Facultad de Economía

Fecha: 31/03/2022, 11:00

Modalidad: Virtual

Presentador: Elisa Facchetti

Autor: Elisa Facchetti

The effect of neighbourhood police on citizens’ welfare is poorly understood. Yet, thisis a key parameter in evaluating the impacts of reductions of police spending. I exploit alarge wave of austerity cuts to police forces in London, which resulted in the closure of 70% of police stations, while preserving the police force size. I combine novel granulardata on reported crime, location of police stations and their closure, and information onindividual crimes’ judicial outcomes. I show that the reduced local police presence ledto a persistent significant increase in violent crimes, consistent with lower deterrence, andreduced clearance rates, indicating lower police effectiveness. I also provide suggestiveevidence consistent with reduced reporting of non-violent crimes, as citizens internalise ahigher reporting cost. Overall, the policy led to a sizeable reduction in citizens’ welfare,which I document by showing a decrease in house prices concentrated in high-crime andmore deprived census blocks, further exacerbating already existing inequality. Together,the closures produced considerable distributional and efficiency losses, and generated coststhat substantially outweigh the benefits in terms of lower public expenditure for the criminaljustice system.

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Fecha: 07/04/2022, 11:00

Modalidad: Virtual

Presentador: Cecilia Díaz

Autor: Cecilia Díaz

Standard health insurance contracts generate nonlinear pricing through the presence of deductibles and caps on out-of-pocket spending, in which the out-of-pocket price paid by consumers decreases as the cumulative use of health care increases. This nonlinear benefit structure, coupled with the uncertainty intrinsic to future health care demand, provides dynamic incentives for consumers’ choices: health care utilization today reduces future expected prices. Standard analyses of insurance contracts study the trade-off between the welfare gains from risk protection and the welfare losses from moral hazard, which I relabel as static moral hazard. In this paper, I study a new source of moral hazard, dynamic moral hazard, which I define as the additional health care utilization when individuals internalize that current utilization lowers future expected prices via the nonlinearities of the contract. By leveraging the random assignment of families to health plans from the RAND Health Insurance Experiment, I am able to focus specifically on moral hazard, avoiding the typically confounding adverse selection present in insurance markets. I develop and estimate a dynamic, stochastic model of weekly health care utilization at the family level that incorporates the dynamic pricing effects. My estimation framework allows for flexibly-correlated multidimensional unobserved heterogeneity related to family health risk, preferences for visiting a doctor, and price sensitivity. I document that 40 percent of total moral hazard is attributed to dynamic moral hazard. Using my estimated model, I study the welfare implications of dynamic moral hazard in the setting of employer-sponsored health insurance. My results show that the presence of dynamic moral hazard can severely dampen the welfare gains associated with higher cost-sharing and plays a crucial role, distinct from static moral hazard, in determining optimal insurance contract design.

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Fecha: 19/04/2022, 11:36

Modalidad: Virtual

Presentador: Rafael Dix-Carneiro (Duke)

Autor: Rafael Dix-Carneiro (Duke)

 
We examine how to interpret estimates from a commonly used migration regression relating changes in local population to exogenous local labor demand shocks. Using a simple model of local labor markets with mobility costs, we find that common conclusions drawn from migration regression estimates are likely to be substantially misleading. Intuitively, the conventional migration regression is misspecified due to the bilateral nature of location choices. Workers choose where to live based not only on the shock to their current location, but also on the shocks to potential alternative locations, which are omitted from the regression. The resulting biases are particularly acute when workers face industry switching costs in addition to geographic mobility costs. Analytical results and simulations based on Brazilian data show that conventional migration regression estimates are inaccurate for the within-sample effects of observed shocks on local populations and uninformative on the effects of counterfactual shocks to local labor demand. A simple alternative approach leveraging the model's structure exhibits far better performance.

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Fecha: 21/04/2022, 11:00

Modalidad: Virtual

Presentador: Roman Merga (Rochester)

Autor: Roman Merga (Rochester)

Developing countries trade less than rich countries. I show that this lack of involvement in trade arises because high domestic volatility discourages exporters' investments in foreign market access. At the cross-country level, I find that country's TFP volatility explains 40% of the relationship between trade and GDP per capita. Using Colombian micro-level data, I document that exporters facing higher domestic sales volatility export less. In industries with more domestic sales volatility, new exporters expand relatively less over their life cycle. This dampening of the firm-level export expansion path is more severe in products with more variable markups. Motivated by these novel firm-level findings, I develop an international trade model with new exporter dynamics and non-CES demand that can account for the novel facts at the firm and the cross-country levels. These findings suggest that trade frictions calculated using static trade models reflect the interactions of domestic volatility and exporters’ investment decisions to grow into foreign markets. Indeed my quantitative findings show that the volatility differences across countries are equivalent to a 30% higher trade cost in developing economies. These volatility differences account for 40% of the differential trade cost estimated by static models.

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Fecha: 26/04/2022, 00:00

Modalidad: Presencial Auditorio 3 Casa Pedro Fermin

Presentador: Luigi Minale

Autor: Luigi Minale

Despite the vast interdisciplinary literature on social capital and its impact on economic and political development, the very notion of social capital remains remarkably blurry, both from the theoretical and the empirical point of view. In this paper, we try to tackle various issues related to the measurement of social capital by exploiting novel and unique survey data from Italy, covering a sample of over half a million respondents interviewed between 2000 and 2015. In particular, we explore what the main components of social capital are and how they relate to each other. Second, we study how different facets of social capital correlate to individual socioeconomic characteristics and community-level characteristics. Third, also building on prior influential contributions, we study what dimensions of social capital are relevant for different outcomes, such as economic, health, and political ones. Our results provide empirical support for the view that social capital is a multifaceted object with several dimensions intertwined but distinct from each other. The paper calls for using accurate measures to “unpack” the different dimensions of social capital when testing the empirical relationship between the latter and the outcomes of interests to minimise the risk of interpreting spurious relations as causal.

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Fecha: 05/05/2022, 00:00

Modalidad: Presencial - Salón 601, Torre 2.

Presentador: Mauricio Rodriguez

Autor: Mauricio Rodriguez

Amid weak international cooperation a significant stretch of the climate policy efforts will continue to take the form of unilateral policies. However, concerns about competitiveness and the risk of carbon leakage limit the scope and acceptability of carbon pricing on domestic production. In this context, Border Carbon Adjustments (BCA) have gained prominence as a complement to carbon taxes. Using a trade adjustment dynamics model we investigate if, from the perspective of a small open economy (SOE), the credible implementation of a BCAs by a subset of its trading partners provides incentives for the tightening of domestic climate policy. These incentives are grounded on a reduced exposure to the foreign BCA. Using data for the Colombian economy, our results indicate that the scope for domestic climate policy and its sectoral impacts depend on whether the BCA design prescribes a tariff level that responds to climate policy adjustments in other economies.

Fecha: 12/05/2022, 11:00

Modalidad: Virtual

Presentador: Dominic Rohner

Autor: Dominic Rohner

Governments that heavily depend on aid from foreign donors may choose to crack down on political opponents when these donors are distracted by major domestic events. In reaction, the opposition in aid receiving countries may have incentive to reduce agitations so as not to incite such crackdowns. We study this interaction in a simple strategic model, and empirically test the model by looking at both unanticipated (natural disaster) and anticipated (election) shocks to attention in major donor countries. We explore the effects of these shocks on agitations (and social violence) in recipient (African) countries. The theory surmises that oppositions will reduce agitations when shocks are anticipated. When unanticipated shocks hit, and when agitations are already under way, the theory surmises that individuals inclined to violently oppose the government will substitute visible forms of unrest (riots) for more covert operations on soft targets (civilian targeted violence). This pattern is precisely reflected in the data. International inattention hurts political oppositions through the out-of-equilibrium threat of increased repression. And this has knock on violent effects, even when on the surface the situation appears "calm". These findings suggest that observed political crackdowns may only represent the "tip of the iceberg", and policies that would enhance international scrutiny would help safeguard public demonstrations of dissent, and reduce violence against civilians.

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Fecha: 17/05/2022, 09:00

Modalidad: Presencial: Auditorio 3 - Pedro Fermín

Presentador: Marina M. Tavares

Autor: Marina M. Tavares

The green economic transformation needed to achieve net zero emissions will also require changes in employment. This chapter examines the labor market implications of this transition, using a mix of empirical and model-based analyses. Looking at a large sample of countries, the empirical analysis indicates that both greener and more polluting jobs are concentrated among smaller subsets of workers. Individual workers face tough challenges in moving to greener jobs from more pollution-intensive jobs, complicating the labor reallocation. Higher skills make job transitions easier, highlighting the potential importance of training. Stronger environmental policies help green the labor market and appear more effective when reallocation incentives are not blunted. Finally, a policy package incorporating a green infrastructure push, phased-in carbon prices, and targeted training and an earned income tax credit to provide income support and incentivize labor supply, could put an economy on a path to net zero emissions by 2050 with an inclusive transition. Model simulations for a representative advanced economy suggest that about 1 percent of employment would shift toward greener activities over a 10-year period. By contrast, for a representative emerging market economy, about 2.5 percent of employment would shift, reflecting differences in workforce skills and greater reliance on higher-emissions-intensive production. Delays in policy actions will require sharper labor market adjustments to achieve net zero emissions.

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