September, 29th - Enrico Rubolino (University of Lausanne)

The Cost of Gender Identity Norms: Evidence from a Spouse Tax Credit

The standard model of household behavior predicts that couples cooperate to maximize family income. This paper shows that gender identity norms represent an important friction preventing family income maximization. For identification, we focus on an Italian policy that grants a large tax credit to the main earner in a couple when the second earner reports income below a cutoff. Using new tax returns data, we show large bunching responses at the tax credit cutoff from second earner women, but no response from second earner men. This result suggests that household decisions are not Pareto-efficient when men are the second earner within the couple. Gender differences in bunching mostly emerge after marriage and childbirth, and do not reflect any gender-specific difference in scope for bunching. In support of the view that gender norms drive our results, we find that gender differences in bunching are relatively larger among immigrants coming from more conservative societies, and natives living in more gender-traditional municipalities. Additionally, these results have important implications for gender inequality: we show that the spouse tax credit persistently limits women’s careers and amplifies the gender income gap.

 

October, 6th - Matthieu Chemin (McGill University)

Know Your Rights! A Field Experiment on Legal Knowledge, Property Rights and Investment in Kenya

In this paper, we test the effects of a legal training program on legal knowledge, the security of property rights, and investment. The content of the program is informed by 5 years of fieldwork for another project [Aberra2020], in which a team of Kenyan lawyers defended the land rights of small-scale farmers in court. During this fieldwork, the Kenyan lawyers discovered that the main reason for disputes was that people had not properly implemented the processes of succession or buying / selling land, and therefore never got an official title for their land. The goal of the training program is to anticipate these issues in court by providing a better explanation of these two processes. We find that this increases legal knowledge, the security of property rights and investment. We also find that this program reduces the number of cases filed in courts, thereby indirectly benefiting all other court users through faster courts.

 

October, 27th - Aline Bütikofer (NHH Bergen)

Collective Climate Action: Air Pollution, Child Outcomes, and Inequality

This paper examines the long-term impacts of early childhood pollution exposure by exploiting the Air Convention (Convention on Long-Range Transboundary Air Pollution) as a natural experiment using Norwegian administrative data. We use a difference-in-differences design to analyze the outcomes between cohorts born in municipalities before and after significant improvements in acid exposure relative to those same cohorts born in municipalities with no improvements. We find that a higher pollution level is associated with lower academic performance and earnings at age 30. The effects are mainly driven by individuals from municipalities with initial exposure above certain thresholds. The mover design on top of DID provides new evidence on age-specific estimates of the pollution-human capital relationship.

 

November, 10th - Michel Serafinelli (University of Essex)

The World´s Rust Belts

We use a newly-assembled dataset to investigate the employment consequences of manufacturing decline for 1,993 cities in 6 industrialized countries in the period after each country’s manufacturing peak. In all six countries we find a strong negative relation between the share of manufacturing employment in the year of the country’s manufacturing peak and the subsequent mean change in total employment. But this average negative effect of deindustrialization on local employment masks a large amount of heterogeneity across areas. While in many former manufacturing hubs total employment declined relative to their country mean, in a surprisingly large number of cases total employment grew much faster than their country mean, despite the losses of manufacturing jobs. Overall, 34% of former manufacturing hubs in our sample experienced an employment growth faster than their country mean and, by 2010, had a relative employment level equal to or above the one they had in the year of the manufacturing peak. Moreover, deindustrialization had profoundly different effects on local employment depending on the initial level of schooling of the local labor force. Using an instrumental variable based on driving distance to historical college and universities, we find that cities that had a higher share of college graduates in the labor force in the year of their country’s manufacturing peak experienced faster total employment growth in the years after the manufacturing peak. Most of this difference is due to faster employment growth in human capital intensive services.

 

January, 12th - Massimiliano Marcellino (Università Bocconi)

Forecasting US Inflation Using Bayesian Nonparametric Models

The relationship between inflation and predictors such as unemployment is poten- tially nonlinear with a strength that varies over time, and prediction errors may be subject to large, asymmetric shocks. Inspired by these concerns, we develop a model for inflation forecasting that is nonparametric both in the conditional mean and in the error using Gaussian and Dirichlet processes, respectively. We discuss how both these features may be important in producing accurate forecasts of inflation. In a forecasting exercise involving CPI inflation, we find that our approach has substantial benefits, both overall and in the left tail, with nonparametric modeling of the conditional mean being of particular importance. 

 

January, 19th - Theresa Kuchler (NYU Stern)

The Social Integration of International Migrants: Evidence from the Networks of Syrians in Germany

We use de-identified data from Facebook to study the social integration of Syrian migrants in Germany, a country that received a large influx of refugees during the Syrian Civil War. We construct measures of migrants' social integration based on Syrians' friendship links to Germans, their use of the German language, and their participation in local social groups. We find large variation in Syrians' social integration across German counties, and use a movers' research design to document that these differences are largely due to causal effects of place. Regional differences in the social integration of Syrians are shaped both by the rate at which German natives befriend other locals in general (general friendliness) and the relative rate at which they befriend local Syrian migrants versus German natives (relative friending). We follow the friending behavior of Germans that move across locations to show that both general friendliness and relative friending are more strongly affected by place-based effects such as local institutions than by persistent individual characteristics of natives (e.g., attitudes toward neighbors or migrants). Relative friending is higher in areas with lower unemployment and more completed government-sponsored integration courses. Using variation in teacher availability as an instrument, we find that integration courses had a substantial causal effect on the social integration of Syrian migrants. We also use fluctuations in the presence of Syrian migrants across high school cohorts to show that natives with quasi-random exposure to Syrians in school are more likely to befriend other Syrian migrants in other settings, suggesting that contact between groups can shape subsequent attitudes towards migrants.

 

January, 26th - Francesco Pappadà (Paris School of Economics)

The Dynamics of Informality and Fiscal Policy Under Sovereign Risk

This paper examines how the dynamics of informality affects optimal fiscal policy and default risk. We build a model of sovereign debt with limited commitment and informality to assess the consequences of dynamic distortions induced by fiscal policy. In the model, fiscal policy generates a persistent impact on taxable activity, which impacts future fiscal revenues and thus default risk. The interaction of tax distortions and limited commitment strongly constrains the dynamics of optimal fiscal policy and leads to costly fluctuations in consumption.