Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field

By Arun G. Chandrasekhar, Cynthia Kinnan, and Horacio Larreguy

American Economic Journal: Applied Economics, October 2018

Lack of well-functioning formal institutions leads to reliance on social networks to enforce informal contracts. Social proximity and network centrality may affect cooperation. To assess the extent to which networks substitute for enforcement, we conducte...

Identifying and Estimating Neighborhood Effects

By Bryan S. Graham

Journal of Economic Literature, June 2018

Residential segregation by race and income are enduring features of urban America. Understanding the effects of residential segregation on educational attainment, labor market outcomes, criminal activity, and other outcomes has been a leading project of t...

Identifying Sorting in Practice

By Cristian Bartolucci, Francesco Devicienti, and Ignacio Monzón

American Economic Journal: Applied Economics, October 2018

We propose a novel methodology to uncover the sorting pattern in labor markets. We identify the strength of sorting solely from a ranking of firms by profits. To discern the sign of sorting, we build a noisy ranking of workers from wage data. Our test for...

Why Did the Democrats Lose the South? Bringing New Data to an Old Debate

By Ilyana Kuziemko and Ebonya Washington

American Economic Review, October 2018

A long-standing debate in political economy is whether voters are driven primarily by economic self-interest or by less pecuniary motives like ethnocentrism. Using newly available data, we reexamine one of the largest partisan shifts in a modern democracy...

Dynamic Certification and Reputation for Quality

By Iván Marinovic, Andrzej Skrzypacz, and Felipe Varas

American Economic Journal: Microeconomics, May 2018

We study firm's incentives to build and maintain reputation for quality, when quality is persistent and can be certified at a cost. We characterize all reputation-dependent MPEs. They vary in frequency of certification and payoffs. Low payoffs arise in eq...

Temporary Price Changes, Inflation Regimes, and the Propagation of Monetary Shocks

By Fernando Alvarez and Francesco Lippi

American Economic Journal: Macroeconomics, January 2020

We present a sticky price model that features the coexistence of many price changes, most of which are temporary, with a modest flexibility of the aggregate price level. Stickiness is introduced in the form of a price plan, namely a set of two prices: eit...

Delegated Expertise, Authority, and Communication

By Inga Deimen and Dezső Szalay

American Economic Review, April 2019

A decision maker needs to reach a decision and relies on an expert to acquire information. Ideal actions of expert and decision maker are partially aligned and the expert chooses what to learn about each. The decision maker can either get advice from the ...

Report of the Editor: American Economic Review: Insights

By Amy Finkelstein

AEA Papers and Proceedings, May 2018

Cooperation in Polygynous Households

By Abigail Barr, Marleen Dekker, Wendy Janssens, Bereket Kebede, and Berber Kramer

American Economic Journal: Applied Economics, April 2019

Using a carefully designed series of public goods games, we compare, across monogamous and polygynous households, the willingness of husbands and wives to cooperate to maximize household gains. Compared to monogamous husbands and wives, polygynous husband...

Fiscal Rules and Discretion in a World Economy

By Marina Halac and Pierre Yared

American Economic Review, August 2018

Governments are present-biased toward spending. Fiscal rules are deficit limits that trade off commitment to not overspend and flexibility to react to shocks. We compare coordinated rules, chosen jointly by a group of countries, to uncoordinated rules. If...

Real Exchange Rates and Sectoral Productivity in the Eurozone

By Martin Berka, Michael B. Devereux, and Charles Engel

American Economic Review, June 2018

We investigate the link between real exchange rates and sectoral TFP for eurozone countries. We show that real exchange rate variation, both cross-country and time-series, closely accords with an amended Balassa-Samuelson interpretation, incorporating sec...

The Causes and Consequences of Test Score Manipulation: Evidence from the New York Regents Examinations

By Thomas S. Dee, Will Dobbie, Brian A. Jacob, and Jonah Rockoff

American Economic Journal: Applied Economics, July 2019

We show that the design and decentralized scoring of New York's high school exit exams—the Regents Examinations—led to systematic manipulation of test scores just below important proficiency cutoffs. Exploiting a series of reforms that eliminated scor...

Housing Booms and Busts, Labor Market Opportunities, and College Attendance

By Kerwin Kofi Charles, Erik Hurst, and Matthew J. Notowidigdo

American Economic Review, October 2018

We study how the recent housing boom and bust affected college enrollment during the 2000s. We exploit cross-city variation in local housing booms, which improved labor market opportunities for young men and women. We find that the boom lowered college en...

Disclosure to a Psychological Audience

By Elliot Lipnowski and Laurent Mathevet

American Economic Journal: Microeconomics, November 2018

We study how a benevolent expert should disclose information to an agent with psychological concerns. We first provide a method to compute an optimal information policy for many psychological traits. The method suggests, for instance, that an agent suffer...

Mismatch Unemployment and the Geography of Job Search

By Ioana Marinescu and Roland Rathelot

American Economic Journal: Macroeconomics, July 2018

Could we significantly reduce US unemployment by helping job seekers move closer to jobs? Using data from the leading employment board CareerBuilder.com, we show that, indeed, workers dislike applying to distant jobs: job seekers are 35 percent less likel...

Projections and Uncertainties about Climate Change in an Era of Minimal Climate Policies

By William Nordhaus

American Economic Journal: Economic Policy, August 2018

Climate change remains one of the major international environmental challenges facing nations. Up to now, nations have adopted minimal policies to slow climate change. Moreover, there has been no major improvement in emissions trends as of the latest data...

The Political Economy of Municipal Pension Funding

By Jeffrey Brinkman, Daniele Coen-Pirani, and Holger Sieg

American Economic Journal: Macroeconomics, July 2018

Many US municipalities have committed to pay retirement benefits to public sector employees but have not saved enough to fulfill these obligations. This paper studies the determinants of municipal pension funding and its implications for intergenerational...

The Economic Impact of Hurricane Katrina on Its Victims: Evidence from Individual Tax Returns

By Tatyana Deryugina, Laura Kawano, and Steven Levitt

American Economic Journal: Applied Economics, April 2018

Hurricane Katrina destroyed over 200,000 homes and led to massive economic and physical dislocation. Using a panel of tax return data, we provide one of the first comprehensive analyses of the hurricane's long-term economic impact on its victims. Hurrican...

The Surge of Economic Nationalism in Western Europe

[Symposium: Modern Populism]

By Italo Colantone and Piero Stanig

Journal of Economic Perspectives, Fall 2019

We document the surge of economic nationalist and radical-right parties in western Europe between the early 1990s and 2016. We discuss how economic shocks contribute to explaining this political shift, looking in turn at theory and evidence on the polit...

Role Models or Individual Consulting: The Impact of Personalizing Micro-entrepreneurship Training

By Jeanne Lafortune, Julio Riutort, and José Tessada

American Economic Journal: Applied Economics, October 2018

Using a randomized experiment in Chile we study the impact role models have in the context of a training program for micro-entrepreneurs. We show that being in a group randomly chosen to be visited by a successful alumnus of the program increases househol...