Working Papers
Income Losses Following First Births and Part-Time Work
(with Debra Hevenstone), February 2023
Institutions and the Sectoral Organization
of Production, January 2016
Fundamental
Resource Curse, July 2010
Uncertainty and the Allocation
of Resources (with Harris Dellas), October 2009
Knowledge,
Technology Adoption and Financial Innovation, June 2005
Published Research
When Does
Gender Occupational Segregation Start? An Experimental Evaluation of the
Effects of Gender and Parental Occupation in the Apprenticeship Labor Market
(with Martin Huber and Camila Plaza) Economics of Education Review 95
(2023), 1-22.
Gender
Differences in Wage Expectations (with Martin Huber and Giannina Vaccaro) PLoS ONE 16(6): e0250892.
https://doi.org/10.1371/journal.pone.0250892
Discrimination in Hiring Based on Potential and
Realized Fertility: Evidence from a Large-Scale Field Experiment (with
Sascha O. Becker and Doris Weichselbaumer) Labour Economics 59 (2019), 139-152.
Finance and Competition (with Harris Dellas), Economic
Journal 124(575), 269-288.
A Closed-Form Solution to a Model of Two-Sided, Partial
Altruism Macroeconomic Dynamics 16(2012), 230-239.
Altruism,
Labor Supply and Redistributive Neutrality Journal of Population Economics
24(2011), 1443-1469.
Youth Emancipation and Perceived Job Insecurity of Parents and
Children (with Sascha O. Becker, Samuel Bentolila
and Andrea Ichino) Journal of Population Economics 23 (2010), 1047–1071.
Income Insecurity and Youth Emancipation: A Theoretical Approach
(with Sascha O. Becker,
Samuel Bentolila and Andrea Ichino)
The B.E. Journal of
Economic Analysis & Policy 8 (2008, Contributions), Article 19.
Inappropriate
Technology (with Krishna Kumar) Macroeconomic Dynamics 11 (2007),
487-518.
On the Equivalence of Quantitative Trade Restrictions and Tariffs
(with Harris Dellas and Klaus Neusser) Economic Letters 96 ( 2007), 331-336.
A Recursive Formulation for
Repeated Agency with History Dependence (with Christopher Phelan), Journal
of Economic Theory 91 (2000), 223-247.
Work in
Progress
Bounds on Democracy
A Wealth-Based Theory of
Property Rights
Income
Losses Following First Births and Part-Time Work Paper
Using linked Swiss
administrative and survey data, we examine the earnings gap in yearly income
and hourly wages experienced by mothers following the birth of their first
child. Correcting for selection, the motherhood earnings gap in yearly income
amounts to roughly 19’000 2016 Swiss francs, corresponding to 63.5% of the
average earnings in our sample, a very high number in an international context.
Controlling for experience and labor market
attachment, the unexplained motherhood gap for full-time workers reduces to
20-30%, roughly the same magnitude as the decline in hourly wages experienced
by full-time working moms. The yearly income penalty for part-time working moms
is about double the full-time motherhood penalty. Although motherhood reduces
hourly wages, we find a premium in wages associated with parttime work, casting
doubt on part-time work having an intrinsically detrimental effect on
productivity in the context of the Swiss labor
market. Using a quasi-experiment in which new mothers’ partners lost their job
during pregnancy or the child’s first year, we do not find changes in mothers’
hourly wages suggesting that, at least among the employed, firms do not
routinely perceive mothers as less committed workers.
Gender
Differences in Wage Expectations Paper
Using an own survey on wage
expectations among students at two Swiss institutions of higher education, we
examine the wage expectations of our respondents along two main lines. First,
we investigate the rationality of wage expectations by comparing average
expected wages from our sample with those of similar graduates; further, we
examine how our respondents revise their expectations when provided information
about actual wages. Second, using causal mediation analysis, we test whether
the consideration of a rich set of personal and professional controls,
inclusive of preferences on family formation and number of children in addition
to professional preferences, accounts for the difference in wage expectations
across genders. Results suggest that both males and females overestimate their
wages compared to actual ones and that males respond in an overconfident manner
to information about realized wages. Personal mediators alone cannot explain
the indirect effect of gender on wage expectations; however, when combined with
professional mediators, this results in a quantitatively large reduction in the
unexplained effect of gender on wage expectations. Nonetheless, a
non-negligible and statistically significant direct (or unexplained) effect of
gender on wage expectations remains in several, but not all specifications.
When Does Gender Occupational Segregation
Start? An Experimental Evaluation of the Effects of Gender and Parental
Occupation in the Apprenticeship Labor Market Paper
The apprenticeship
market is the earliest possible entry point into the workforce in developed
economies. Since early labor market shocks are likely magnified throughout
professional life, avoiding mismatches between talent and occupations – for
example due to gender- or status-based discrimination – appears crucial. This
experimental study investigates the effects of applicant gender and its
interaction with parental occupation on the probability of receiving an
invitation to an interview in the Swiss apprenticeship labor market. We find no
robust evidence of differential treatment by employers in most cases. Policies
aimed at fostering gender equality across occupations should therefore focus on
removing gender related educational or cultural barriers influencing
occupational choices at young ages.
Keywords: Field
Experiment, Correspondence Test, Discrimination, Gender, Parental Occupation
JEL Codes: C93, J16, J71
Institutions and the Sectoral Organization of
Production Paper
Do institutions, such as the Rule of Law, affect the way in which output
is generated? This paper provides evidence suggesting that countries with
better contract enforcement have disproportionately higher employment shares in
sectors that interact more with other input-providing sectors; further, such
countries also experience disproportionately higher sectoral value added in
those sectors. The data are consistent with institutions affecting the productivity
of technological use or adoption, thus acting as sectoral productivity
shifters. However, labor (mis)allocation (and not
direct productivity loss) is quantitatively the most important effect of poor
institutional quality in reducing sectoral value added. These effects are
statistically undetected once we rely on data aggregated across the subsectors
of manufacturing. Yet, when sectoral data are used, a one standard deviation
increment in the Rule of Law indicator results in an increase of the overall value
added in the manufacturing sector of 36%. Our findings support the notion that
sectoral transformation is grounded on good institutional quality.
Keywords: Sectoral organization of output, employment shares,
institutions, contractual enforcement, input-output, complexity
JEL Codes: O43, P16
Fundamental Resource Curse Paper
Abstract: This
paper proposes a fundamental model of the resource curse problem. Outcomes,
such as the formation of coalitions -- groups of financiers who engage armies
to gain control of the resources -- as well as the size of the corresponding
armies, are derived endogenously from the economy's fundamentals. The model
predicts that inefficient outcomes -- in the form of either conflict or a deterrence
army solution -- will always occur as long as the value of natural resources to
capture is positive and the opportunity cost of time -- which partly determines
soldiers' wages -- is finite.
Keywords: Endogenous
political economy, conflict, deterrence, natural resource curse, inefficiency,
general equilibrium.
JEL Codes: H11, O11, P16
Discrimination in Hiring Based on Potential and Realized Fertility:
Evidence from a Large-Scale Field Experiment Paper
Abstract: Due to conventional gender norms,
women are more likely to be in charge of childcare
than men. From an employer‟s perspective, in
their fertile age they are also at “risk” of pregnancy. Both factors
potentially affect hiring practices of firms. We conduct a largescale
correspondence test in Germany,
Switzerland, and Austria, sending out approx. 9,000 job applications, varying
job candidate‟s personal characteristics such
as marital status and age of children. We find evidence that, for part-time
jobs, married women with older kids, who likely finished their childbearing
cycle and have more projectable childcare chores than women with very young
kids, are at a significant advantage vis-àvis other
groups of women. At the same time, married, but childless applicants, who have
a higher likelihood to become pregnant, are at a disadvantage compared to
single, but childless applicants to part-time jobs. Such effects are not
present for full-time jobs, presumably, because by applying to these in
contrast to part-time jobs, women signal that they have arranged for external
childcare.
Finance and Competition Paper
Abstract:
We investigate the role of financial constraints for product market competition
in a general equilibrium model, where firms may differ in terms of own wealth
and/or efficiency. We find that the amelioration of financial constraints always increases competition (it lowers
the Lerner index of markups) in financially dependent sectors even when other
standard concentration indexes indicate otherwise. Our analysis implies that
disruptions in financial markets –such as the recent financial crisis– may have
adverse effects on competition in product markets, a cost that has not been
identified before.
Keywords: Financial
Development, Liberalization, Market Structure, Product Market Competition.
JEL Codes: L1, E2
Uncertainty and the Allocation of Resources Paper
Abstract: We study the effects of uncertainty
on the allocation of resources in the standard, general equilibrium,
two-sector, two-factor model. The elasticity of substitution in production vs
that in consumption plays the key role in determining whether uncertainty
attracts or repels resources, while risk aversion is of lesser importance. The
model predicts that countries with greater production flexibility (better
factor substitution possibilities) will be able to pursue more risky activities
than less flexible economies.
Keywords: Uncertainty,
General Equilibrium, Two Factor-Sector Model, Flexibility.
JEL Codes: E2, D5, D8
On the Equivalence of Quantitative Trade Restrictions
and Tariffs Paper
Abstract: A major difficulty in the conduct of industrial
policy is that governments rarely have advance knowledge of an infant
industry’s long term potential. We argue that alternative commercial policy
instruments may be associated with differences in the speed and the accuracy
with which the government learns about industry type.
Keywords: Industrial Policy,
Quantitative Trade Restrictions, Tariffs, Learning, Infant Industry.
JEL Classification: E32, E52.
Income Insecurity and Youth
Emancipation: A Theoretical Approach Paper
Abstract: In this paper, we propose a
theoretical model to study the effect of income insecurity of parents and
offspring on the child’s residential choice. Parents are partially altruistic
toward their children and will provide financial help to an independent child
when her income is low relative to the parents’. We find that children of more
altruistic parents are more likely to become independent. However, first-order stochastic dominance (FOSD)
shifts in the distribution of the child’s future income (or her parents’) have
ambiguous effects on the child’s residential choice. Parental altruism is the
very source of ambiguity in the results. If parents are selfish or the joint
income distribution of parents and child places no mass on the region where
transfers are provided, a FOSD shift in the distribution of the child’s
(parents’) future income will reduce (raise) the child’s current income
threshold for independence.
Keywords:
Partial Altruism, Emancipation, Coresidence, Income Insecurity, Option value,
Stochastic Dominance.
JEL Classification: D1, D8, J1, J2.
Youth Emancipation and Perceived Job Insecurity
of Parents and Children Paper
Abstract: The age at which children leave the parental home differs considerably
across countries. In this paper we argue that lower job insecurity of parents
and higher job insecurity of children delay emancipation. We provide aggregate
evidence which supports this hypothesis for 12 European countries and which
helps account for the increase in coresidence in the 1990s. We also give
microeconometric evidence for
Keywords:
Emancipation, Job security, Option value.
JEL
Classification: J1, J2.
Knowledge,
Technology Adoption and Financial Innovation Paper
Abstract: Why are new financial instruments
created? This paper proposes the view that financial development arises as a
response to the contractual needs of emerging technologies. Exogenous
technological progress generates a demand for new financial instruments in
order to share risk or overcome private information, for example. A model of
the dynamics of technology adoption and the evolution of financial instruments
that support such adoption is presented. Early adoption may be required for
financial markets to learn the technology; once learned, financial innovation
boosts adoption further. Financial learning emerges as a source of
technological diffusion. The analysis identifies a causality link from
technology to finance which is nonetheless consistent with empirical findings
of a positive effect of current financial development on future growth.
Keywords: Financial
innovation, Technology adoption, Learning.
JEL Codes: G20, N20, O30.
A Closed-Form Solution to a Model of
Two-Sided, Partial Altruism Paper
Abstract: This paper
presents a closed-form characterization of the allocation of resources in an
overlapping generation's model of two-sided, partial altruism. Three
assumptions are made: (i) parents and children play Markov strategies, (ii)
utility takes the CRRA form, and (iii) the income of children is stochastic but
proportional to the saving of parents. In families where children are rich
relatively to their parents, saving rates -- measured as a function of the
family's total resources -- are higher compared to the case when children are
poor relative to their parents. Income redistribution from the old to the
young, therefore, leads to an increase in aggregate saving.
Keywords:
Closed form, Value function, Partial altruism, Markov strategies
JEL Codes: C61, D13.
Inappropriate
Technology (with Krishna Kumar) Paper
[Presented at the 2002 Minnesota
Workshop in Macroeconomic Theory.]
Abstract: In this paper, we investigate
incentives, other than altruism, developed countries have in improving
developing country technologies. We propose a simple model of international
trade between two regions, in which individuals have preferences over an
inferior good and a luxury good. The poor region has a comparative advantage in
the production of the inferior good, and the rich in the luxury good. Even when
costly adaptation of the technology to the poor region's characteristics is
required -- which makes the technology inappropriate for local use -- there are
parameter configurations for which the rich region has an incentive to incur
this cost. It benefits from an improvement in its terms of trade; by raising
the efficiency of the productive process of the developing region, it can also
redirect its own productive resources toward the luxury good. Indeed, there are
cases where the rich region would prefer to improve the poor region's
technology for producing the inferior good rather than its own. We apply our
model to the Green Revolution and provide a quantitative assessment of its
welfare effects.
Keywords: Developing
country technology improvements, Dynamic trade models, Welfare analysis.
JEL Classification: O11, O33,
F11, F41
Altruism,
Labor Supply and Redistributive Neutrality Paper
Abstract: This paper presents a model of
familial altruism in which labor supply is chosen endogenously. The model is
used to address the predictions of Ricardian Equivalence, both theoretical and
empirical. It is argued that, to the extent that income variation in the data
comes mostly from wage and effort changes, the empirical tests of neutrality
are misspecified. Numerical estimates suggest that quantitatively important
deviations from neutrality may be at work.
Keywords: Ricardian
Equivalence, redistributive neutrality, altruism, endogenous labor supply,
private information.
JEL Classification: D19,
D64, D82, J22.
Altruism, Redistributive
Neutrality and Labor Supply (with extended appendices) Paper
Abstract: The psychology literature firmly
establishes that optimism is an attribute of mentally healthy
individuals. Data show, for example, that people systematically
overestimate future income. Optimism may be motivated by the human
tendency to derive utility from the anticipation of positive future
events. Anticipation utility is conceptually distinct from the
utility induced by actual events as they occur. Here, we model the
utility of a decision maker as the weighted sum of both
components. Because anticipation utility increases with the believed
probability of good outcomes, the utility-maximizing decision maker distorts
his beliefs away from rational expectations, even though he must then adopt
actions based on those distorted beliefs. Such rational optimism can
affect effort levels and other behavior with macroeconomic
consequences. Considering saving for retirement, we find that when
risk-aversion exceeds unity, the optimal believed return to saving exceeds the
true return, saving is lower than the amount chosen by a conventional
expected-utility maximizer, and both deviations increase in the weight assigned
to anticipation. These results are in line with two well-known empirical
facts: the low intertemporal elasticity of substitution and the puzzling drop
in consumption following anticipated retirement.
JEL Classification: D81, D83,
D84.
A
Recursive Formulation for Repeated Agency with History Dependence (with Christopher Phelan)
Journal of Economic
Theory 91, 223-247
(2000). JET
Abstract: We present general recursive
methods to handle environments where privately observed variables are linked
over time. We show that incentive compatible contracts are implemented
recursively with a threat keeping constraint in addition to the usual temporary
incentive compatibility and promise keeping conditions.
Keywords: Mechanism design,
Repeated agency.
JEL Classification: D30, D31,
D80, D82.