Working Papers

Qiuying Qu

Abstract

Zombie firms—indebted firms that are unprofitable and depend on banks or government bailouts for continued operation—are a drag on the economies in which they operate. The existence of zombie firms has been attributed to banks continuing to provide forbearance lending for their own interests. But local political officials may also contribute to keeping zombie firms alive, even in settings without the pressures of electoral cycles. Studying loans in China, I examine how bank lending is influenced by local officials and tracks their appointment cycle. I find that there…

Ofer Malamud, Andreea Mitrut, and Cristian Pop-Eleches

Abstract

This paper examines a schooling expansion in Romania that increased educational attainment for successive cohorts born between 1945 and 1950. We use a regression discontinuity design at the day level based on school entry cutoff dates to estimate impacts on mortality with 1994-2016 Vital Statistics data and self-reported health with 2011 Census data. We find that the schooling reform led to significant increases in years of schooling, higher employment rates, and reductions in fertility, but did not affect mortality, hospitalizations,…

Alice Tianbo Zhang

Abstract

Between 1995 and 2010, China’s Three Gorges Dam uprooted more than one million people, resulting in the largest involuntary displacement from dam construction in history. This paper provides the first evidence of the causal impact of dam-induced inundation on migration and labor market outcomes by combining micro-level census and satellite data. Using a novel identification strategy and remote sensing techniques to capture exogenous variations in flooding intensity, I find that inundation has imposed large and enduring costs on the local economy. Rising water…

Hein Bogaard and Jan Svejnar

Abstract

We exploit organizational reforms in a foreign-owned bank in Central-East Europe to study the implementation of modern HRM policies in an emerging market context. We have branch-level data and use our knowledge of the process that led to the adoption of the reforms to implement two estimators that address endogeneity bias in a complementary fashion: an IV approach and Generalized Propensity Score estimation. Our results show that some of the reforms had a positive impact on productivity, but they also underscore the risks of quantity-based incentives…

Rafael Dix-Carneiro, Rodrigo R Soares, and Gabriel Ulyssea

Abstract

This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor…

Francisco Gallego, Ofer Malamud, and Cristian Pop-Eleches

Abstract

This paper explores how parental information and control can influence children’s internet use in Chile. We designed and implemented a set of randomized interventions whereby approximately 7700 parents were sent weekly SMSs messages with (i) specific information about their children’s internet use, and/or (ii) encouragement and assistance with the installation of parental control software. We separate the informational content from the cue associated with SMS messages and vary the strength of the cues by randomly assigning…

Judith A. Frias, David S. Kaplan, Eric Verhoogen, and David Alfaro-Serrano

Abstract

This paper draws on employer-employee and longitudinal plant data from Mexico to investigate the impact of exports on wage premia, defined as wages above what workers would receive elsewhere in the labor market. We decompose plant-level average wages into a component reflecting skill composition and a component reflecting wage premia. Using the late-1994 peso devaluation interacted with initial plant size as a source of exogenous variation in exports, we find that exports have a significant positive effect…

Alex Eble and Feng Hu

Abstract

Every government chooses the number of years of schooling needed to complete primary education, but little is known about how this policy decision affects educational attainment and subsequent labor market outcomes. We study a policy change in China which extended the length of primary school from five years to six but did not change the primary school curriculum. We exploit the gradual rollout of the policy to estimate its impact on affected individuals’ schooling and performance in the labor market. The policy causes average years spent in primary school…

Willem H. Buiter and Anne C. Sibert

Abstract

The recent reduction in the US corporate profit tax rate from 35 percent to 21 percent has triggered renewed interest in the impact of a cut in the corporate tax rate on capital accumulation and real wages. This theoretical contribution demonstrates that the familiar proposition that a cut in the corporate profit tax rate boosts the capital intensity of production and the real wage is sensitive to a number of key assumptions. Even when the real interest rate is exogenously given, full deductibility of capital expenditure from the corporate profit…

Francisco Costa and Francois Gerard

Abstract

A growing body of evidence documents that policies can affect household behaviors persistently, even if they are no longer in place. This paper studies the importance of such “hysteresis” – the failure of an effect to reverse itself as its underlying cause is reversed – for the welfare evaluation of corrective policies. First, we introduce hysteresis into the textbook framework used to derive canonical sufficient statistics formulas for the welfare effect of corrective policies. We then derive new formulas allowing for hysteresis. We show…

Ashna Arora

Abstract

This paper evaluates the effects of encouraging the selection of local politicians in India via community-based consensus, as opposed to a secret ballot election. While secret ballot elections prevent vote capture by guaranteeing voter anonymity, consensus-based elections may improve welfare by promoting the exchange of information. I find that politicians elected via community consensus are younger and more educated, but lead to worse governance as measured by a fall in local expenditure and regressive targeting of workfare employment. These results…

Jonas Hjort and Jonas Poulsen

Abstract:

This paper provides evidence on how the expansion of fast Internet along its current frontier in developing countries affects job creation. We exploit the gradual arrival in African coastal cities of submarine Internet cables from Europe and maps of the continent’s terrestrial cable network that connects those cities with users. Robust difference-in differences estimates from four datasets covering 14 countries show large positive effects on employment rates. A decrease in unskilled jobs is offset by a bigger increase in jobs in higher-skill occupations,…