, early-stage venture financing of new companies has reached levels not observed since the late 1990s, resulting in a sharp debate about the state of American entrepreneurship. Building on Guzman and Stern (2015a; 2015b), this paper offers new evidence to inform this debate by estimating measures of entrepreneurial quality based on predictive analytics and comprehensive business registries. Our estimates suggest that the probability of a significant growth outcome (either an IPO or high-value acquisition) is highly skewed and predicted by observables at or near the time of business registration: 69% of realized growth events are in the top 5% of our estimated growth distribution. This high level of skewness motivates the development of three new economic statistics that simultaneously account for both the quantity as well as the quality of entrepreneurship: the Entrepreneurial Quality Index (EQI, measuring the average quality level among a group of start-ups within a given cohort), the Regional Entrepreneurship Cohort Potential Index (RECPI, measuring the growth potential of firms founded within a given region and time period) and the Regional Entrepreneurship Acceleration Index (REAI, measuring the performance of a region over time in realizing the potential of firms founded there). We use these statistics to establish several new findings about the history and state of US entrepreneurship using data for 15 states (covering 51% of the overall US economy) from 1988 through 2014. First, in contrast the secular decline in the aggregate quantity of entrepreneurship observed in series such as the Business Dynamic Statistics (BDS), the growth potential of start-up companies (RECPI relative to GDP) has followed a cyclical pattern that seems sensitive to the capital market environment and overall economic conditions. Second, while the peak value of RECPI is recorded in 2000, the level during the first decade during this century was actually higher than the late 1980s and first half of the 1990s, and also has experienced a sharp upward swing beginning in 2010. Even after controlling for changes in the overall size of the economy, the second highest level of entrepreneurial growth potential is registered in 2014. Third, the likelihood of start-up firms for a given quality level to realize their potential (REAI) declined sharply in the late 1990s, and did not recover through 2008. These findings suggest that divergent assessments of the state of American entrepreneurship can potentially be reconciled by explicitly adopting a quantitative approach to the measurement of entrepreneurial quality.

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When Is a Good Time to Raise the Minimum Wage?

Samuel Lundstrom

Contemporary Economic Policy, forthcoming

Abstract:
I analyze changes in the target efficiency of the federal minimum wage over the past 25 years. Using static simulation methods I find that minimum wage target efficiency is currently close to its 25-year peak - of the total monetary benefits generated by a 12% increase in the federal minimum wage, 16.8% would flow to workers in poverty. This exceeds the least target efficient year over this period by 4.7 percentage points and is only 0.6 percentage points below the peak. Furthermore, I find a very strong positive relationship between minimum wage target efficiency and the real federal minimum wage. The implication is that, from an efficiency standpoint, a good time to raise the minimum wage is when it is already high. This discovery raises the possibility that the minimum wage increases the employment of low-skilled poor individuals relative to the employment of low-skilled non-poor individuals. Moreover, this discovery may bolster the rationale for an indexed minimum wage whereby it is prevented from falling to less efficient levels.

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Promises Unfulfilled: Right-to-Work's Early Economic Track Record in Indiana

Frank Manzo

Labor Studies Journal, December 2015, Pages 379-395

Abstract:
This article examines the early economic track record of Indiana's "right-to-work" (RTW) law on labor market outcomes. It analyzes various labor market metrics to compare the experience in Indiana relative to nine neighboring states, as well as to the United States in the aggregate. Data are analyzed both 36 months before and 36 months after Indiana passed RTW. Initial "difference-in-difference" estimates find that the labor market performance of Indiana has not surpassed that of neighboring states following passage of the law, contrary to the claims promised by its proponents. Wage and employment growth in Indiana's construction industry, in particular, has fallen significantly behind the rest of the region. Regression analyses are subsequently performed, which conclude that RTW's unique effect has been to lower hourly wages in the state economy by 1.1 to 1.5 percent on average and have little to no impact on employment. The combination of effects results in state income tax revenues that are annually $16 to $52 million lower than they would be in the absence of the RTW policy.

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Family Background And Contemporary Changes In Young Adults' School-Work Transitions And Family Formation In The United States

Chelsea Smith, Robert Crosnoe & Shih-Yi Chao

Research in Social Stratification and Mobility, forthcoming

Abstract:
The oft-discussed lengthening of the transition into adulthood is unlikely uniform across diverse segments of the population. This study followed youth in the National Longitudinal Survey of Youth 1979 and 1997 cohorts (n = 12,686 and 8,984, respectively) from 16 to 32 years old to investigate this trend in the United States, examining cross-cohort changes in transitions with a focus on differences by family background. Logistic regressions revealed that young adults in the most recent cohort were less likely to have completed schooling, fully entered the labor force, married, or become parents by their 30s than those in the older cohort. The cross-cohort drop in young adults completing schooling was more pronounced among youth from more disadvantaged family backgrounds, the drop in entering the labor force and having children was more pronounced among those from more advantaged backgrounds, and the drop in marriage did not differ by family background.

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The Shifting Job Tenure Distribution

Henry Hyatt & James Spletzer

U.S. Census Bureau Working Paper, February 2016

Abstract:
There has been a shift in the U.S. job tenure distribution toward longer-duration jobs since 2000. This change is apparent both in the tenure supplements to the Current Population Survey and the Longitudinal Employer-Household Dynamics matched employer-employee data. A substantial portion of these changes are caused by the ageing of the workforce and the decline in the entry rate of new employer businesses. We show that the tenure distribution is a function of historical hiring rates and tenure-specific separation rates, and we use this framework to show that the shift in the tenure distribution is accounted for primarily by declines in the hiring rate, which are concentrated in the labor market downturns associated with the 2001 and 2007-2009 recessions. We also find that the increase in average real earnings since 2007 is less than what would be predicted by the shift toward longer-tenure jobs; this reflects declines in tenure-held-constant real earnings. Regression estimates of the returns to job tenure provide no evidence that the shift in the job tenure distribution is being driven by better matches between workers and employers.

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The Employment Impact of Motor Vehicle Assembly Plant Openings

Brian Adams

Regional Science and Urban Economics, May 2016, Pages 57-70

Abstract:
Local governments often offer motor vehicle assembly plants large subsidies to locate in their jurisdiction. A frequent justification is that an assembly plant will attract upstream parts suppliers to locate nearby and provide manufacturing jobs. Using propensity score matching, I find that an assembly plant brings an average of 500 additional parts suppliers jobs beyond the employment gains the region would have experienced without the assembly plant. This increase is far less than predicted by the input-output models that state development agencies often employ.

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Government Old-Age Support and Labor Supply: Evidence from the Old Age Assistance Program

Daniel Fetter & Lee Lockwood

NBER Working Paper, March 2016

Abstract:
Many major government programs transfer resources to older people and implicitly or explicitly tax their labor. In this paper, we shed new light on the labor supply effects of such programs by investigating the Old Age Assistance Program (OAA), a means-tested and state-administered pension program created by the Social Security Act of 1935. Using newly available Census data on the entire US population in 1940, we exploit the large differences in OAA programs across states to estimate the labor supply effects of OAA. Our estimates imply that OAA reduced the labor force participation rate among men aged 65-74 by 5.7 percentage points, nearly half of its 1930-40 decline. Estimating a structural model of labor supply, we find that the welfare costs to recipients of the high tax rates implicit in OAA's earnings test were quite small. Predictions based on our reduced-form estimates and our estimated model both suggest that Social Security could account for at least half of the large decline in late-life work from 1940 to 1960.

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Local Labor Market Conditions and the Federal Disability Insurance Program: New Evidence from the Bakken Oil Boom

Mallory Vachon

LSU Working Paper, May 2015

Abstract:
The Social Security Disability Insurance (DI) program is the largest income replacement program in the United States for non-elderly adults. Growth in the DI program since the 1970s coincided with a well-documented decline in wages and labor force participation of low-skilled workers. Since DI is more attractive as outside options decline, a key question in labor and public economics is the extent to which secular changes in the labor market have led to increases in DI program participation. In this paper, I exploit an exogenous positive labor demand shock caused by a boom in oil production in the Bakken formation covering parts of Montana, North Dakota, and South Dakota to estimate the impact of earnings growth on DI payments and participation. Using the value of county oil reserves as an instrument for earnings, my estimates suggest a strong negative relationship between local economic conditions and DI payments and participation. I find an elasticity of DI payments with respect to local earnings of -1 and an elasticity of DI participation with respect to earnings of -0.7.

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Penalized or Protected? Gender and the Consequences of Nonstandard and Mismatched Employment Histories

David Pedulla

American Sociological Review, April 2016, Pages 262-289

Abstract:
Millions of workers are employed in positions that deviate from the full-time, standard employment relationship or work in jobs that are mismatched with their skills, education, or experience. Yet, little is known about how employers evaluate workers who have experienced these employment arrangements, limiting our knowledge about how part-time work, temporary agency employment, and skills underutilization affect workers' labor market opportunities. Drawing on original field and survey experiment data, I examine three questions: (1) What are the consequences of having a nonstandard or mismatched employment history for workers' labor market opportunities? (2) Are the effects of nonstandard or mismatched employment histories different for men and women? and (3) What are the mechanisms linking nonstandard or mismatched employment histories to labor market outcomes? The field experiment shows that skills underutilization is as scarring for workers as a year of unemployment, but that there are limited penalties for workers with histories of temporary agency employment. Additionally, although men are penalized for part-time employment histories, women face no penalty for part-time work. The survey experiment reveals that employers' perceptions of workers' competence and commitment mediate these effects. These findings shed light on the consequences of changing employment relations for the distribution of labor market opportunities in the "new economy."

By KEVIN LEWIS | 09:00:00 AM

Thursday, April 7, 2016

Her chance

The Effect on Lawyers Income of Gender Information Contained in First Names

Bentley Coffey & Patrick McLaughlin

Review of Law & Economics, forthcoming

Abstract:
We test the Portia Hypothesis – that a more masculine name improves a woman’s legal career – using primary data that we collected so that we can control for an arguably important, but previously omitted, confounding factor: the woman’s parents. In theory, a correlation between nominal masculinity and success may be due to a common cause: parents’ ability to advance their children’s career prospects and the more able parents having an irrelevant preference for masculine names. We control for the family’s wealth by using their child’s educational debt at the time of graduating from law school and for the family’s reputation, within the legal profession, by using the probability of being a lawyer conditional upon their last name. We find robust evidence that a more masculine name improves a woman’s earnings as a lawyer, even when we control for her parents’ wealth and reputation.

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Desirable but not smart: Preference for smarter romantic partners impairs women's STEM outcomes

Lora Park et al.

Journal of Applied Social Psychology, March 2016, Pages 158–179

Abstract:
Although women today excel in many areas of society, they are often underrepresented in the traditionally male-dominated fields of Science, Technology, Engineering, and Math (STEM). The present research examined whether traditional romantic partner preferences — specifically, a desire to date partners who are smarter than oneself — affects women's tendency to minimize their intelligence in STEM fields when pursuing romantic goals. Women (but not men) who preferred smarter romantic partners showed worse math performance (Studies 1–2), less identification with math (Study 2), and less interest in STEM careers (Study 3) when the goal to be romantically desirable was activated. A meta-analysis across studies supported results. This research thus demonstrates that partner preferences influence women's STEM outcomes in response to romantic goal pursuit.

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The Performance of Female Hedge Fund Managers

Rajesh Aggarwal & Nicole Boyson

Review of Financial Economics, forthcoming

Abstract:
Using data for the period 1994-2013, we examine the return and risk-taking behavior of hedge funds having at least one female portfolio manager and funds that have all female portfolio managers. Funds with all female managers perform no differently than all male-managed funds and have similar risk profiles. For single style funds, those with mixed teams of both genders underperform male-only funds on both a raw and risk-adjusted basis, although mixed funds incur less risk and their Sharpe ratios do not differ. For funds of funds, both all-female and mixed funds have similar performance to male-managed funds. We then consider the failure rate across all fund styles. Funds with at least one female manager fail at higher rates, driven by difficulty in raising capital – these funds are smaller and are less likely to be closed to new investment. Surviving funds with at least one female manager have better performance than male-managed surviving funds, consistent with the idea that female managers need to perform better for their funds to survive. Yet, female-managed surviving funds have fewer assets under management than surviving male-managed funds. Using media mentions as a proxy for investor interest, female-managed funds receive proportionately less attention. Our results suggest that there are no inherent differences in skill between female and male managers, but that only the best performing female managers manage to survive.

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Why and When Does the Gender Gap Reverse? Diversity Goals and the Pay Premium for High Potential Women

Lisa Leslie, Colleen Manchester & Patricia Dahm

Academy of Management Journal, forthcoming

Abstract:
Abundant research documents a gender pay gap; women earn less than men, all else being equal. Against the backdrop of an overall female penalty, we propose that the widespread adoption of diversity goals in organizations creates a female premium for certain women. We integrate the economic principle of supply and demand with theory from the field of strategic human resource management and theorize that individuals perceive high potential women — who have the abilities needed to reach the upper echelons of organizations, where women remain underrepresented — as more valuable for achieving organizational diversity goals than high potential men and, in turn, reward them with higher pay. Two field studies (Studies 1 & 3) and two laboratory experiments (Studies 2 & 4) reveal a female premium that is unique to high potential women (Studies 1 & 2), driven by perceptions that high potential women have more diversity value than high potential men (Studies 2 & 4), and larger in contexts where diversity goals are stronger (Studies 3 & 4). Our theory and findings challenge the assumption that the gender pay gap uniformly disadvantages women and offer new insight into why and when the female penalty reverses and becomes a female premium.

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CEO gender, corporate risk-taking, and the efficiency of capital allocation

Mara Faccio, Maria-Teresa Marchica & Roberto Mura

Journal of Corporate Finance, forthcoming

Abstract:
We extend the literature on how managerial traits relate to corporate choices by documenting that firms run by female CEOs have lower leverage, less volatile earnings, and a higher chance of survival than otherwise similar firms run by male CEOs. Additionally, transitions from male to female CEOs (or vice-versa) are associated with economically and statistically significant reductions (increases) in corporate risk-taking. The results are robust to controlling for the endogenous matching between firms and CEOs using a variety of econometric techniques. We further document that this risk-avoidance behavior appears to lead to distortions in the capital allocation process. These results potentially have important macroeconomic implications for long-term economic growth.

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Equal Opportunity? Gender Gaps in CEO Appointments and Executive Pay

Matti Keloharju, Samuli Knüpfer & Joacim Tåg

Harvard Working Paper, February 2016

Abstract:
This paper uses exceptionally rich data on Swedish corporate executives and their personal characteristics to study gender gaps in CEO appointments and pay. Both gaps are sizeable: 18% for CEO appointments and 27% for pay. At most one-eighth of the gaps can be attributed to observable gender differences in executives’ and their firms’ characteristics. Further tests suggest that unobservable gender differences in characteristics are unlikely to account for the remaining gaps. Instead, our results are consistent with the view that male and female executives sharing equal attributes neither have equal opportunities to reach the top, nor are they equally paid.

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Differences in the Eyes of the Beholders: The Roles of Subjective and Objective Judgments in Sexual Harassment Claims

Katherine Kimble et al.

Law and Human Behavior, forthcoming

Abstract:
In 2 studies, we found support for current sexual harassment jurisprudence. Currently, the courts use a 2-prong test to determine the viability of a sexual harassment claim: that the adverse treatment is sufficiently severe or pervasive to alter conditions of employment based on a protected class from the perspective of the individual complainant (subjective prong) and from the perspective of a reasonable person (objective prong). In Experiment 1, trained male undergraduate research assistants administered sequential objectifying gazes and comments to undergraduate female research participants. We found that the pervasive objectification delivered by multiple men (compared with 1 man) did not elicit more negative emotion or harm the experiencers’ task performance, although it did lead them to make increased judgments of sexual harassment. In Experiment 2, observers (who viewed a recording of an experiencer’s interactions with the male research assistants) and predictors (who read a protocol describing the facts of the interaction) anticipated the female targets would experience negative emotions, show impaired performance, as well as find more evidence in the interaction of sexual harassment. Observers’ judgments mirrored those of the experiencers’ while predictors’ judgments demonstrated affective forecasting errors. Predictors were more likely to anticipate more negative emotion, worse performance, and greater likelihood of sexual harassment. Overall, these studies demonstrate the impact and importance of considering perceptions of sexual harassment from multiple perspectives and viewpoints.

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A burden for the boys: Evidence of stereotype threat in boys' reading performance

Pascal Pansu et al.

Journal of Experimental Social Psychology, July 2016, Pages 26–30

Abstract:
There is ample evidence that Stereotype Threat (ST) contributes to gender differences favoring males on standardized math tests; however, whether ST also contributes to gender differences favoring females in reading remains unanswered. This is surprising as the gender gap in reading is three times bigger than the gender gap in math (OECD, 2014). In this study, we examined whether ST may explain gender differences favoring schoolgirls in reading, assuming that boys are negatively stereotyped in this domain. Eighty students (3rd grade) took a reading test while being assigned to either a threat or a reduced-threat condition (test presented as diagnostic of reading abilities versus as a game, respectively). Boys underperformed girls in the threat condition, whereas they outperformed girls in the reduced-threat condition. Consistent with ST theory, this pattern was obtained only among highly-identified students. These findings offer another explanation for the well-known gender gap favoring girls in reading.

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Does Gender Diversity Promote Nonconformity?

Makan Amini et al.

Management Science, forthcoming

Abstract:
Failure to express minority views may distort the behavior of company boards, committees, juries, and other decision-making bodies. Devising a new experimental procedure to measure such conformity in a judgment task, we compare the degree of conformity in groups with varying gender composition. Overall, our experiments offer little evidence that gender composition affects expression of minority views. A robust finding is that a subject’s lack of ability predicts both a true propensity to accept others’ judgment (informational social influence) and a propensity to agree despite private doubt (normative social influence). Thus, as an antidote to conformity in our experiments, high individual ability seems more effective than group diversity.

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The dwindling Winter Olympic divide between male and female athletes: The NBC broadcast network’s primetime coverage of the 2014 Sochi Olympic Games

Paul MacArthur et al.

Sport in Society, forthcoming

Abstract:
All 63 h of the National Broadcasting Company’s (NBC) scheduled primetime coverage of the 2014 Sochi Winter Olympic broadcast were analyzed revealing significant sex-based trends. Women athletes received 47.7% of the clock-time on the broadcast, more than in any other Winter Olympiad examined, and significantly more than in the previous four Winter Olympic Games. Women received 41.7% of the mentions in the broadcast and comprised 45% of the top-20 most mentioned athletes. Sex-based divergences in dialogues surrounding attributions of success were found, but none were detected for attributions of failure. Sex-based differences were also found in descriptions of personality/physicality. Contextualization is offered related to other intervening factors such as US medal successes by sex, celebrity and salient storylines surrounding American athletes.

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Who You Know in Hollywood: A Network Analysis of Television Writers

Patricia Phalen, Thomas Ksiazek & Jacob Garber

Journal of Broadcasting & Electronic Media, Winter 2016, Pages 160-170

Abstract:
“It’s who you know, not what you know,” is a familiar phrase — often repeated by professionals in Hollywood. The present study focuses on “who knows who” among Hollywood television writers. Using network analysis, this exploratory study identifies the degree of centralization and types of connections found in this elite writers’ network. Results show a great deal of collaboration in the network, and while male writers are more connected overall in Hollywood, women are more likely to be brokers — a structurally advantageous position. The authors provide explanations for collaboration patterns, especially with regard to gender differences in network roles, and propose avenues for further research.

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Aggregate Effects of Gender Gaps in the Labor Market: A Quantitative Estimate

David Cuberes & Marc Teignier

Journal of Human Capital, Spring 2016, Pages 1-32

Abstract:
This paper examines the quantitative effects of gender gaps in entrepreneurship and workforce participation. We simulate an occupational choice model with heterogeneous agents in entrepreneurial ability. Gender gaps in entrepreneurship affect negatively both income and aggregate productivity, since they reduce the entrepreneurs’ average talent. Specifically, the expected income loss from excluding 5 percent of women is 2.5 percent, while the loss is 10 percent if they are all employers. We find that gender gaps cause an average income loss of 15 percent in the OECD, 40 percent of which is due to entrepreneurship gaps. Extending the model to developing countries, we obtain substantially higher losses, with significant variation across regions.

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STEM Stereotypic Attribution Bias Among Women in an Unwelcoming Science Setting

Jennifer LaCosse, Denise Sekaquaptewa & Jill Bennett

Psychology of Women Quarterly, forthcoming

Abstract:
Science, technology, engineering, and math (STEM) stereotypic attribution bias (SSAB) is the tendency to spontaneously generate external attributions for men’s setbacks in STEM fields and to spontaneously make internal attributions for women’s setbacks in STEM fields. Among samples of undergraduate STEM students, STEM settings perceived as unwelcoming to women through self-report (Study 1) and a manipulation (Study 2) were shown to predict SSAB. Among undergraduate women, experiencing the negative treatment of other women in a science setting predicted SSAB, which was negatively correlated with feelings of belonging in STEM (Study 1) and with intentions to continue in STEM after graduation (Studies 1 and 2). Research materials (i.e., data, measures, materials, etc.) used in both studies will be made available upon request to either of first two authors. The results of our studies suggest that those interested in increasing retention of women in STEM majors should develop strategies designed to reduce internal attributions for women’s setbacks among women facing negative STEM environments and cultivate a more positive climate for women in STEM fields.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, April 6, 2016

Emerging

Clans, Guilds, and Markets: Apprenticeship Institutions and Growth in the Pre-Industrial Economy

David de la Croix, Matthias Doepke & Joel Mokyr

NBER Working Paper, March 2016

Abstract:
In the centuries leading up to the Industrial Revolution, Western Europe gradually pulled ahead of other world regions in terms of technological creativity, population growth, and income per capita. We argue that superior institutions for the creation and dissemination of productive knowledge help explain the European advantage. We build a model of technological progress in a pre-industrial economy that emphasizes the person-to-person transmission of tacit knowledge. The young learn as apprentices from the old. Institutions such as the family, the clan, the guild, and the market organize who learns from whom. We argue that medieval European institutions such as guilds, and specific features such as journeymanship, can explain the rise of Europe relative to regions that relied on the transmission of knowledge within extended families or clans.

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Does Lean Improve Labor Standards? Management and Social Performance in the Nike Supply Chain

Greg Distelhorst, Jens Hainmueller & Richard Locke

Management Science, forthcoming

Abstract:
This study tests the hypothesis that lean manufacturing improves the social performance of manufacturers in emerging markets. We analyze an intervention by Nike, Inc., to promote the adoption of lean manufacturing in its apparel supply chain across 11 developing countries. Using difference-in-differences estimates from a panel of more than 300 factories, we find that lean adoption was associated with a 15 percentage point reduction in noncompliance with labor standards that primarily reflect factory wage and work hour practices. However, we find a null effect on factory health and safety standards. This pattern is consistent with a causal mechanism that links lean to improved social performance through changes in labor relations, rather than improved management systems. These findings offer evidence that capability-building interventions may reduce social harm in global supply chains.

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Property rights and economic development: The legacy of Japanese colonial institutions

Dongwoo Yoo & Richard Steckel

Journal of Institutional Economics, forthcoming

Abstract:
Several studies link development to institutions transplanted by European colonizers and here we extend this line of research to Asia. Japan imposed its system of well-defined property rights on some of its Asian colonies. In 1939, Japan began to register private land in its island colonies, an effort that was completed in Palau but interrupted elsewhere by World War II. Within Micronesia, robust economic development followed only in Palau where individual property rights were well defined. We show that well-defined property rights in Korea and Taiwan secured land taxation and enabled farmers to obtain bank loans for irrigation systems. Considering Japanese colonies, we use the presence or absence of a land survey as an instrument to identify the causal impact of new institutions. Our estimates show that property-defining institutions were important for economic development, results that are confirmed when using a similar approach with British Colonies in Asia.

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How Rome Enabled Impersonal Markets

Benito Arruñada

Explorations in Economic History, forthcoming

Abstract:
Impersonal exchange increases trade and specialization opportunities, encouraging economic growth. However it requires the support of sophisticated public institutions. This paper explains how Classical Rome provided such support in the main areas of economic activity by relying on public possession as a titling device, enacting rules to protect innocent acquirers in agency contexts, enabling the extended family to act as a contractual entity, and diluting the enforcement of personal obligations which might collide with impersonal exchange. Focusing on the institutions of impersonal exchange, it reaches a clear positive conclusion on the market-facilitating role of the Roman state because such institutions have unambiguously positive effects on markets. Moreover, being impersonal, these beneficial effects are also widely distributed across society instead of accruing disproportionately to better-connected individuals.

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Diversity and innovation

Bala Ramasamy & Matthew Yeung

Applied Economics Letters, forthcoming

Abstract:
Although the effect of culture on national innovation levels is well-established, previous literature assumes cultural homogeneity within a nation. In this article we analyse two aspects of diversity – ethnic and values – and their impact on national innovation output. We show that ethnic diversity or fractionalization and values diversity are distinct and while the former has a negative effect on innovation, the latter contributes positively. However, countries are bound to have both types of diversity. We find that countries that are ethnically homogenous but diverse in values orientation are the best innovators.

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Explaining Cross-Country Productivity Differences in Retail Trade

David Lagakos

Journal of Political Economy, forthcoming

Abstract:
Many macroeconomists argue that productivity is low in developing countries because of frictions that impede the adoption of modern technologies. I argue that in the retail trade sector, developing countries rationally choose technologies with low measured labor productivity. My theory is that the adoption of modern retail technologies is optimal only when household ownership of complementary durable goods, such as cars, is widespread. Because income is low in the developing world, households own few such durables. The theory implies that policies that increase measured retail productivity do not necessarily increase welfare.

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Trust and delegation: Theory and evidence

Nurullah Gur & Christian Bjørnskov

Journal of Comparative Economics, forthcoming

Abstract:
Social trust is associated with good economic performance, but little is known about the transmission mechanisms connecting trust and performance. We explore the effect of trust on delegation decisions. In a theoretical framework, we note that delegation is a low-cost option when management decisions can be implemented without monitoring. This option is, however, risky and more likely to be profitable in higher-trust environments. In a set of cross-country regressions, we show a strong association between trust and delegation, which is increasing in economic sophistication.

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Precolonial Political Centralization and Contemporary Development in Uganda

Sanghamitra Bandyopadhyay & Elliott Green

Economic Development and Cultural Change, April 2016, Pages 471-508

Abstract:
The role of precolonial history on contemporary development has become an important field of study within development economics. Here we examine the role of precolonial political centralization on contemporary development outcomes with detailed subnational data from Uganda. We use a variety of data sets and obtain two striking results. First, we find that precolonial centralization is highly correlated with modern-day development outcomes such as GDP, asset ownership, and poverty at the subcounty, district, and individual level; additional results using an instrumental variable approach confirm this finding. Second, we find that public goods such as immunization coverage and primary school enrollment, as well as perceptions of local government quality, are not correlated with precolonial centralization. These findings are thus consistent with a correlation between precolonial centralization and private rather than public goods, thereby suggesting the persistence of poverty and wealth from the precolonial period to the present.

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Do Good Institutions Promote Countercyclical Macroeconomic Policies?

César Calderón, Roberto Duncan & Klaus Schmidt-Hebbel

Oxford Bulletin of Economics and Statistics, forthcoming

Abstract:
The literature has argued that developing countries are unable to adopt countercyclical monetary and fiscal policies due to financial imperfections and unfavourable political-economy conditions. Using a world sample of up to 112 industrial and developing countries for 1984–2008, we find that the level of institutional quality plays a key role in countries’ ability and willingness to implement countercyclical macroeconomic policies. Countries with strong (weak) institutions adopt countercyclical (procyclical) macroeconomic policies, reflected in extended monetary policy and fiscal policy rules. The threshold levels of institutional quality at which policies are acyclical are found to be similar for monetary and fiscal policy.

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The changing face of financial development

Panicos Demetriades & Peter Rousseau

Economics Letters, April 2016, Pages 87–90

Abstract:
We provide evidence from a large number of countries which demonstrates the changing nature of the finance-growth nexus. Specifically, we show that financial depth is no longer a significant determinant of long-run growth. Instead we find evidence to suggest that certain financial reforms have sizeable growth effects, which can be positive or negative depending on how well banks are regulated and supervised.

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The Impact of Accession to the European Union on Homicide Rates in Eastern Europe

Sylwia Piatkowska, Steven Messner & Lawrence Raffalovich

European Sociological Review, February 2016, Pages 151-161

Abstract:
The present study builds on previous work by Andresen by examining the effects of entry into the European Union (EU) on the levels of homicide in the 10 Eastern European countries that joined the EU in 2004 and 2007. Andresen’s research has indicated that accession to the EU led to increased levels of violent crime across municipalities in Lithuania over the 2001–2006 period. We go beyond prior work by using pooled cross-sectional time-series data that cover approximately 20 years for these 10 Eastern European nations. The results from fixed-effects regression analyses at the national level are generally consistent with Andresen’s research, indicating that entry into the EU is positively associated with levels of homicide. In addition, we find that economic growth has a negative effect on homicide rates, whereas the divorce rate and income inequality have positive effects on homicide rates. These findings reaffirm for the sample of Eastern European countries results reported for other cross-national samples. However, our analyses also reveal that these structural covariates do not account for the observed relationship between EU entry and homicide rates. We conclude with a discussion of the some of the mechanisms that might be responsible for the EU effect.

By KEVIN LEWIS | 09:00:00 AM

Tuesday, April 5, 2016

Addicting

Marital Histories and Heavy Alcohol Use among Older Adults

Corinne Reczek et al.

Journal of Health and Social Behavior, March 2016, Pages 77-96

Abstract:
We develop a gendered marital biography approach — which emphasizes the accumulating gendered experiences of singlehood, marriage, marital dissolution, and remarriage — to examine the relationship between marital statuses and transitions and heavy alcohol use. We test this approach using individual-level (n = 10,457) and couple-level (n = 2,170) longitudinal data from the Health and Retirement Study, and individual-level (n = 46) and couple-level (n = 42) in-depth interview data. Quantitative results show that marriage, including remarriage, reduces men’s but increases women’s drinking relative to being never married and previously married, whereas divorce increases men’s but decreases women’s drinking, with some variation by age. Our qualitative findings reveal that social control and convergence processes underlie quantitative results. We call attention to how men’s and women’s heavy drinking trajectories stop, start, and change direction as individuals move through their distinctive marital biography.

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Predictors of alcohol consumption on dates and sense of intimacy

Sonia Ip & Bernd Heubeck

Personal Relationships, March 2016, Pages 124–140

Abstract:
The drinking culture in Western societies infiltrates many aspects of life, including early romantic relationships. This study investigated factors that predict drinking on dates and the impact of date drinking on feelings of intimacy. Regression analyses of questionnaire data revealed that expectancies, general drinking tendencies, and partner's drinking as well as their interactions with gender and ethnicity contributed to explaining alcohol consumption on dates. Intimacy was significantly predicted by alcohol usage on dates, but the effects of drinking by self and partner varied by gender. Women's own drinking positively predicted their sense of intimacy, but their partner's drinking was linked to decreased intimacy. Men's reports showed significant effects but in the opposite direction. The Discussion section considers implications for dating and future research.

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The War on Drugs: Estimating the Effect of Prescription Drug Supply-Side Interventions

Angelica Meinhofer

Brown University Working Paper, February 2016

Abstract:
Prescription drug abuse is America’s fastest-growing drug problem, with overdose deaths from opioid pain relievers increasing by 313% from 1999 to 2010. This paper estimates the effect of supply-side interventions on prescription drug availability, abuse, public health, and crime. The study is based in Florida, the epicenter of the prescription drug abuse epidemic in the late-2000s, where physicians prescribing and dispensing oxycodone from pain clinics were the main source of drug diversion. In mid-2010, government officials initiated a sweeping crackdown on Florida’s pain clinic suppliers, reducing the number of pain clinic licenses by 59%. Using novel online and administrative data and exploiting the timing and geographic location of the crackdown, I find that enforced regulation of pharmaceuticals’ legal supply chain can reduce prescription drug abuse substantially and sustainably. Between 2008-12, oxycodone street prices increased by 238% and average supply decreased by 59%. In turn, indicators of oxycodone consumption decreased significantly. There is no evidence of an oxycodone price, supply, or consumption recovery. There is substitution to heroin, but this offsetting effect is small relative to substantial public health gains from decreases in oxycodone deaths and hospitalizations. In addition, there is weak evidence of a decrease in drug arrests and index crimes.

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Does Early Life Exposure to Cigarette Smoke Permanently Harm Childhood Welfare? Evidence from Cigarette Tax Hikes

David Simon

American Economic Journal: Applied Economics, forthcoming

Abstract:
Evidence suggests that excise taxes on tobacco improve fetal health. However, it remains unknown if smoke exposure in early life causes lasting harm to children. I find that in-utero exposure to a dollar increase in the state cigarette tax causes a 10% decrease in sick days from school and a 4.7% decrease in having two or more doctor visits. I present additional evidence for decreases in hospitalizations and asthma. This supports the hypothesis that exposure to cigarette smoke in utero and infancy carries significant medium-term costs, and that excise taxes can lead to lasting intergenerational improvements in wellbeing.

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Assessing the Impact of Twenty Underage Drinking Laws

James Fell et al.

Journal of Studies on Alcohol and Drugs, March 2016, Pages 249–260

Method: We updated the effective dates of the 20 MLDA-21 laws examined in this study and used scores of each law’s strengths and weaknesses. Our structural equation model included the 20 MLDA-21 laws, impaired driving laws, seat belt safety laws, economic strength, driving exposure, beer consumption, and fatal crash ratios of drinking-to-nondrinking drivers under age 21.

Results: Nine MLDA-21 laws were associated with significant decreases in fatal crash ratios of underage drinking drivers: possession of alcohol (-7.7%), purchase of alcohol (-4.2%), use alcohol and lose your license (-7.9%), zero tolerance .02 blood alcohol concentration limit for under-age drivers (-2.9%), age of bartender ≥21 (-4.1%), state responsible beverage service program (-3.8%), fake identification support provisions for retailers (-11.9%), dram shop liability (-2.5%), and social host civil liability (-1.7%). Two laws were associated with significant increases in the fatal crash ratios of underage drinking drivers: prohibition of furnishing alcohol to minors (+7.2%) and registration of beer kegs (+9.6%).

Conclusions: The nine effective MLDA-21 laws are estimated to be currently saving approximately 1,135 lives annually, yet only five states have enacted all nine laws. If all states adopted these nine effective MLDA-21 laws, it is estimated that an additional 210 lives could be saved every year.

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People and places: Relocating to neighborhoods with better economic and social conditions is associated with less risky drug/alcohol network characteristics among African American adults in Atlanta, GA

Sabriya Linton et al.

Drug and Alcohol Dependence, March 2016, Pages 30–41

Methods: This longitudinal study analyzed 7 waves of data (2009–2014) from a predominantly substance-using cohort of 172 African American adults relocated from public housing complexes in Atlanta, GA, to determine whether post-relocation changes in exposure to neighborhood conditions were associated with four network characteristics related to substance use: number of social network members who used illicit drugs or alcohol in excess in the past six months (“drug/alcohol network”), drug/alcohol network stability, and turnover into and out of drug/alcohol networks. Individual- and network-level characteristics were captured via survey and administrative data were used to describe census tracts where participants lived. Multilevel models were used to assess relationships of census tract-level characteristics to network outcomes over time.

Results: On average, participants relocated to census tracts that had less economic disadvantage, social disorder, and renter-occupied housing. Post-relocation reductions in exposure to economic disadvantage were associated with fewer drug/alcohol network members and less turnover into drug/alcohol networks. Post-relocation improvements in exposure to multiple census tract-level social conditions and reductions in perceived community violence were associated with fewer drug/alcohol network members, less turnover into drug/alcohol networks, less drug/alcohol network stability, and more turnover out of drug/alcohol networks.

Conclusion: Relocating to neighborhoods with less economic disadvantage and better social conditions may weaken relationships with substance-using individuals.

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Economic Conditions, Illicit Drug Use, and Substance Use Disorders in the United States

Christopher Carpenter, Chandler McClellan & Daniel Rees

NBER Working Paper, February 2016

Abstract:
We provide the first analysis of the relationship between economic conditions and the use of illicit drugs other than marijuana. Drawing on US data from 2002-2013, we find mixed evidence with regard to the cyclicality of illicit drug use. However, there is strong evidence that economic downturns lead to increases in substance use disorders involving hallucinogens and prescription pain relievers. These effects are robust to a variety of specification choices and are concentrated among prime-age white males with low educational attainment. We conclude that the returns to spending on the treatment of substance use disorders are particularly high during economic downturns.

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Gender balance and its impact on male and female smoking rates in Chinese cities

Tingzhong Yang et al.

Social Science & Medicine, April 2016, Pages 9–17

Objective: Although gender differences in smoking have received much attention, few studies have explored the importance of contextual effects on male and female smoking rates. The aim of this study is to examine the association between variations in city-level sex ratios and gender differences in smoking in China.

Methods: Participants included 16,866 urban residents, who were identified through multi-stage sampling conducted in 21 Chinese cities.

Results: The study found that, independent of personal characteristics, cities with more males had higher male smoking rates and lower female rates.

Conclusions: Our research underscores the importance of city-level contextual effects in understanding gender differences in smoking in China.

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Medicare Letters To Curb Overprescribing Of Controlled Substances Had No Detectable Effect On Providers

Adam Sacarny et al.

Health Affairs, March 2016, Pages 471-479

Abstract:
Inappropriate prescribing is a rising threat to the health of Medicare beneficiaries and a drain on Medicare’s finances. In this study we used a randomized controlled trial approach to evaluate a low-cost, light-touch intervention aimed at reducing the inappropriate provision of Schedule II controlled substances in the Medicare Part D program. Potential overprescribers were sent a letter explaining that their practice patterns were highly unlike those of their peers. Using rich administrative data, we were unable to detect an effect of these letters on prescribing. We describe ongoing efforts to build on this null result with alternative interventions. Learning about the potential of light-touch interventions, both effective and ineffective, will help produce a better toolkit for policy makers to improve the value and safety of health care.

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Addiction History Associates with the Propensity to Form Habits

Theresa McKim, Daniel Bauer & Charlotte Boettiger

Journal of Cognitive Neuroscience, forthcoming

Abstract:
Learned habitual responses to environmental stimuli allow efficient interaction with the environment, freeing cognitive resources for more demanding tasks. However, when the outcome of such actions is no longer a desired goal, established stimulus–response (S-R) associations or habits must be overcome. Among people with substance use disorders (SUDs), difficulty in overcoming habitual responses to stimuli associated with their addiction in favor of new, goal-directed behaviors contributes to relapse. Animal models of habit learning demonstrate that chronic self-administration of drugs of abuse promotes habitual responding beyond the domain of compulsive drug seeking. However, whether a similar propensity toward domain-general habitual responding occurs in humans with SUDs has remained unclear. To address this question, we used a visuomotor S-R learning and relearning task, the Hidden Association between Images Task, which employs abstract visual stimuli and manual responses. This task allows us to measure new S-R association learning and well-learned S-R association execution and includes a response contingency change manipulation to quantify the degree to which responding is habit based, rather than goal directed. We find that people with SUDs learn new S-R associations as well as healthy control participants do. Moreover, people with an SUD history slightly outperform controls in S-R execution. In contrast, people with SUDs are specifically impaired in overcoming well-learned S-R associations; those with SUDs make a significantly greater proportion of perseverative errors during well-learned S-R replacement, indicating the more habitual nature of their responses. Thus, with equivalent training and practice, people with SUDs appear to show enhanced domain-general habit formation.

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Marijuana on Main Street? Estimating Demand in Markets with Limited Access

Liana Jacobi & Michelle Sovinsky

American Economic Review, forthcoming

Abstract:
Marijuana is the most common illicit drug with vocal advocates for legalization. Among other things, legalization would increase access and remove the stigma of illegality. Our model disentangles the role of access from preferences and shows that selection into access is not random. We find that traditional demand estimates are biased resulting in incorrect policy conclusions. If marijuana were legalized those under 30 would see modest increases in use of 28 percent, while on average use would increase by 48 percent (to 19.4 percent). Tax policies are effective at curbing use, where Australia could raise a billion (and the US $12 billion).

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Can a criminal justice alcohol abstention programme with swift, certain, and modest sanctions (24/7 Sobriety) reduce population mortality? A retrospective observational study

Nancy Nicosia, Beau Kilmer & Paul Heaton

Lancet Psychiatry, March 2016, Pages 226–232

Background: In the UK and USA, various jurisdictions have launched new approaches for managing alcohol-involved offenders that might have public health implications. These programmes require participants to abstain from alcohol and submit to frequent alcohol testing with swift, certain, and modest sanctions for violations, with the aim to reduce crime and keep alcohol-involved offenders in the community. In this study we examine whether the 24/7 Sobriety programme in South Dakota, USA—the largest such programme to date—is associated with reductions in mortality.

Methods: With a differences-in-differences design, we used variation in the timing of 24/7 Sobriety implementation across South Dakota counties between 2005 and 2011 to estimate the association between programme introduction and county-level mortality. We used monthly, county-level, aggregate counts for mortality from January, 2000, to June, 2011. We assessed total deaths, and deaths due to external injuries, circulatory disorders, digestive disorders, and cancer (as a potential placebo).

Findings: Between January, 2005, and June, 2011, 16 932 people (about 3% of the adult population) participated in the 24/7 Sobriety programme. The analysis was based on a sample size of 9 108 county-month observations (ie, 66 counties × 12 months × 11•5 years). Implementation of 24/7 Sobriety was associated with a 4•2% (95% CI 1•5–6•9) reduction in all-cause adult mortality, with the largest associations among women (8•0%, 95% CI 3•9–11•8) and individuals older than 40 years (4•3%, 95% CI 1•4–7•0). Associations were most evident among circulatory disorders.

Interpretation: 24/7 Sobriety might have public health benefits, which could extend beyond individuals directly enrolled in the programme. However, further research, including randomised controlled trials and analyses of individual-level data, is needed to corroborate the finding, reassess the size of these associations, and gain insight into causal mechanisms. Should a negative association be replicated, it might represent a substantial advance in our understanding of how criminal justice interventions could help shape public health.

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Older, Less Regulated Medical Marijuana Programs Have Much Greater Enrollment Rates Than Newer ‘Medicalized’ Programs

Arthur Robin Williams et al.

Health Affairs, March 2016, Pages 480-488

Abstract:
Twenty-three states and the District of Columbia have passed laws implementing medical marijuana programs. The nineteen programs that were in operation as of October 2014 collectively had over one million participants. All states (including D.C.) with medical marijuana laws require physicians directly or indirectly to authorize the use of marijuana at their discretion, yet little is known about how medical marijuana programs vary regarding adherence to basic principles of medical practice and associated rates of enrollment. To explore this, we analyzed marijuana programs according to seven components of traditional medical care and pharmaceutical regulation. We then examined enrollment rates, while controlling for potentially confounding state characteristics. We found that fourteen of the twenty-four programs were nonmedical and collectively enrolled 99.4 percent of participants nationwide, with enrollment rates twenty times greater than programs deemed to be “medicalized.” Policy makers implementing or amending medical marijuana programs should consider the powerful relationship between less regulation and greater enrollment. Researchers should consider variations across programs when assessing programs’ population-level effects.

By KEVIN LEWIS | 09:00:00 AM

Monday, April 4, 2016

Comparative advantage

Looking for Local Labor-Market Effects of NAFTA

Shushanik Hakobyan & John McLaren

Review of Economics and Statistics, forthcoming

Abstract:
Using US Census data for 1990-2000, we estimate effects of NAFTA on US wages. We look for effects of the agreement by industry and by geography, measuring each industry's vulnerability to Mexican imports, and each locality's dependence on vulnerable industries. We find evidence of both effects, dramatically lowering wage growth for blue-collar workers in the most affected industries and localities (even for service-sector workers in affected localities, whose jobs do not compete with imports). These distributional effects are much larger than aggregate welfare effects estimated by other authors.

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An empirical analysis of trade-related redistribution and the political viability of free trade

James Lake & Daniel Millimet

Journal of International Economics, March 2016, Pages 156-178

Abstract:
Even if free trade creates net welfare gains for a country as a whole, the associated distributional implications can undermine the political viability of free trade. We show that trade-related redistribution - as presently constituted - modestly increases the political viability of free trade in the US. We do so by assessing the causal effect of expected redistribution associated with the US Trade Adjustment Assistance program on US Congressional voting behavior on eleven Free Trade Agreements (FTAs) between 2003 and 2011. We find that a one standard deviation increase in expected redistribution leads to an average increase in the probability of voting in favor of an FTA of 1.8 percentage points. Although this is a modest impact on average, we find significant heterogeneities; in particular, the effect is larger when a representative's constituents are more at risk or the representative faces greater re-election risk.

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Import Exposure and Human Capital Adjustment: Evidence from the U.S.

Andrew Greenland & John Lopresti

Journal of International Economics, May 2016, Pages 50-60

Abstract:
We exploit variation in exposure to Chinese import competition to identify the effect of trade-induced changes in labor market conditions on human capital accumulation in the U.S. from 1990 to 2007. We document large increases in U.S. high school graduation rates in the labor markets most affected by import competition. After controlling for established predictors of high school completion, demographic shifts, and coincident labor market changes unrelated to trade with China, we estimate that a movement from the 25th to the 75th percentile in Chinese import exposure led to an average increase in the graduation rate of 3.64 percentage points. Consistent with an environment in which students weigh increases in future earnings potential from further education against current labor market opportunities foregone, we find that growth in Chinese imports led to declines in wages for all educational groups, and reductions in employment for individuals without a high school degree both in absolute terms and relative to their more educated peers.

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Accounting for the New Gains from Trade Liberalization

Chang-Tai Hsieh et al.

NBER Working Paper, March 2016

Abstract:
We measure the "new" gains from trade reaped by Canada as a result of the Canada-US Free Trade Agreement (CUSFTA). We think of the "new" gains from trade of a country as all welfare effects pertaining to changes in the set of firms serving that country as emphasized in the so-called "new" trade literature. To this end, we first develop an exact decomposition of the gains from trade which separates "traditional" and "new" gains. We then apply this decomposition using Canadian and US micro data and find that the "new" welfare effects of CUSFTA on Canada were negative.

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Resident Networks and Corporate Connections: Evidence from World War II Internment Camps

Lauren Cohen, Umit Gurun & Christopher Malloy

Journal of Finance, forthcoming

Abstract:
Using customs and port authority data, we show that firms are significantly more likely to trade with countries that have a large resident population near their firm headquarters, and that these connected trades are their most valuable international trades. Using the formation of World War II Japanese internment camps to isolate exogenous shocks to local ethnic populations, we identify a causal link between local networks and firm trade. Firms are also more likely to acquire target firms, and report increased segment sales, in connected countries. Our results point to a surprisingly large role of immigrants as economic conduits for firms.

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Task Trade and the Wage Effects of Import Competition

Abigail Cooke, Thomas Kemney & David Rigby

U.S. Census Bureau Working Paper, January 2016

Abstract:
Do job characteristics modulate the relationship between import competition and the wages of workers who perform those jobs? This paper tests the claim that workers in occupations featuring highly routine tasks will be more vulnerable to low-wage country import competition. Using data from the US Census Bureau, we construct a pooled cross-section (1990, 2000, and 2007) of more than 1.6 million individuals linked to the establishment in which they work. Occupational measures of vulnerability to trade competition - routineness, analytic complexity, and interpersonal interaction on the job - are constructed using O*NET data. The linked employer-employee data allow us to model the effect of low-wage import competition on the wages of workers with different occupational characteristics. Our results show that low-wage country import competition is associated with lower wages for US workers holding jobs that are highly routine and less complex. For workers holding nonroutine and highly complex jobs, increased import competition is associated with higher wages. Finally, workers in occupations with the highest and lowest levels of interpersonal interaction see higher wages, while workers with medium-low levels of interpersonal interaction suffer lower wages with increased low-wage import competition. These findings demonstrate the importance of accounting for occupational characteristics to more fully understand the relationship between trade and wages, and suggest ways in which task trade vulnerable occupations can disadvantage workers even when their jobs remain onshore.

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Can Sports Promote Exports? The Role of Soccer Matches in International Trade

Andreas Hatzigeorgiou

Global Economy Journal, March 2016, Pages 1-32

Abstract:
Sports can help to increase foreign trade and promote global economic integration. Engaging in sports can provide visibility opportunities for countries and may spur the interest of firms as well as consumers in the respective foreign market. Sport could also help to infuse trust into cross-country business relationships. While previous studies have investigated the role of sport events on trade, this study analyzes whether countries can increase trade between them by engaging in sporting activities with each other. We use soccer, being the world's most popular sport, as an example when investigating this potential bilateral sport-trade link. Our empirical strategy builds on the fact that many soccer matches between countries' national teams are the result of a random drawing procedure. Thus, they are a possible source of exogenous variation. Using a gravity model framework, we test the proposed link for approximately 4,800 soccer matches that were played between 209 countries during the period 1995 through 2001. We also analyze the hypothesized underlying impact channel by estimating the impact on trade for goods that are likely to have different elasticity with respect to information and trust friction. The results are indicative of the hypothesis that countries that engage in sporting activities with each other enhance their bilateral trade. These results could have potentially interesting policy implications. Governments may want to consider actively promoting sporting activities together with countries with which they want to enhance their trade.

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Effects of US policy uncertainty on Swedish GDP growth

Pär Stockhammar & Pär Österholm

Empirical Economics, March 2016, Pages 443-462

Abstract:
In this paper, we study the effects of US policy uncertainty - measured as the policy uncertainty index of Baker et al. (Measuring economic policy uncertainty, 2013) - on Swedish GDP growth. Another source of spillovers of shocks to small open economies is thereby examined. We apply both Bayesian VAR models and spectral analysis to quarterly data from 1988 to 2013. Results show that increasing US policy uncertainty has significant negative effects on Swedish GDP growth. The effect seems to primarily stem from effects on investment growth and export growth. Our findings should prove useful to those who analyse and forecast the Swedish economy and potentially also other similar small open economies.

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The Impact of Banking Deregulation on Inbound Foreign Direct Investment: Transaction-Level Evidence from the United States

Ivan Kandilov, Aslı Leblebicioğlu & Neviana Petkova

Journal of International Economics, forthcoming

Abstract:
We evaluate the effects of state-level banking deregulation that resulted in improved access to cheaper local finance on foreign firms investing in the U.S. We provide direct, micro-level evidence from U.S. inbound foreign direct investment transactions showing that interstate banking, but not intrastate branching, deregulation increased the number of transactions, reduced the average transaction value, and boosted overall investment by foreign multinationals. We also show that lower cost of local credit and greater local bank competition in each state, following the interstate banking deregulation, are potential mechanisms that stimulated FDI activity. Finally, we demonstrate that after the adoption of the interstate banking deregulation, both the number and the average value of transactions increased in industries that are more dependent on external finance relative to industries that are less dependent.

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Does Trade Credit Boost Firm Performance?

Dongya Li et al.

Economic Development and Cultural Change, April 2016, Pages 573-602

Abstract:
Some firms have achieved good performance in developing countries where the financial sector is far from established. One explanation in the literature is that these firms benefit from trade credit, a form of informal financing. Using a survey of firms in China conducted by the World Bank in early 2003, this article examines whether trade credit indeed boosts firm performance. Our ordinary least squares results show that trade credit is significantly and positively correlated with firm performance. However, using the instrumental variable approach to address endogeneity, we find that the statistical significance disappears. The results are robust to a series of robustness checks, casting doubt on the claim that trade credit boosts firm performance.

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Preferential Trade Agreements, Income Inequality, and Authoritarian Survival

Eric Chang & Wen-Chin Wu

Political Research Quarterly, forthcoming

Abstract:
This paper investigates the political and economic consequences of signing preferential trade agreements (PTAs) in authoritarian countries. Based on the Heckscher-Ohlin model of international trade and theories of inequality and regime transition, this paper argues that dictators sign PTAs as a means of consolidating their authoritarian rule. Specifically, PTAs help dictators reduce economic inequality by enriching poor laborers and thereby attenuating the threat of regime collapse. We support our theory with the data from seventy-odd authoritarian regimes from 1960 to 2006, and contribute to ongoing debates about the effects of both income inequality and economic globalization on autocratic resilience.

By KEVIN LEWIS | 09:00:00 AM

Sunday, April 3, 2016

Perceptive

Mood migration: How enfacing a smile makes you happier

Ke Ma et al.

Cognition, June 2016, Pages 52–62

Abstract:
People tend to perceive the face of another person more as their own if own and other face are stroked in synchrony — the enfacement illusion. We conceptually replicated the enfacement illusion in a virtual reality environment, in which participants could control the movements of a virtual face by moving and touching their own face. We then used this virtual enfacement illusion to study whether enfacing a virtual face would also involve adopting the emotion that this face is expressing. As predicted, participants adopted the expressed emotion, as indicated by higher valence scores and better performance in a mood-sensitive divergent-thinking task when facing a happy virtual face, if the virtual face moved in synchrony with their own head movements. This suggests that impact on or control over another person’s facial movements invite “mood migration” from the person one identifies with to oneself.

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How pathogen cues shape impressions of foods: The Omnivore’s Dilemma and functionally specialized conditioning

Joshua Tybur et al.

Evolution and Human Behavior, forthcoming

Abstract:
When consumed, meats and plants have presented asymmetric threats to humans and their hominid ancestors for hundreds of thousands of years. Here, we test the hypothesis that human food learning mechanisms are functionally specialized to navigate these asymmetric threats. Specifically, we predict that pathogen cues condition evaluations of meat differently than they condition evaluations of plants. Data across three studies are consistent with this prediction. In each study, participants who first viewed images of meats paired with cues to pathogens subsequently reported less desire eat those meats. In contrast, participants who first viewed plants paired with the same cues to pathogens did not report less desire to eat those plants. Further, a meta-analysis of effects across the three studies (total N = 398) indicated that pairings with cues to pathogens affected both desires to eat meats and anticipated tastes of meats, but not desires to eat plants or anticipated tastes of plants. These findings present novel evidence for functionally specialized, pathogen-based meat learning.

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Attention Alters Perceived Attractiveness

Viola Störmer & George Alvarez

Psychological Science, forthcoming

Abstract:
Can attention alter the impression of a face? Previous studies showed that attention modulates the appearance of lower-level visual features. For instance, attention can make a simple stimulus appear to have higher contrast than it actually does. We tested whether attention can also alter the perception of a higher-order property — namely, facial attractiveness. We asked participants to judge the relative attractiveness of two faces after summoning their attention to one of the faces using a briefly presented visual cue. Across trials, participants judged the attended face to be more attractive than the same face when it was unattended. This effect was not due to decision or response biases, but rather was due to changes in perceptual processing of the faces. These results show that attention alters perceived facial attractiveness, and broadly demonstrate that attention can influence higher-level perception and may affect people’s initial impressions of one another.

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Human Brain Reacts to Transcranial Extraocular Light

Lihua Sun et al.

PLoS ONE, February 2016

Abstract:
Transcranial extraocular light affects the brains of birds and modulates their seasonal changes in physiology and behavior. However, whether the human brain is sensitive to extraocular light is unknown. To test whether extraocular light has any effect on human brain functioning, we measured brain electrophysiology of 18 young healthy subjects using event-related potentials while they performed a visual attention task embedded with emotional distractors. Extraocular light delivered via ear canals abolished normal emotional modulation of attention related brain responses. With no extraocular light delivered, emotional distractors reduced centro-parietal P300 amplitude compared to neutral distractors. This phenomenon disappeared with extraocular light delivery. Extraocular light delivered through the ear canals was shown to penetrate at the base of the scull of a cadaver. Thus, we have shown that extraocular light impacts human brain functioning calling for further research on the mechanisms of action of light on the human brain.

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The drawing effect: Evidence for reliable and robust memory benefits in free recall

Jeffrey Wammes, Melissa Meade & Myra Fernandes

Quarterly Journal of Experimental Psychology, September 2016, Pages 1752-1776

Abstract:
In 7 free-recall experiments, the benefit of creating drawings of to-be-remembered information relative to writing was examined as a mnemonic strategy. In Experiments 1 and 2, participants were presented with a list of words and were asked to either draw or write out each. Drawn words were better recalled than written. Experiments 3–5 showed that the memory boost provided by drawing could not be explained by elaborative encoding (deep level of processing, LoP), visual imagery, or picture superiority, respectively. In Experiment 6, we explored potential limitations of the drawing effect, by reducing encoding time and increasing list length. Drawing, relative to writing, still benefited memory despite these constraints. In Experiment 7, the drawing effect was significant even when encoding trial types were compared in pure lists between participants, inconsistent with a distinctiveness account. Together these experiments indicate that drawing enhances memory relative to writing, across settings, instructions, and alternate encoding strategies, both within- and between-participants, and that a deep LoP, visual imagery, or picture superiority, alone or collectively, are not sufficient to explain the observed effect. We propose that drawing improves memory by encouraging a seamless integration of semantic, visual, and motor aspects of a memory trace.

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As time goes by: Oxytocin influences the subjective perception of time in a social context

Valentina Colonnello, Gregor Domes & Markus Heinrichs

Psychoneuroendocrinology, June 2016, Pages 69–73

Abstract:
Time perception depends on an event’s emotional relevance to the beholder; a subjective time dilation effect is associated with self-relevant, emotionally salient stimuli. Previous studies have revealed that oxytocin modulates the salience of social stimuli and attention to social cues. However, whether the oxytocin system is involved in human subjective time perception is unknown. The aim of the present study was to investigate whether increased oxytocin levels would induce a time dilation effect for self-relevant, positive social cues. In a double-blind, placebo-controlled, between-subject design, heterosexual men self-administered intranasal oxytocin or placebo. After about 50 min, participants completed a time-bisection task in which they estimated lengths of exposure to happy female faces (self-relevant positive stimuli, based on sexual orientation), emotionally neutral and negative female faces (control), and happy, neutral, and negative male faces (control). Oxytocin induced a subjective time dilation effect for happy female faces and a time compression effect for happy male faces. Our results provide evidence that oxytocin influences time perception, a primary form of human subjectivity.

By KEVIN LEWIS | 09:00:00 AM

Saturday, April 2, 2016

Gender roles

Early Postnatal Testosterone Predicts Sex-Related Differences in Early Expressive Vocabulary

Karson Kung et al.

Psychoneuroendocrinology, June 2016, Pages 111-116

Abstract:
During the first few years of life, girls typically have a larger expressive vocabulary than boys. This sex difference is important since a small vocabulary may predict subsequent language difficulties, which are more prevalent in boys than girls. The masculinizing effects of early androgen exposure on neurobehavioral development are well-documented in nonhuman mammals. The present study conducted the first test of whether early postnatal testosterone concentrations influence sex differences in expressive vocabulary in toddlers. It was found that testosterone measured in saliva samples collected at 1 to 3 months of age, i.e., during the period called mini-puberty, negatively predicted parent-report expressive vocabulary size at 18 to 30 months of age in boys and in girls. Testosterone concentrations during mini-puberty also accounted for additional variance in expressive vocabulary after other predictors such as sex, child's age at vocabulary assessment, and paternal education, were taken into account. Furthermore, testosterone concentrations during mini-puberty mediated the sex difference in expressive vocabulary. These results suggest that testosterone during the early postnatal period contributes to early language development and neurobehavioral sexual differentiation in humans.

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Do CEO Activists Make a Difference? Evidence from a Field Experiment

Aaron Chatterji & Michael Toffel

Harvard Working Paper, March 2016

Abstract:
Several CEOs are receiving significant media attention for taking public positions on controversial social and environmental issues largely unrelated to their core business, ranging from gay marriage to climate change to gender equality. We provide the first evidence that such "CEO activism" can influence public opinion and consumer attitudes. Our field experiment examines the impact of Apple CEO Tim Cook's public statements opposing a pending religious freedom law that critics warned would allow discrimination against same-sex couples. Our results confirm the influence of issue framing on public opinion and suggest that CEOs can sway public opinion, and potentially to the same extent as prominent politicians. Moreover, Cook's CEO activism increased consumer intentions to purchase Apple products, especially among proponents of same-sex marriage.

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Cadet and Civilian Undergraduate Attitudes toward Transgender People: A Research Note

Morten Ender, David Rohall & Michael Matthews

Armed Forces & Society, April 2016, Pages 427-435

Abstract:
We explore American military academy, Reserve Officers' Training Corps (ROTC) and civilian undergraduate attitudes toward transgender people in general, in the workplace, and in the military. Earlier this decade, the US military experienced both the repeals of the Don't Ask, Don't Tell policy and the exclusion of women from combat, yet transgender people are prohibited from serving openly in the military. This study explores tolerance toward perceived gender nonconformity by military affiliation, race/ethnicity, sex, religious affiliation, and political leaning. Most members of our sample, regardless of military affiliation, do not report that having a transgender person in the workplace would impact their job. At first glance, military academy and ROTC cadets are least tolerant of transgender people in the military and in society more generally. Further analyses shows that the impact of military affiliation is reduced substantially by controlling for background characteristics, especially political ideology and religious affiliation.

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Femininity and Kin-Directed Altruism in Androphilic Men: A Test of an Evolutionary Developmental Model

Doug VanderLaan, Lanna Petterson & Paul Vasey

Archives of Sexual Behavior, April 2016, Pages 619-633

Abstract:
Androphilia refers to sexual attraction and arousal toward males whereas gynephilia refers to sexual attraction and arousal toward females. This study tested the adaptive feminine phenotype model of the evolution of male androphilia via kin selection, which posits that the development of an evolved disposition toward elevated kin-directed altruism among androphilic males is contingent on the behavioral expression of femininity. Gynephilic men, androphilic women, and androphilic men (N = 387) completed measures of childhood and adulthood gender expression and concern for kin's well-being. Adulthood femininity correlated positively with uncle/aunt-like tendencies among androphilic men and women. Although androphilic women reported greater willingness to invest in nieces and nephews than gynephilic and androphilic men, mediation analyses indicated that adult femininity completely mediated these group differences. In addition, changes in the expression of femininity between childhood and adulthood were associated with parallel changes in concern for the well-being of kin among androphilic men. Thus, these findings suggest that femininity is key to the expression of kin-directed altruism among androphilic males and may have been important in the evolution of male androphilia.

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Testosterone reduces functional connectivity during the 'Reading the Mind in the Eyes' Test

Peter Bos et al.

Psychoneuroendocrinology, June 2016, Pages 194-201

Abstract:
Women on average outperform men in cognitive-empathic abilities, such as the capacity to infer motives from the bodily cues of others, which is vital for effective social interaction. The steroid hormone testosterone is thought to play a role in this sexual dimorphism. Strikingly, a previous study shows that a single administration of testosterone in women impairs performance on the 'Reading the Mind in Eyes' Test (RMET), a task in which emotions have to be inferred from the eye-region of a face. This effect was mediated by the 2D:4D ratio, the ratio between the length of the index and ring finger, a proxy for fetal testosterone. Research in typical individuals, in individuals with autism spectrum conditions (ASC), and in individuals with brain lesions has established that performance on the RMET depends on the left inferior frontal gyrus (IFG). Using functional magnetic resonance imaging (fMRI), we found that a single administration of testosterone in 16 young women significantly altered connectivity of the left IFG with the anterior cingulate cortex (ACC) and the supplementary motor area (SMA) during RMET performance, independent of 2D:4D ratio. This IFG-ACC-SMA network underlies the integration and selection of sensory information, and for action preparation during cognitive empathic behavior. Our findings thus reveal a neural mechanism by which testosterone can impair emotion-recognition ability, and may link to the symptomatology of ASC, in which the same neural network is implicated.

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Can a Naturally Occurring Pathogen Threat Change Social Attitudes? Evaluations of Gay Men and Lesbians During the 2014 Ebola Epidemic

Yoel Inbar et al.

Social Psychological and Personality Science, forthcoming

Abstract:
Previous evidence linking disease threat and social attitudes suggests that a highly salient society-wide pathogen threat should lead to more negative attitudes toward gay men and lesbians. Using a sample of 248,922 Americans recruited via the Project Implicit website, we tested whether implicit attitudes toward gay men and lesbians shifted as a result of the 2014 Ebola virus outbreak. Regression discontinuity analyses, but not t-tests, showed evidence of a small shift in implicit (but not explicit) attitudes at the height of public concern over Ebola. These results could be interpreted as providing partial support for the effects of naturally occurring pathogen threats on social attitudes. Alternatively, given the large size of our sample, the mixed evidence and small effects may reflect a boundary condition for the operation of the behavioral immune system.

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Genetic Attributions, Immutability, and Stereotypical Judgments: An Analysis of Homosexuality

Mark Joslyn & Donald Haider-Markel

Social Science Quarterly, forthcoming

Objectives: Individuals employ causal reasoning to explain the world around them, including political events, group behavior, and conditions in society. People may attribute causes of behavior to controllable components, such as individual choices, or uncontrollable elements, such as broader forces in the environment. To this, we add biological or genetic attributions that have received increasing attention. Broadly, we argue that people's understanding about genetics as a cause for group behavior influences perceptions of immutability and stereotypical judgments about groups.

Methods: Making use of individual-level data from three national surveys of American adults, we examine causal beliefs about the origins of homosexuality. Specifically, we assess the impact of genetic attributions on judgments about whether a gay or lesbian person's sexual orientation can or cannot be changed. We also examine the association between genetic attributions and several stereotypic judgments about gays and lesbians.

Results: We find that genetic attributions strongly shape perceptions of immutability as well as stereotypic judgments about gays and lesbians.

Conclusions: Implications of our findings for attribution theory and the attitudinal changes that follow from the public's understanding of genetics and its impact on sexual orientation are discussed.

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The association between AIDS-related stigma and aggression toward gay men and lesbians

Wilson Vincent, John Peterson & Dominic Parrott

Aggressive Behavior, forthcoming

Abstract:
This study examined whether self-identified race and prior contact with a gay man or lesbian moderate the association between AIDS-related stigma and aggression toward gay men and lesbians when controlling for sexual prejudice. A regional, community-recruited sample of 194 heterosexual men (50% Black, 50% White) completed measures of AIDS-related stigma, sexual prejudice, and prior contact with gay men and lesbians. Regression analyses showed that AIDS-related stigma was positively associated with aggression toward gay men and lesbians among White men who reported no prior contact, but not among White men who endorsed prior contact and Black men regardless of prior contact. Findings suggest that intergroup contact may be a key component to reducing the effects of AIDS-related stigma towards stigmatized groups. Implications for aggression theory and intervention are discussed.

By KEVIN LEWIS | 09:00:00 AM

Friday, April 1, 2016

All or nothing

Getting Serious about Inequality

Kevin Leicht

Sociological Quarterly, forthcoming

Abstract:
Sociologists have spent a great deal of energy studying social inequality, but in this presentation I suggest that we need to refocus our efforts a bit. I examine four popular myths among the general public, and among some in sociology, regarding the drivers of extreme inequality: (1) that most inequality is generated by race and gender, (2) that most inequality is driven by educational inequality, (3) that most inequality is driven by differences in family structure, and (4) that most inequality results from face-to-face interactions. I provide preliminary evidence that our explanations need some work. That work involves recognizing that most inequality is generated within demographic groups and that this inequality is growing rapidly. It also involves recognizing that there are few ways to incorporate underrepresented groups into the mainstream of a social and economic system where extreme inequality is getting worse and substantial percentages of the population face economic stagnation and downward mobility. The conclusion represents a call to focus on the most important group gap — the widening gap between the wealthy and the poor — and the mechanisms through which most people gain access to economic goods, services, and social respect — jobs and money.

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Inequality, the Great Recession and slow recovery

Barry Cynamon & Steven Fazzari

Cambridge Journal of Economics, March 2016, Pages 373-399

Abstract:
Rising inequality reduced income growth for the bottom 95% of the US personal income distribution beginning about 1980. To maintain stable debt to income, this group’s consumption-income ratio needed to decline, which did not happen through 2006, and its debt-income ratio rose dramatically, unlike the ratio for the top 5%. In the Great Recession, the consumption-income ratio for the bottom 95% did finally decline, consistent with tighter borrowing constraints, whilst the top 5% ratio rose, consistent with consumption smoothing. We argue that higher inequality and the associated demand drag helps explain the slow recovery.

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Ownership of the Means of Production

Glen Weyl & Anthony Lee Zhang

University of Chicago Working Paper, March 2016

Abstract:
Private property creates monopoly power. Common ownership can restore allocative efficiency, but it also destroys incentives for investments in the "capital" value common to all potential owners of an asset. Property rights should thus balance ex-ante capital investment and ex-post allocative efficiency through partial common ownership. A universal, self-assessed property tax with a universal right to force a sale at the self-assessed value implements this partial common ownership and is generically efficiency-enhancing compared to pure private ownership. At present, a range of calibrations suggests a 10% annual rate is robustly near optimal, implying expropriation of more than two thirds of capital income. However, the easiest application of our approach may be to assets with limited capital investment opportunities and administratively assigned property rights, such as radio spectrum or internet addresses, where taxes should be set at a higher rate equal to the (socially efficient) rate of annual asset turnover. This rate nonetheless retains some private ownership.

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Bonus Culture: Competitive Pay, Screening, and Multitasking

Roland Bénabou & Jean Tirole

Journal of Political Economy, forthcoming

Abstract:
To analyze the impact of labor market competition on the structure of compensation, we embed multitasking and screening within a Hotelling framework. Competition for talent leads to an escalation of performance pay, shifting effort away from long-term investments, risk management, and cooperation. Efficiency losses can exceed those from a single principal, who dulls incentives to extract rents. As competition intensifies, monopsonistic underincentivization of low-skill agents first decreases and then gives way to growing overincentivization of high-skill ones. Aggregate welfare is thus hill-shaped, while inequality tends to rise monotonically. Bonus caps can help restore balance in incentives but may generate other distortions.

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Top Incomes and Human Well-Being Around the World

Richard Burkhauser, Jan‐Emmanuel De Neve & Nattavudh Powdthavee

Cornell University Working Paper, January 2016

Abstract:
The share of income held by the top 1 percent in many countries around the world has been rising persistently over the last 30 years. But we continue to know little about how the rising top income shares affect human well-being. This study combines the latest data to examine the relationship between top income share and different dimensions of subjective well-being. We find top income shares to be significantly correlated with lower life evaluation and higher levels of negative emotional well-being, but not positive emotional well-being. The results are robust to household income, individual's socio-economic status, and macroeconomic environment controls.

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Grabbing Your Bootstraps: Threats to Economic Order Boost Beliefs in Personal Control

Chris Goode & Lucas Keefer

Current Psychology, March 2016, Pages 142-148

Abstract:
Individuals are motivated to maintain perceptions of order and predictability in the social environment. Compensatory control theory proposes that when an individual’s perception of her or his own control is threatened, the individual can turn to external systems that may provide a perception of control (e.g., organized government). Conversely, the theory also predicts that when external systems of control are threatened, individuals may respond by exaggerating perceptions of personal control, although this effect has received relatively little empirical support. In the present study, we examined how a threat to an external system of economic control affects individual perceptions of personal control. Specifically, we found that a threat to the perceived distribution of economic resources based on hard work and effort (i.e., meritocracy) led to greater perceptions of personal control. Moreover, this increase in personal control directly increased participants’ optimism about their future economic outcomes. This study provides important insight into the broad influence of external systems on individuals' perceptions of personal control and assessment of future action.

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Human Capital Investment, Inequality, and Economic Growth

Kevin Murphy & Robert Topel

Journal of Labor Economics, April 2016, Pages S99-S127

Abstract:
We treat rising inequality as an equilibrium outcome in which human capital investment fails to keep pace with rising demand for skills. Investment affects skill supply and prices on three margins: the type of human capital in which to invest, how much to acquire, and the intensity of use. The latter two represent the intensive margins of human capital acquisition and utilization. These choices are substitutes for the creation of new skilled workers, yet they are complementary with each other, magnifying inequality. When skill-biased technical change drives economic growth, greater inequality reduces growth.

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The Impact of Taxes on Income Mobility

Mario Alloza

University College London Working Paper, January 2016

Abstract:
This paper investigates how taxes affect relative mobility in the income distribution in the US. Household panel data drawn from the PSID between 1967 and 1996 is employed to analyse the relationship between marginal tax rates and the probability of staying in the same income decile. Exogenous variation in marginal tax rates is identified by using counterfactual rates based on legislated changes in the tax schedule. I find that higher marginal tax rates reduce income mobility. An increase in one percentage point in marginal tax rates causes a decline of around 0.8% in the probability of changing to a different income decile. Tax reforms that reduce marginal rates by 7 percentage points are estimated to account for around a tenth of the average movements in the income distribution in a year. Additional results suggest that the effect of taxes on income mobility differs according to the level of human capital and that it is particularly significant when considering mobility at the bottom of the distribution.

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Stress at Work: Differential Experiences of High versus Low SES Workers

Sarah Damaske, Matthew Zawadzki & Joshua Smyth

Social Science & Medicine, May 2016, Pages 125–133

Abstract:
This paper asks whether workers with greater socioeconomic status (SES) experience different levels of stress at work than workers with lower SES and, if so, what might explain these differences. We collected innovative assessments of immediate objective and subjective measures of stress at multiple time points across consecutive days from 122 employed men and women. We find that in comparison to higher SES individuals, those with lower SES reported greater happiness at work, less self-reported stress, and less perceived stress; cortisol, a biological marker of stress, was unrelated to SES. Worker’s momentary perceptions of the workplace were predicted by SES, with higher SES individuals more commonly reporting feeling unable to meet work demands, fewer work resources, and less positive work appraisals. In turn, perceptions of the workplace had a generally consistent and robust effect on positive mood, subjective stress, and cortisol.

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Three-generation Mobility in the United States, 1850-1940: The Role of Maternal and Paternal Grandparents

Claudia Olivetti, Daniele Paserman & Laura Salisbury

NBER Working Paper, March 2016

Abstract:
This paper estimates intergenerational elasticities across three generations in the United States in the late 19th and early 20th centuries. We extend the methodology in Olivetti and Paserman (2015) to explore the role of maternal and paternal grandfathers for the transmission of economic status to grandsons and granddaughters. We document three main findings. First, grandfathers matter for income transmission, above and beyond their effect on fathers' income. Second, the socio-economic status of grandsons is influenced more strongly by paternal grandfathers than by maternal grandfathers. Third, maternal grandfathers are more important for granddaughters than for grandsons, while the opposite is true for paternal grandfathers. We present a model of multi-trait matching and inheritance that can rationalize these findings.

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Personal income inequality and aggregate demand

Laura Carvalho & Armon Rezai

Cambridge Journal of Economics, March 2016, Pages 491-505

Abstract:
This paper presents a theoretical and empirical investigation of how changes in the size distribution of income can affect aggregate demand and the demand regime of an economy. After presenting empirical evidence for the US economy that the propensity to save increases significantly from the bottom to the top quintile of wage earners, we demonstrate that more equal distributions always lead to higher output in the traditional neo-Kaleckian macroeconomic model. We also present conditions under which a reduction of income inequality among workers results in demand becoming more wage led. This view is supported by the results of an econometric study for the USA (1967–2010), which show that the rise after 1980 in income inequality has made the US economy more profit led.

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Welfare Consequences of Asymmetric Growth

Daniel Murphy

Journal of Economic Behavior & Organization, June 2016, Pages 1–17

Abstract:
Standard models in macroeconomics and development economics imply that growth in the aggregate enhances welfare for everyone in the economy. I show that instead, if economic growth is biased towards the consumption bundle of the rich, the welfare of the poor may fall. I document the relevance of this mechanism during the latter part of the Twentieth Century by showing that new information technology disproportionately benefited sectors consumed by the rich.

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A Comparison of Inequality and Living Standards in Canada and the United States Using an Extended Income Measure

Edward Wolff et al.

Eastern Economic Journal, Spring 2016, Pages 171–192

Abstract:
We use the Levy Institute Measure of Economic Well-Being (LIMEW) to compare living standards and inequality in Canada and the United States. LIMEW includes non-cash government transfers, public consumption, annuitized wealth, and household production and nets out all personal taxes. We compare our results to the standard US Census measure, gross money income (MI). We expected a smaller inter-country gap in median LIMEW than median MI and relatively lower LIMEW inequality in Canada because of the more extensive Canadian welfare state. Instead, we found that the measured gap in the level and inequality of economic well-being was higher based on LIMEW than MI.

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An allegory of the political influence of the top 1%

Philippe De Donder & John Roemer

Business and Politics, forthcoming

Abstract:
We study how rich shareholders use their political influence to deregulate firms that they own, thus skewing the income distribution towards themselves. Individuals differ in productivity and choose how much labor to supply. High productivity individuals also own shares in the productive sector and thus earn capital income. All individuals vote over a linear tax rate on (labor and capital) income whose proceeds are redistributed lump sum. Shareholders also lobby in order to ease the price cap imposed on the private firm. We first solve analytically for the Kantian equilibrium of this lobbying game together with the majority voting equilibrium over the tax rate. We then proceed to a comparative statics analysis of the model with the help of numerical simulations. We obtain that, as the capital income distribution becomes more concentrated among the top productivity individuals, increased lobbying effort generates efficiency as well as equity costs, with lower labor supply and lower average utility levels in society.

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Decomposing Trends in Inequality in Earnings into Forecastable and Uncertain Components

Flávio Cunha & James Heckman

Journal of Labor Economics, April 2016, Pages S31-S65

Abstract:
A substantial empirical literature documents the rise in wage inequality in the American economy. It is silent on whether the increase in inequality is due to components of earnings that are predictable by agents or whether it is due to greater uncertainty facing them. These two sources of variability have different consequences for both aggregate and individual welfare. Using data on two cohorts of American males, we find that a large component of the rise in inequality for less skilled workers is due to uncertainty. For skilled workers, the rise is less pronounced.

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Income-comparison Attitudes in the US and the UK: Evidence from Discrete-choice Experiments

Hitoshi Shigeoka & Katsunori Yamada

NBER Working Paper, February 2016

Abstract:
Economists have long been aware of utility externalities such as a tendency to compare own income with others'. If welfare losses from income comparisons are significant, any governmental interventions that alter such attitudes may have large welfare consequences. We conduct an original online survey of discrete-choice questions to estimate such attitudes in the US and the UK. We find that the UK respondents compare incomes more than US respondents do. We then manipulate our respondents with simple information to examine whether the attitudes can be altered. Our information treatment suggesting that comparing income with others may diminish welfare even when income levels increase makes UK respondents compare incomes more rather than less. Interestingly, US respondents are not affected at all. The mechanism behind the UK results seems to be that our treatment gives moral license to make income comparisons by providing information that others do so.

By KEVIN LEWIS | 09:00:00 AM

Thursday, March 31, 2016

Legacies of race

Doing Violence, Making Race: Southern Lynching and White Racial Group Formation

Mattias Smångs

American Journal of Sociology, March 2016, Pages 1329-1374

Abstract:
This article presents a theoretical framework of how intergroup violence may figure into the activation and maintenance of group categories, boundaries, and identities, as well as the mediating role played by organizations in such processes. The framework’s analytical advantages are demonstrated in an application to southern lynchings. Findings from event- and community-level analyses suggest that “public” lynchings, carried out by larger mobs with ceremonial violence, but not “private” ones, perpetrated by smaller bands without public or ceremonial violence, fed off and into the racial group boundaries, categories, and identities promoted by the southern Democratic Party at the turn of the 20th century and on which the emerging Jim Crow system rested. Highlighting that racialized inequalities cannot be properly understood apart from collective processes of racial group boundary and identity making, the article offers clues to the mechanisms by which past racial domination influences contemporary race relations.

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Wealth Inequality in Black and White: Cultural and Structural Sources of the Racial Wealth Gap

Cedric Herring & Loren Henderson

Race and Social Problems, March 2016, Pages 4-17

Abstract:
Using data from the 2013 Survey of Consumer Finances, this research examines competing and complementary cultural and structural explanations of the sources of racial differences in wealth. We use OLS regression and quantile regression to identify the major individual-level sources of wealth differences between African Americans and whites. Whites have more favorable wealth characteristics than do African Americans on all of the variables in the analysis: gender of household head, bankruptcies, spending patterns, stock ownership, business ownership, home ownership, inheritance, educational attainment, income, occupation, age, and number of children. Cultural factors, having a female-headed family, spending patterns, and inheritance account for little of the racial wealth gap. Racial differences in income, stock ownership, and business ownership account for much of the explained racial wealth gap. Moreover, compared with whites, African Americans receive significantly lower wealth returns to education, age, income, stock ownership, and business ownership. We discuss the implications of our findings.

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Racial Sorting and the Emergence of Segregation in American Cities

Allison Shertzer & Randall Walsh

NBER Working Paper, March 2016

Abstract:
Residential segregation by race grew sharply in the United States as black migrants from the South arrived in northern cities during the early twentieth century. The existing literature emphasizes discriminatory institutions as the driving force behind this rapid rise in segregation. Using newly assembled neighborhood-level data, we instead focus on the role of “flight” by whites, providing the first systematic evidence of the role that prewar population dynamics played in the emergence of the American ghetto. Leveraging exogenous changes in neighborhood racial composition, we show that white departures in response to black arrivals were quantitatively large and accelerated between 1900 and 1930. Our preferred estimates suggest that white flight was responsible for 34 percent of the increase in segregation over the 1910s and 50 percent over the 1920s. Our analysis suggests that segregation would likely have arisen in American cities even without the presence of discriminatory institutions as a direct consequence of the widespread and decentralized relocation decisions of white urban residents.

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Credit Standards and Segregation

Amine Ouazad & Romain Rancière

Review of Economics and Statistics, forthcoming

Abstract:
This paper explores the effects of changes in lending standards on racial segregation within metropolitan areas. Such changes affect neighborhood choices as well as aggregate prices and quantities in the housing market. Using the credit boom of 2000-2006 as a large-scale experiment, we put forward an IV strategy that predicts the relaxation of credit standards as the result of a credit supply shock predominantly affecting liquidity-constrained banks. The relaxed lending standards led to significant outflows of Whites from black and from racially mixed neighborhoods: without such credit supply shock, black households would have had between 2.3 and 5.1 percentage points more white neighbors in 2010.

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A Drought-Induced African Slave Trade?

Levi Boxell

Stanford Working Paper, March 2016

Abstract:
Historians have frequently suggested that droughts helped facilitate the African slave trade. By introducing a previously unused dataset on historical rainfall levels in Africa, I provide the first empirical answer to this hypothesis. I demonstrate how negative rainfall shocks and long-run shifts in the mean level of rainfall increased the number of slaves exported from a given region and can have persistent effects on the level of development today. Using a simple economic model of an individual's decision to participate in the slave trade, along with observed empirical heterogeneity and historical anecdotes, I argue that consumption smoothing and labor allocation adjustments are the primary causal mechanisms for the negative relationship between droughts and slave exports. These findings contribute to our understanding of the process of selection into the African slave trade and have policy implications for contemporary human trafficking and slavery.

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Young Adults’ Race, Wealth, and Entrepreneurship

Terri Friedline & Stacia West

Race and Social Problems, March 2016, Pages 42-63

Abstract:
This study explored relationships among young adults’ wealth and entrepreneurial activities with emphasis on how these relationships differed among racial and ethnic groups. Using data from the 1997 National Longitudinal Survey of Youth, results indicated that young adults’ (N = 8984) higher accumulated amounts of wealth were associated with pursuing self-employment at higher rates; however, differences emerged when the associations were explored with various types of wealth and within racial and ethnic groups. Black young adults’ greater debt and net worth were associated with their increased likelihoods of self-employment. Among Latino/a young adults, greater liquid assets and net worth were associated with increased likelihoods of self-employment. Wealth was unrelated to white young adults’ self-employment. Wealth appeared to play an outsized role in the self-employment of black and Latino/a young adults compared to that of their white counterparts. In other words, racial and ethnic minority young adults may have a heavier burden for generating their own capital to embark on entrepreneurial activities when mainstream credit markets are unresponsive or inaccessible. Policy implications are discussed.

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Supportive Family Environments Ameliorate the Link Between Racial Discrimination and Epigenetic Aging: A Replication Across Two Longitudinal Cohorts

Gene Brody et al.

Psychological Science, forthcoming

Abstract:
This study tested the hypothesis that supportive family environments during adolescence buffer exposure to racial discrimination, reducing its impact on biological weathering and its manifestation in cellular aging. Perceived racial discrimination, support in the family environment, and confounder variables were assessed for 3 consecutive years across adolescence in two independent cohorts of African American youth from rural Georgia. DNA was extracted from peripheral blood mononuclear cells collected during young adulthood. Patterns of methylation were used to index the epigenetic ages of these cells and the extent to which they differed from participants’ chronological ages. Among youth in supportive family environments, exposure to higher levels of racial discrimination did not forecast greater epigenetic aging. Among youth in less supportive family environments, exposure to higher levels of racial discrimination did forecast greater epigenetic aging. The associations emerged independently of confounder variables, and the results were replicated across the two cohorts.

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Diverging Fortunes: Racial/Ethnic Inequality in Wealth Trajectories in Middle and Late Life

Tyson Brown

Race and Social Problems, March 2016, Pages 29-41

Abstract:
The primary aim of this study is to examine whether racial/ethnic inequality in wealth dissipates or increases between middle and late life, and by how much. To address this aim, this study draws on critical race and life course perspectives as well as 10 waves of panel data from the Health and Retirement Study and growth curve models to understand racial/ethnic inequality in wealth trajectories among whites, blacks, and Mexican Americans (N = 8337). Findings show that, by midlife, significant inequalities in net worth emerge between whites and their black and Mexican American counterparts. On average, white households have amassed a net worth of $105k by midlife, compared to less than $5k and $39k among black and Mexican American families, respectively. Moreover, whites experience much more rapid rates of wealth accumulation during their 50s and 60s than their minority counterparts, resulting in increasing wealth disparities with age, consistent with a process of cumulative disadvantage. At the peak of their wealth trajectory (at age 66), whites have approximately $245k more than blacks and $219k more than Mexican Americans. A wide range of socioeconomic, behavioral, and health factors account for a portion, but not all, of racial/ethnic inequality in wealth, suggesting that unobserved factors such as parental wealth, segregation, and discrimination may play a role in the production and maintenance of wealth inequality.

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Realizing Racial and Ethnic Neighborhood Preferences? Exploring the Mismatches Between What People Want, Where They Search, and Where They Live

Esther Havekes, Michael Bader & Maria Krysan

Population Research and Policy Review, February 2016, Pages 101-126

Abstract:
The housing search process is an overlooked mechanism in the scholarly research that seeks to understand the causes of persistent racial residential segregation in the United States. Past research has explored in detail the preferences people hold in terms of the racial and ethnic composition of their neighborhoods, and more recently some have also examined the correspondence between racial and ethnic neighborhood preferences and current neighborhood racial/ethnic composition. But an intermediate stage — the racial/ethnic composition of where people search — has not been investigated. We analyze a subsample (n = 382) from the 2004–2005 Chicago Area Study to demonstrate the value of systematically studying the matches — or mismatches — between preferences, search locations, and neighborhood outcomes. We find that for whites, not only their current neighborhoods but also the neighborhoods in which they search for housing have larger percentages of whites than they say they prefer. In contrast, blacks — and to a lesser extent Latinos — search in neighborhoods that correspond to their preferences, but reside in neighborhoods with a larger percentage own group. Logistic regression analyses reveal that mismatches are associated with both a lack of information and inadequate finances, but also may be due to socially desirable responding for whites in particular. Our results provide suggestive evidence of the importance of unpacking the search process more generally and draw attention to what are likely to be productive new future data collection efforts as well as an area potentially ripe for policy interventions.

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Race, Skin Color, and Economic Outcomes in Early Twentieth-Century America

Roy Mill & Luke Stein

Arizona State University Working Paper, February 2016

Abstract:
We study the effect of race on economic outcomes using unique data from the first half of the twentieth century, a period in which skin color was explicitly coded in U.S. censuses as “White,” “Black,” or “Mulatto.” We construct a panel of siblings by digitizing and matching records across the 1910 and 1940 censuses, identifying all 12,000 African-American families in which enumerators classified some children as light-skinned (“Mulatto”) and others as dark-skinned (“Black”). Siblings coded “Mulatto” when they were children (in 1910) earned similar wages as adults (in 1940) as their Black siblings. This within-family earnings difference is substantially lower than the Black-Mulatto earnings difference in the general population, suggesting that skin color in itself played only a small role in the earnings gap. In the second half of the paper, we focus on individuals who “passed for White,” an important social phenomenon at the time. To do so, we identify individuals coded “Mulatto” as children but “White” as adults. Passing meant that individuals changed their racial affiliation by changing their social presentation while skin color remained unchanged. Comparing passers to their siblings who did not pass, we find that passing was associated with substantially higher earnings, suggesting that social presentations of race could have significant consequences for economic outcomes.

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Inequality in the “Cradle of Liberty”: Race/Ethnicity and Wealth in Greater Boston

Tatjana Meschede et al.

Race and Social Problems, March 2016, Pages 18-28

Abstract:
New data collected for the Boston Metropolitan Statistical Area provide detailed information on financial assets that allow analysis to extend beyond the traditional black–white divide. Targeting US-born blacks, Caribbean blacks, Puerto Ricans, Dominicans, and other Hispanics, findings from the National Asset Scorecard for Communities of Color survey underscore the large racial and ethnic disparities in financial wealth, even after controlling for demographic and socioeconomic status. Further, some notable differences between Boston’s communities of color highlight the importance of detailed analyses for research on the racial wealth gap. In particular, among non-white communities Dominicans report comparatively low asset and high debt amounts, while Caribbean blacks report relatively higher levels of wealth. Altogether, these findings point to the need for wealth building opportunities in communities of color and further investigation of the causes and consequences of financial disparities between groups of color disaggregated by specific ancestral origin.

By KEVIN LEWIS | 09:00:00 AM

Wednesday, March 30, 2016

Greenery

Red, White, and Blue Enough to be Green: Effects of Moral Framing on Climate Change Attitudes and Conservation Behaviors

Christopher Wolsko, Hector Ariceaga & Jesse Seiden

Journal of Experimental Social Psychology, July 2016, Pages 7–19

Abstract:
Widespread political polarization on issues related to environmental conservation may be partially explained by the chronic framing of persuasive messages in ideological and moral terms that hold greater appeal for liberals and egalitarians. A series of three experiments examined the extent to which variations in the moral framing of pro-environmental messaging affect liberals' vs. conservatives' conservation intentions, climate change attitudes, and donations to an environmental organization. While liberals did not generally differ across conditions, conservatives shifted substantially in the pro-environmental direction after exposure to a binding moral frame, in which protecting the natural environment was portrayed as a matter of obeying authority, defending the purity of nature, and demonstrating one's patriotism to the United States. This shift was pronounced when conservatives perceived the congruent appeal to be a stronger argument. Evidence of mediated moderation is also presented, in which the attitudinal and behavioral shifts for conservatives were a function of the degree to which the values present in the pro-environmental appeal were perceived as coming from the ingroup. Discussion focuses on future directions for more precisely specifying moral framing effects, and on considering the pros and cons of targeted messaging for the sustainability of environmental attitude change.

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From plastic bottle recycling to policy support: An experimental test of pro-environmental spillover

Heather Barnes Truelove et al.

Journal of Environmental Psychology, forthcoming

Abstract:
Little research has investigated the extent to which performance of one pro-environmental behavior (PEB) spills over to increase or decrease support for pro-environmental policies or the mechanisms underlying spillover effects. In this study, 283 U.S. university students were randomly assigned via situational manipulations to either recycle a water bottle, throw the bottle in the trash, or a control condition. All participants then completed surveys assessing environmental identity, guilt, and environmental worry, as well as support for a pro-environmental campus green fund. Results showed evidence for negative spillover among Democrats only, which was mediated by environmental identity: Democrats who recycled the water bottle had lower environmental identities and were less supportive of the green fund than those in the control condition. Neither Republicans nor Independents displayed spillover. The results have implications for those interested in increasing small, easy PEBs in hopes of gaining future support for environmental policies.

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Who Did the Ethanol Tax Credit Benefit? An Event Analysis of Subsidy Incidence

David Bielen, Richard Newell & William Pizer

NBER Working Paper, February 2016

Abstract:
Using commodity futures contract and spot prices, we estimate the incidence of the US ethanol subsidy accruing to corn farmers, ethanol producers, gasoline blenders, and gasoline consumers at expiration in 2011. We find compelling evidence that ethanol producers captured two-thirds of the subsidy, and suggestive evidence that a small portion of this benefit accrued to corn farmers. The remaining one-third appears to have been captured by blenders, as we find no evidence that oil refiners or gasoline consumers captured any part of the subsidy. This paper contributes to understanding of biofuels markets and policy and empirical estimation of economic incidence.

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The Effect of Competition on Toxic Pollution Releases

Daniel Simon & Jeffrey Prince

Journal of Environmental Economics and Management, forthcoming

Abstract:
We examine how competition affects toxic industrial releases, using five years of data from thousands of facilities across hundreds of industries. Our main result indicates that competition reduces toxic releases at the facility level. On average, each percentage-point reduction in the Herfindahl Index (HHI) results in a nearly two-percent reduction in a facility's toxic releases. At the same time, we find no evidence that competition increases aggregate pollution. Further analysis sheds some light on the mechanisms through which firms reduce pollution releases due to increased competition. In particular, we find suggestive evidence that this relationship is due to both reduced output and increases in abatement. We find no evidence that our result is driven by: consumer aversion to pollution, regulations changing with competition, or technologies introduced by new firms. Taken together, our results indicate that competition may be good, at least for public health in areas near polluting facilities, and fail to provide support for the hypothesis that competition leads to more socially undesirable behavior.

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Of Disasters and Dragon Kings: A Statistical Analysis of Nuclear Power Incidents and Accidents

Spencer Wheatley, Benjamin Sovacool & Didier Sornette

Risk Analysis, forthcoming

Abstract:
We perform a statistical study of risk in nuclear energy systems. This study provides and analyzes a data set that is twice the size of the previous best data set on nuclear incidents and accidents, comparing three measures of severity: the industry standard International Nuclear Event Scale, the Nuclear Accident Magnitude Scale of radiation release, and cost in U.S. dollars. The rate of nuclear accidents with cost above 20 MM 2013 USD, per reactor per year, has decreased from the 1970s until the present time. Along the way, the rate dropped significantly after Chernobyl (April 1986) and is expected to be roughly stable around a level of 0.003, suggesting an average of just over one event per year across the current global fleet. The distribution of costs appears to have changed following the Three Mile Island major accident (March 1979). The median cost became approximately 3.5 times smaller, but an extremely heavy tail emerged, being well described by a Pareto distribution with parameter α = 0.5–0.6. For instance, the cost of the two largest events, Chernobyl and Fukushima (March 2011), is equal to nearly five times the sum of the 173 other events. We also document a significant runaway disaster regime in both radiation release and cost data, which we associate with the “dragon-king” phenomenon. Since the major accident at Fukushima (March 2011) occurred recently, we are unable to quantify an impact of the industry response to this disaster. Excluding such improvements, in terms of costs, our range of models suggests that there is presently a 50% chance that (i) a Fukushima event (or larger) occurs every 60–150 years, and (ii) that a Three Mile Island event (or larger) occurs every 10–20 years. Further — even assuming that it is no longer possible to suffer an event more costly than Chernobyl or Fukushima — the expected annual cost and its standard error bracket the cost of a new plant. This highlights the importance of improvements not only immediately following Fukushima, but also deeper improvements to effectively exclude the possibility of “dragon-king” disasters. Finally, we find that the International Nuclear Event Scale (INES) is inconsistent in terms of both cost and radiation released. To be consistent with cost data, the Chernobyl and Fukushima disasters would need to have between an INES level of 10 and 11, rather than the maximum of 7.

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Life goals predict environmental behavior: Cross-cultural and longitudinal evidence

Wenceslao Unanue et al.

Journal of Environmental Psychology, forthcoming

Abstract:
Prioritizing intrinsic life goals (self-development, community involvement, relationships) rather than extrinsic ones (money, fame, image) is said to foster not only personal wellbeing, but also pro-social behavior such as protecting the environment. We explored concurrent and prospective links between intrinsic (versus extrinsic) life goals and self-reported environmentally responsible behavior, using correlational and longitudinal data from adult participants in a mass consumer society (UK) and a fast developing nation (Chile). In both countries, the importance of intrinsic (versus extrinsic) life goals was associated cross-sectionally with environmentally responsible behavior, even after controlling for possible effects of environmental worldviews and environmental identification. In longitudinal analyses, life goals prospectively predicted environmentally responsible behavior over a two-year period, whereas, rather unexpectedly, environmental worldviews and environmental identification did not. We conclude that focusing on intrinsic, rather than extrinsic, life goals may be important not just for individuals’ well-being, but also for the well-being of future generations.

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The Role of Sales Agents in Information Disclosure: Evidence from a Field Experiment

Hunt Allcott & Richard Sweeney

Management Science, forthcoming

Abstract:
With a large nationwide retailer, we run a natural field experiment to measure the effects of energy use information disclosure, customer rebates, and sales agent incentives on demand for energy-efficient durable goods. Although a combination of large rebates plus sales incentives substantially increases market share, information and sales incentives alone each have zero statistical effect and explain at most a small fraction of the low baseline market share. Sales agents strategically comply only partially with the experiment, targeting information to more interested consumers but not discussing energy efficiency with the disinterested majority. These results suggest that seller-provided information is not a major barrier to energy-efficiency investments at current prices in this context.

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Is California More Energy Efficient than the Rest of the Nation? Evidence from Commercial Real Estate

Matthew Kahn, Nils Kok & Peng Liu

NBER Working Paper, January 2016

Abstract:
California’s per-capita electricity consumption is 50 percent lower than national per-capita consumption. Mild climate, deindustrialization, and its demographics explain part of this differential. California energy efficiency policy is often claimed to be another key factor. A challenge in judging this claim is the heterogeneity of the real estate capital stock. Residential homes differ along a large number of physical attributes. We access a proprietary dataset from a large hotel chain that allows us to evaluate the environmental performance of comparable commercial real estate across the United States. Controlling for climate conditions and geographic location, we document that California’s commercial real estate stock is the most energy efficient at a point in time but this differential is quantitatively small. However, over the years 2007 to 2013, California’s hotels achieved much greater energy efficiency progress than hotels in other states.

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Is Shale Development Drilling Holes in the Human Capital Pipeline?

Dan Rickman, Hongbo Wang & John Winters

Oklahoma State University Working Paper, January 2016

Abstract:
Using the Synthetic Control Method (SCM) and a novel method for measuring changes in educational attainment we examine the link between educational attainment and shale oil and gas extraction for the states of Montana, North Dakota, and West Virginia. The three states examined are economically-small, relatively more rural, and have high levels of shale oil and gas reserves. They also are varied in that West Virginia is intensive in shale gas extraction, while the other two are intensive in shale oil extraction. We find significant reductions in high school and college attainment among all three states' initial residents because of the shale booms.

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An Input-Output Model of the U.S. Economy with Pollution Externality

Nicholas Muller

NBER Working Paper, March 2016

Abstract:
Input-output (I-O) analysis represents the flows of goods and services within the market. Environmentally-extended I-O (EEIO) models include flows of both pollution and consumption of resources and energy. The present paper proposes a conceptual structure for EEIO accounts that builds on the work of Leontief (1970) and Hendrickson, Lave, and Matthews (2006), and then estimates empirical EEIO accounts for the U.S. economy in 1999 and 2011. The empirical accounts provide the first complete characterization of the air pollution damage flows throughout the U.S. economy. Pollution intensity fell from 7 percent of value-added in 1999 to 2 percent in 2011. The utility sector exhibits the highest ratio of pollution damage from value-added production to supply chain damage; this ratio was 22 in 1999 and 54 in 2011. About one-half of all damage comes from intermediate demand, one-third from household consumption, and about 7 percent each from fixed investment and government use of commodities. In both 1999 and 2011, damages would have been about 7 percent higher had all imports been made domestically. The damages from exported goods nearly doubled from 5 percent to almost 10 percent of total pollution damage.

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Environmental Pollution and Biodiversity: Light Pollution and Sea Turtles in the Caribbean

Michael Brei, Agustín Pérez-Barahona & Eric Strobl

Journal of Environmental Economics and Management, May 2016, Pages 95–116

Abstract:
We examine the impact of pollution on biodiversity by studying the effect of coastal light pollution on the sea turtle population in the Caribbean. To this end we assemble a panel data set of sea turtle nesting activity and satellite-derived measures of nighttime light. Controlling for the surveyor effort, the local economic infrastructure, and spatial spillovers, we find that nighttime light significantly reduces the number of sea turtle nests. According to data on replacement costs for sea turtles raised in captivity, our result suggests that the increase in lighting over the last two decades has resulted in the loss of close to 1,800 sea turtles in the Caribbean, worth up to $288 million. Incorporating our empirical estimates into a stage-structured population model, we discover that the dynamic effect of nighttime light on future generations of sea turtles is likely to be much larger, with a cost of approximately $2.8 billion for Guadeloupe alone. More generally, our study provides a new approach to valuing the cost of environmental pollution associated with species extinction.

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Trends in mercury wet deposition and mercury air concentrations across the U.S. and Canada

Peter Weiss-Penzias et al.

Science of the Total Environment, forthcoming

Abstract:
This study examined the spatial and temporal trends of mercury (Hg) in wet deposition and air concentrations in the United States (U.S.) and Canada between 1997 and 2013. Data were obtained from the National Atmospheric Deposition Program (NADP) and Environment Canada monitoring networks, and other sources. Of the 19 sites with data records from 1997–2013, 53% had significant negative trends in Hg concentration in wet deposition, while no sites had significant positive trends, which is in general agreement with earlier studies that considered NADP data up until about 2010. However, for the time period 2007–2013 (71 sites), 17% and 13% of the sites had significant positive and negative trends, respectively, and for the time period 2008–2013 (81 sites) 30% and 6% of the sites had significant positive and negative trends, respectively. Non-significant positive tendencies were also widespread. Regional trend analyses revealed significant positive trends in Hg concentration in the Rocky Mountains, Plains, and Upper Midwest regions for the recent time periods in addition to significant positive trends in Hg deposition for the continent as a whole. Sulfate concentration trends in wet deposition were negative in all regions, suggesting a lower importance of local Hg sources. The trend in gaseous elemental Hg from short-term datasets merged as one continuous record was broadly consistent with trends in Hg concentration in wet deposition, with the early time period (1998–2007) producing a significantly negative trend (− 1.5 ± 0.2% year− 1) and the recent time period (2008–2013) displaying a flat slope (− 0.3 ± 0.1% year− 1, not significant). The observed shift to more positive or less negative trends in Hg wet deposition primarily seen in the Central-Western regions is consistent with the effects of rising Hg emissions from regions outside the U.S. and Canada and the influence of long-range transport in the free troposphere.

By KEVIN LEWIS | 09:00:00 AM


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