1. Information Frictions and Access to the Paycheck Protection Program
Christopher Neilson, John Eric Humphries, and Gabriel Ulyssea #27624
Abstract: The Paycheck Protection Program(PPP) extended 669 billion dollars of forgivable loans in an unprecedented effort to support small businesses affected by the COVID-19 crisis. This paper provides evidence that information frictions and the 「first-come, first-served」 design of the PPP program skewed its resources towards larger firms and may have permanently reduced its effectiveness. Using new daily survey data on small businesses in the U.S., we show that the smallest businesses were less aware of the PPP and less likely to apply. If they did apply, the smallest businesses applied later, faced longer processing times, and were less likely to have their application approved. These frictions may have mattered, as businesses that received aid report fewer layoffs, higher employment, and improved expectations about the future.
2. A Dynamic Theory of Lending Standards
Michael J. Fishman, Jonathan A. Parker, and Ludwig Straub #27610
Abstract: We develop a tractable dynamic model of credit markets in which lending standards and the quality of potential borrowers are endogenous. Competitive banks privately choose their lending standards: whether to pay a cost to screen out some unprofitable borrowers. Lending standards have negative externalities and are dynamic strategic complements: tighter screening worsens the future pool of borrowers for all banks and increases their incentives to screen in the future. Lending standards can amplify and prolong temporary downturns, affecting lending volume, credit spreads, and default rates. We characterize constrained-optimal policy which can generally be implemented as a government loan insurance program. When markets recover, they may do so only slowly, a phenomenon we call 「slow thawing.」 Finally, we show that limits on lending such as from capital constraints naturally incentivize tight lending standards, further amplifying shocks to credit markets.
3. The Impact of Social Security on Pension Claiming and Retirement: Active vs. Passive Decisions
Rafael Lalive, Arvind Magesan, and StefanStaubli #27616
Abstract: We exploit a unique Swiss reformto identify the importance of passivity, claiming social security benefits atthe Full Retirement Age (FRA). Sharp discontinuities generated by the reformreveal that raising the FRA while imposing small early claiming penaltiessignificantly delays pension claiming and retirement, but imposing largepenalties and holding the FRA fixed does not. The nature of the reform allowsus to identify that between 47 and 69% of individuals are passive, whileimposing additional structure point identifies the fraction at 67%. An originalsurvey of Swiss pensioners reveals that reference-dependent preferences is themain source of passivity.
4. Nursing Home Staff Networks and COVID-19
M. Keith Chen, Judith A. Chevalier, and Elisa F. Long #27608
Abstract: Nursing homes and other longterm-care facilities account for a disproportionate share of COVID-19 cases andfatalities worldwide. Outbreaks in U.S. nursing homes have persisted despitenationwide visitor restrictions beginning in mid-March. An early report issuedby the Centers for Disease Control and Prevention identified staff membersworking in multiple nursing homes as a likely source of spread from the LifeCare Center in Kirkland, Washington to other skilled nursing facilities. Thefull extent of staff connections between nursing homes---and the crucial rolethese connections serve in spreading a highly contagious respiratoryinfection---is currently unknown given the lack of centralized data oncross-facility nursing home employment. In this paper, we perform the firstlarge-scale analysis of nursing home connections via shared staff usingdevice-level geolocation data from 30 million smartphones, and find that 7percent of smartphones appearing in a nursing home als! o appeared in at leastone other facility---even after visitor restrictions were imposed. We constructnetwork measures of nursing home connectedness and estimate that nursing homeshave, on average, connections with 15 other facilities. Controlling fordemographic and other factors, a home's staff-network connections and itscentrality within the greater network strongly predict COVID-19 cases.Traditional federal regulatory metrics of nursing home quality are unimportantin predicting outbreaks, consistent with recent research. Results suggest thateliminating staff linkages between nursing homes could reduce COVID-19infections in nursing homes by 44 percent.
5. Do Unemployment Insurance Benefits Improve Match Quality? Evidence from Recent U.S. Recessions
Ammar Farooq, Adriana D. Kugler, and Umberto Muratori #27574
Abstract: We present new evidence on theimpact of more generous unemployment insurance (UI) on workers』 ability to findjobs better suited to their skills. Using Longitudinal Employer-HouseholdDynamics data, we find the UI extensions introduced in the U.S. improved thequality of worker-job matches. Using Current Population Survey data, we also findthat longer UI benefit durations decrease the mismatch between workers』educational attainments and the educational requirements of jobs. We findbigger effects of UI on match quality for those more likely to be liquidityconstrained—women, non-whites and less-educated workers—,suggesting UIextensions improve the functioning of the labor market.
6. COVID-19 Prevention and Air Pollution in the Absence of a Lockdown
Hung-Hao Chang, Chad Meyerhoefer, andFeng-An Yang #27604
Abstract: Recent studies demonstrate thatair quality improved during the coronavirus pandemic due to the imposition ofsocial lockdowns. We investigate the impact of COVID-19 on air pollution in thetwo largest cities in Taiwan, which were not subject to economic or mobilityrestrictions. Using a generalized difference-in-differences approach andreal-time data on air quality and transportation, we estimate that levels ofsulfur dioxide, nitrogen dioxide and particulate matter increased 5 - 12percent relative to 2017 - 2019. We demonstrate that this counterintuitivefinding is likely due to a shift in preferences for mode of transport away frompublic transportation and towards personal automobiles. Similar COVID-19prevention behaviors in regions or countries emerging from lockdowns couldlikewise result in an increase in air pollution.
7. Initial Impacts of the Pandemic on Consumer Behavior: Evidence from Linked Income, Spending, and Savings Data
Natalie Bachas, Peter Ganong, Pascal J.Noel, Joseph S. Vavra, Arlene Wong, Diana Farrell, and Fiona E. Greig #27617
Abstract: We use U.S. household-level bankaccount data to investigate the heterogeneous effects of the pandemic onspending and savings. Households across the income distribution all cutspending from March to early April. Since mid April, spending has reboundedmost rapidly for low-income households. We find large increases in liquid assetbalances for households throughout the income distribution. However,lower-income households contribute disproportionately to the aggregate increasein balances, relative to their pre-pandemic shares. Taken together, our resultssuggest that spending declines in the initial months of the recession wereprimarily caused by direct effects of the pandemic, rather than resulting fromlabor market disruptions. The sizable growth in liquid assets we observe forlow-income households suggests that stimulus and insurance programs during thisperiod likely played an important role in limiting the effects of labor marketdisruptions on spending.
8. The Macroeconomic Consequences of Infrastructure Investment
Valerie A. Ramey #27625
Abstract: Can greater investment ininfrastructure raise U.S. long-run output? Are infrastructure projects a goodshort-run stimulus to the economy? This paper uses insights from themacroeconomics literature to address these questions. I begin by analyzing theeffects of government investment in both a stylized neoclassical model and amedium-scale New Keynesian model, highlighting the economic mechanisms thatgovern the strength of the short-run and long-run impacts. The analysisconfirms earlier findings that the implementation delays inherent ininfrastructure projects reduce short-run multipliers in most cases. Incontrast, long-run multipliers can be sizable when government capital isproductive. Moreover, these multipliers are greater if the economy starts froma point below the socially optimal amount of public capital. Turning toempirical estimation, I use the theoretical model to explain the econometricchallenges to estimating the elasticity of output to public infrastruct! ure.Using both artificial data generated by simulations of the model and extensionsof existing empirical work, I demonstrate how both general equilibrium effectsand optimal choice of public capital are likely to impart upward biases tooutput elasticity estimates. Finally, I review and extend some empiricalestimates of the short-run effects, focusing on infrastructure spending in theARRA.
9. The Economic Consequences of R̂ = 1: Towards a Workable Behavioural Epidemiological Model of Pandemics
Joshua S. Gans #27632
Abstract: This paper reviews the literatureon incorporating behavioural elements into epidemiological models of pandemics.While modelling behaviour by forward-looking rational agents can provide someinsight into the time paths of pandemics, the non-stationary nature ofSusceptible-Infected-Removed (SIR) models of viral spread makescharacterisation of resulting equilibria difficult. Here I posit a shortcutthat can be deployed to allow for a tractable equilibrium model of pandemicswith intuitive comparative statics and also a clear prediction that effectivereproduction numbers (that is, R) will tend towards 1 in equilibrium. Thismotivates taking R̂=1 as an equilibrium starting point for analyses ofpandemics with behavioural agents. The implications of this for the analysis ofwidespread testing, tracing, isolation and mask-use is discussed.
10. Skilled Human Capital and High-Growth Entrepreneurship: Evidence from Inventor Inflows
Benjamin Balsmeier, Lee Fleming, Matt Marx,and Seungryul Ryan Shin #27605
Abstract: To what extent does high-growthentrepreneurship depend on skilled human capital? We estimate the impact of theinflow of inventors into a region on the founding of high-growth firms,instrumenting mobility with the county-level share of millions of inventorsurnames in the 1940 U.S. Census. Inventor immigration increases county-levelhigh-growth entrepreneurship; estimates range from 29-55 immigrating inventorsfor each new high-growth firm, depending on the region and model. We also finda smaller but significant negative effect of inventor arrival onentrepreneurship in nearby counties.
11. Understanding the German Criticism of the Target System and the Role of Central Bank capital
Roberto Perotti #27627
Abstract: Criticism of the Target system bya group of central European scholars has become a widespread argument againstthe policies of the European Central Bank and even the integrity of themonetary union, and even standard fare in the media and in the political debatein Germany. Most academics and practitioners that have participated in thedebate have been dismissive of the German preoccupations. In this paper, Ifirst try and clarify the many remaining misunderstandings about the workingsand implications of the Target system. I propose a unified, systematic andsimple approach to the study of the workings of the Target system in responseto different shocks and in comparison with different alternative regimes. Ithen argue that the German criticism of the Target system is not so unfoundedafter all, and should be taken seriously, both on theoretical grounds and forits political implications.
12. Effects of State COVID-19 Closure Policy on NON-COVID-19 Health Care Utilization
Engy Ziedan, Kosali I. Simon, and Coady Wing #27621
Abstract: The U.S. health care system hasexperienced great pressure since early March 2020 as it pivoted to providingnecessary care for COVID-19 patients. But there are signs that non-COVID-19care use declined during this time period. We examine near real time data froma nationwide electronic healthcare records system that covers over 35 millionpatients to provide new evidence of how non-COVID-19 acute care andpreventive/primary care have been affected during the epidemic. Using eventstudy and difference-in-difference models we find that state closure policies(stay-at-home or non-essential business closures) are associated with largedeclines in ambulatory visits, with effects differing by type of care. Stateclosure policies reduced overall outpatient visits by about 15-16 percentwithin two weeks. Outpatient visits for health check-ups and well careexperience very large declines during the epidemic, with substantial effectsfrom state closure policies. In contrast, mental health outpatient visitsdeclined less than other care, and appear less affected by state closurepolicies. We find substitution to telehealth modalities may have played animportant role in mitigating the decline in mental health care utilization.Aggregate trends in outpatient visits show a 40% decline after the first weekof March 2020, only a portion of which is attributed to state policy. A reboundstarts around mid April that does not appear to be explained by state reopeningpolicy. Despite this rebound, care visits still remain below the pre-epidemiclevels in most cases.
13. Randomization in the Tropics Revisited: a Theme and Eleven Variations
Angus Deaton #27600
Abstract: Randomized controlled trials havebeen used in economics for 50 years, and intensively in economic developmentfor more than 20. There has been a great deal of useful work, but RCTs have nounique advantages or disadvantages over other empirical methods in economics.They do not simplify inference, nor can an RCT establish causality. Many of thedifficulties were recognized and explored in economics 30 years ago, but aresometimes forgotten. I review some of the most relevant issues here. The mosttroubling questions concern ethics, especially when very poor people areexperimented on. Finding out what works, even if such a thing is possible, isin itself a deeply inadequate basis for policy
14. Do State Earned Income Tax Credits Increase Participation in the Federal EITC?
David Neumark and Katherine E. Williams#27626
Abstract: In recent years, many states andsome local governments implemented or expanded their own supplemental EarnedIncome Tax Credits (EITCs). The expansion of state EITCs may have stemmed inlarge part from wanting to provide a more generous program than the federalprogram, because state EITCs increase transfer payments to low-incomerecipients who qualify. However, state and local governments can also benefitfrom maximizing participation of their constituents in the federal EITC, andthere are several reasons why state or local EITCs could increase participationin the federal EITC program. We find some evidence suggesting that state EITCsmay increase federal EITC program participation among low-skilled single filerswith children.
15. Window Dressing in the Public Sector: A Case Study of China’s Compulsory Education Promotion Program
Hanming Fang, Chang Liu, and Li-An Zhou#27628
Abstract: We examine window dressingphenomenon in the public sector by studying the strategic responses of Chineselocal officials to the compulsory education promotion program launched by thecentral government in the 1990s. According to this program, the Chinesecounties should receive inspections on whether the compulsory educationaltargets were achieved on pre-scheduled time by provincial governments; andfailing to pass the inspection would have severe negative career consequencesfor the county leaders. We find that county-level educational expenditures sawa sustained increase before the inspection, but a sharp drop immediately afterthe inspection. Local officials who were more likely to be inspected withintheir tenures window-dressed more aggressively. As a result, middle schoolenrollment rates declined significantly after the inspection, and rural girlsbore the blunt of the decline in school enrollment.
16. Regulatory Arbitrage in Teacher Hiring and Retention: Evidence from Massachusetts Charter Schools
Jesse M. Bruhn, Scott A. Imberman, andMarcus A. Winters #27607
Abstract: We study personnel flexibility incharter schools by exploring how teacher retention varies with teacher andschool quality in Massachusetts. Charters are more likely to lose their highestand lowest value-added teachers. Low performers tend to exit public education,while high performers tend to switch to traditional public schools. Torationalize these findings, we propose a model in which educators with highfixed-costs use charter schools to explore teaching careers before obtaininglicenses required for higher paying public sector jobs. The model suggestscharter schools create positive externalities for traditional public schools byincreasing the average quality of available teachers.
17. Collaborating During Coronavirus: The Impact of COVID-19 on the Nature of Work
Evan DeFilippis, Stephen Michael Impink,Madison Singell, Jeffrey T. Polzer, and Raffaella Sadun #27612
Abstract: We explore the impact of COVID-19on employee's digital communication patterns through an event study oflockdowns in 16 large metropolitan areas in North America, Europe and theMiddle East. Using de- identified, aggregated meeting and email meta-data from3,143,270 users, we find, compared to pre- pandemic levels, increases in thenumber of meetings per person (+12.9 percent) and the number of attendees permeeting (+13.5 percent), but decreases in the average length of meetings (-20.1percent). Collectively, the net effect is that people spent less time inmeetings per day (-11.5 percent) in the post- lockdown period. We also findsignificant and durable increases in length of the average workday (+8.2percent, or +48.5 minutes), along with short-term increases in email activity.These findings provide insight from a novel dataset into how the nature of workhas changed for a large sample of knowledge workers. We discuss these changesin light of the ongoing challenges fa! ced by organizations and workersstruggling to adapt and perform in the face of a global pandemic.
18. Valuing the Global Mortality Consequences of Climate Change Accounting for Adaptation Costs and Benefits
Tamma A. Carleton, Amir Jina, Michael T.Delgado, Michael Greenstone, Trevor Houser, Solomon M. Hsiang, Andrew Hultgren,Robert E. Kopp, Kelly E. McCusker, Ishan B. Nath, James Rising, Ashwin Rode, HeeKwon Seo, Arvid Viaene, Jiacan Yuan, and Alice Tianbo Zhang #27599
Abstract: This paper develops the firstglobally comprehensive and empirically grounded estimates of mortality risk dueto future temperature increases caused by climate change. Using 40 countries'subnational data, we estimate age-specific mortality-temperature relationshipsthat enable both extrapolation to countries without data and projection intofuture years while accounting for adaptation. We uncover a U-shapedrelationship where extreme cold and hot temperatures increase mortality rates,especially for the elderly, that is flattened by both higher incomes andadaptation to local climate (e.g., robust heating systems in cold climates andcooling systems in hot climates). Further, we develop a revealed preferenceapproach to recover unobserved adaptation costs. We combine these componentswith 33 high-resolution climate simulations that together capture scientificuncertainty about the degree of future temperature change. Under a highemissions scenario, we estimate the mean inc! rease in mortality risk is valuedat roughly 3.2% of global GDP in 2100, with today's cold locations benefitingand damages being especially large in today's poor and/or hot locations.Finally, we estimate that the release of an additional ton of CO2 today willcause mean [interquartile range] damages of $36.6 [-$7.8, $73.0] under a highemissions scenario and $17.1 [-$24.7, $53.6] under a moderate scenario, using a2% discount rate that is justified by US Treasury rates over the last twodecades. Globally, these empirically grounded estimates substantially exceedthe previous literature's estimates that lacked similar empirical grounding,suggesting that revision of the estimated economic damage from climate changeis warranted.
19. Designing Disability Insurance Reforms: Tightening Eligibility Rules or Reducing Benefits
Andreas Haller, Stefan Staubli, and JosefZweimüller #27602
Abstract: We study the welfare effects ofdisability insurance (DI) and derive social-optimality conditions for the twomain DI policy parameters: (i) DI eligibility rules and (ii) DI benefits.Causal evidence from two DI reforms in Austria generate fiscal multipliers(total over mechanical cost reductions) of 2.0-2.5 for stricter DI eligibilityrules and of 1.3-1.4 for lower DI benefits. Stricter DI eligibility rulesgenerate lower income losses (earnings + transfers), particularly at the lowerend of the income distribution. Our analysis suggests that the welfare cost ofrolling back the Austrian DI program is lower through tightening eligibilityrules than through lowering benefits. Applying our framework to the US DIsystem suggests that both loosening eligibility rules, and increasing benefits,would be welfare increasing.
20. Family Spillovers in Field of Study
Gordon B. Dahl, Dan-Olof Rooth, and Anders Stenberg #27618
Abstract: This paper estimates peer effectsboth from older to younger siblings and from parents to children in academicfields of study. Our setting is secondary school in Sweden, where admissions tooversubscribed fields is determined based on a student's GPA. Using an RDdesign, we find strong spillovers in field choices that depend on the gendermix of siblings and whether the field is gender conforming. There are alsolarge intergenerational effects from fathers and mothers to sons, except infemale-dominated fields, but little effect for daughters. These spillovers havelong-term consequences for occupational segregation and wage gaps by gender.
21. Self-Harming Trade Policy? Protectionism and Production Networks
Alessandro Barattieri and Matteo Cacciatore#27630
Abstract: Using monthly data on temporarytrade barriers (TTBs), we estimate the dynamic employment effects ofprotectionism through vertical production linkages. First, exploitingprocedural details of TTBs and high-frequency data, we identify movements inprotectionism exogenous to economic fundamentals. We then use input-outputtables to construct measures of protectionism affecting downstream producers.Finally, we estimate panel local projections using the identified trade-policyshocks. Protectionism has small and insignificant beneficial effects inprotected industries. In contrast, the effects in downstream industries arenegative, sizable, and significant. The employment decline follows an increasein intermediate-inputs and final goods prices.
22. Persuasion on Networks
Georgy Egorov and Konstantin Sonin #27631
Abstract: We analyze persuasion in a modelin which each receiver can buy a direct access to the sender's signal or relyon her network connections to get it. For the sender, a higher bias increasesthe impact per direct receiver, yet diminishes the willingness of agents toreceive information. Contrary to naive intuition, the optimal propaganda mighttarget peripheral, rather than centrally-located agents, and is at its maximumlevels when the probability that information flows between agents is close tozero or one, but not in-between. The impact of network density depends on thisprobability as well.
23. At What Level Should One Cluster Standard Errors in Paired Experiments, and in Stratified Experiments with SmallStrata?
Clément de Chaisemartin and JaimeRamirez-Cuellar #27609
Abstract: In paired experiments, units arematched into pairs, and one unit of each pair is randomly assigned totreatment. To estimate the treatment effect, researchers often regress theiroutcome on a treatment indicator and pair fixed effects, clustering standarderrors at the unit-of-randomization level. We show that the variance estimatorin this regression may be severely downward biased: under constant treatmenteffect, its expectation equals 1/2 of the true variance. Instead, we show thatresearchers should cluster their standard errors at the pair level. Usingsimulations, we show that those results extend to stratified experiments withfew units per strata.
24. Small Business Survival Capabilities and Policy Effectiveness: Evidence from Oakland
Robert P. Bartlett III and Adair Morse#27629
Abstract: Using unique City of Oakland dataduring COVID-19, we document that small business survival capabilities vary byfirm size as a function of revenue resiliency, labor flexibility, and committedcosts. Nonemployer businesses rely on low cost structures to survive 73%declines in own-store foot traffic. Microbusinesses (1-to-5 employees) dependon 14% greater revenue resiliency. Enterprises (6-to-50 employees) havetwice-as-much labor flexibility, but face 11%-to-22% higher residual closurerisk from committed costs. Finally, inconsistent with the spirit ofChetty-Friedman-Hendren-Sterner (2020) and Granja-Makridis-Yannelis-Zwick(2020), PPP application success increased medium-run survival probability by20.5%, but only for microbusinesses, arguing for size-targeting of policies.
25. Efficient Redistribution
Corina Boar and Virgiliu Midrigan #27622
Abstract: We ask: what are the mostefficient means of redistribution in an unequal society? We answer thisquestion by characterizing the optimal shape of non-linear income and wealthtaxes in a dynamic general equilibrium model with uninsurable idiosyncraticrisk. Our analysis reproduces the distribution of income and wealth in theUnited States and explicitly takes into account the long-lived transitiondynamics after policy reforms. We find that a uniform flat tax on capital andlabor income combined with a lump-sum transfer is nearly optimal. Though taxingwealth and allowing for increasing marginal income tax schedules raisesutilitarian welfare, the incremental gains from doing so are small. This resultis robust to changing household preferences, the distribution of ability, theplanner's preference for redistribution, as well as to explicitly modelingprivate business ownership and the ensuing heterogeneity in rates of returnacross financially constrained entrepreneurs.
26. Local Access to Mental Healthcare and Crime
Monica Deza, Johanna Catherine Maclean, andKeisha T. Solomon #27619
Abstract: We estimate the effect of localaccess to office-based mental healthcare on crime. We leverage variation in thenumber of mental healthcare offices within a county over the period 1999 to2014 in a two-way fixed-effects model. We find that increases in the number ofmental healthcare offices modestly reduce crime. In particular, ten additionaloffices in a county reduces crime by 1.7 crimes per 10,000 residents. Thesefindings suggest an unintended benefit from expanding the office-based mentalhealthcare workforce: reductions in crime.
27. Competitive Effects of Federal and State Opioid Restrictions: Evidence from the Controlled Substance Laws
Sumedha Gupta, Thuy D. Nguyen, Patricia R.Freeman, and Kosali I. Simon #27520
Abstract: A large concern in U.S. opioidpolicy is whether supply side controls are effective at reducing the quantityof opioids prescribed, without harmful substitution. An unstudied way thatpolicy targeted a major opioid through the federal Controlled Substance Act(CSA) was the August 2014 scheduling of tramadol products, the second mostpopular opioid medication at the time. Twelve states implemented the identicalpolicy prior to federal action, providing a unique opportunity to compareeffectiveness of the same opioid policy at state versus federal levels. This isimportant because many recent opioid policy interventions have only taken theform of state actions, while federal policy has largely been advisory. Sevenweeks after tramadol's scheduling, the leading opioid form on the market,hydrocodone combination products, was move to the more restricted level II (norefills allowed) from level III in the CSA, allowing us to test a new questionin the opioid literature: competit! ive spillover effects from regulationstargeting one drug. Using weekly prescription data spanning 2007-2017, thisstudy finds that tightening prescribing restrictions on one opioid leads todecreases in its use, but also causes some increases in prescriptions of closecompetitors, leading to no statistically detectable short-run reduction in totalopioid prescriptions.
28. The Drug Crisis and the Living Arrangements of Children
Kasey Buckles, William N. Evans, and EthanM.J. Lieber #27633
Abstract: We examine the impact of the drugcrisis that has unfolded over the last three decades in the United States onchildren’s living arrangements and environments. Because the current livingarrangement could be a result of events that occurred at any point in a child’slife, we measure children’s exposure to the crisis with the cumulative drug-relatedmortality of likely parents. A potential omitted variables bias complicates theanalysis, as the factors that may have led parents to abuse drugs could alsohave altered the living arrangements of their children. Within a 2SLSframework, we instrument for the cumulative mortality of likely parents with achild’s years of exposure to a non-triplicate prescription pad environment.Previous work by Alpert et al. (2019) demonstrates that pharmaceuticaladvertising was much more extensive in non-triplicate states and fostered thedevelopment of the drug crisis. Our results indicate that OLS and 2SLSestimates are nearly iden! tical and the crisis increased both the fraction ofchildren living away from a parent and in a household headed by a grandparent.We estimate that if drug abuse had remained at 1996 levels, 1.5 million fewerchildren aged 0-16 would have lived away from a parent in 2015.
29. A Quantity-Driven Theory of Term Premia and Exchange Rates
Robin Greenwood, Samuel G. Hanson, JeremyC. Stein, and Adi Sunderam #27615
Abstract: We develop a model in whichspecialized bond investors must absorb shocks to the supply and demand forlong-term bonds in two currencies. Since long-term bonds and foreign exchangeare both exposed to unexpected movements in short-term interest rates, a shiftin the supply of long-term bonds in one currency influences the foreignexchange rate between the two currencies, as well as bond term premia in bothcurrencies. Our model matches several important empirical patterns, includingthe co-movement between exchange rates and term premia, as well as the findingthat central banks' quantitative easing policies impact exchange rates. Anextension of our model sheds light on the persistent deviations from coveredinterest rate parity that have emerged since 2008.
30. Co-Benefits and Regulatory Impact Analysis: Theory and Evidence from Federal Air Quality Regulations
Joseph E. Aldy, Matthew Kotchen, Mary F.Evans, Meredith Fowlie, Arik Levinson, and Karen Palmer #27603
Abstract: This paper considers thetreatment of co-benefits in benefit-cost analysis of federal air qualityregulations. Using a comprehensive data set on all major Clean Air Act rulesissued by the Environmental Protection Agency over the period 1997-2019, weshow that (1) co-benefits make up a significant share of the monetizedbenefits; (2) among the categories of co-benefits, those associated withreductions in fine particulate matter are the most significant; and (3)co-benefits have been pivotal to the quantified net benefit calculation inexactly half of cases. Motivated by these trends, we develop a simpleconceptual framework that illustrates a critical point: co-benefits are simplya semantic category of benefits that should be included in benefit-costanalyses. We also address common concerns about whether the inclusion ofco-benefits is problematic because of alternative regulatory approaches thatmay be more cost-effective and the possibility for double counting.
31. The Risk of Being a Fallen Angel and the Corporate Dash for Cash in the Midst of COVID
Viral V. Acharya and Sascha Steffen #27601
Abstract: Data on firm-loan-level dailycredit line drawdowns in the United States expose a corporate 「dash for cash」induced by the COVID-19 pandemic. In the first phase of the crisis, which wascharacterized by extreme precaution and heightened aggregate risk, all firmsdrew down bank credit lines and raised cash levels. In the second phase, whichfollowed the adoption of stabilization policies, only the highest-rated firmsswitched to capital markets to raise cash. Consistent with the risk of becominga fallen angel, the lowest-quality BBB-rated firms behaved more similarly tonon-investment grade firms. The observed corporate behavior reveals the significantimpact of credit risk on corporate cash holdings.
32. Measuring the labor market at the onset of the COVID-19 crisis
Alexander W. Bartik, Marianne Bertrand,Feng Lin, Jesse Rothstein, and Matt Unrath #27613
Abstract: We use traditional and non-traditionaldata to measure the collapse and partial recovery of the U.S. labor market fromMarch to early July, contrast this downturn to previous recessions, and providepreliminary evidence on the effects of the policy response. For hourly workersat both small and large businesses, nearly all of the decline in employmentoccurred between March 14 and 28. It was driven by low-wage services,particularly the retail and leisure and hospitality sectors. A large share ofthe job losses in small businesses reflected firms that closed entirely, thoughmany subsequently reopened. Firms that were already unhealthy were more likelyto close and less likely to reopen, and disadvantaged workers were more likelyto be laid off and less likely to return. Most laid off workers expected to berecalled, and this was predictive of rehiring. Shelter-in-place orders droveonly a small share of job losses. Last, states that received more smallbusiness loans from t! he Paycheck Protection Program and states with moregenerous unemployment insurance benefits had milder declines and fasterrecoveries. We find no evidence that high UI replacement rates drove job lossesor slowed rehiring.
33. Rule of Law in Labor Relations,1898-1940
Price V. Fishback #27614
Abstract: The paper examines changes inlabor regulation between 1898 and 1940 in the context of issues related to ruleof law in two areas. 1) Many see the 1905 Lochner Supreme Court decision onmen’s hours laws as the beginning of 30 years in which labor regulation was stymiedby the doctrine of 「freedom of contract.」 Seeing close votes and substantialturnover of judges on the Supreme Court, the de facto situation was morecomplex as some states maintained their laws or passed new ones. 2) Labordisputes led to some of the greatest threats to rule of law. To limit descentsinto violence, states passed arbitration laws, pro-union laws, and anti-unionlaws. Uncertainty about the rules led to a sharp rise in strikes and violenceafter World War I and again when Congress and the states sought to establishthe rules for collective bargaining between 1932 and 1937. A panel analysis ofthe impact of state laws in bituminous coal mining from 1902 to 1941 shows thatthe a! rbitration and pro-union laws were associated with less violence duringperiods of uncertainty. During several periods state pro-union laws wereassociated with more strikes and state anti-union laws with fewer strikes.
34. Challenges of Change: An Experiment Promoting Women to Managerial Roles in the Bangladeshi Garment Sector
Rocco Macchiavello, Andreas Menzel, AtonuRabbani, and Christopher Woodruff #27606
Abstract: Women remain disadvantaged inaccess to management positions around the world. We conduct a field experimentwith 24 large garment factories in Bangladesh to test for inefficientrepresentation of women among line supervisors. We identify the marginal femaleand male candidates for supervisory positions and randomly assign them tomanage production lines. Three sets of results emerge: (i) extensive diagnostictesting at baseline reveal few skill differences between marginal female andmale supervisor candidates; (ii) initially, marginal female candidates havelower productivity and evaluations from sub-ordinate workers, though after fourto six months, these gaps disappear; and (iii) the share of the femalecandidates retained as line supervisor after the trial is significantly higherthan the share of female supervisors in the factories at baseline. Thissuggests that factories previously promoted fewer women than would have beenoptimal. Additional surveys and a lab-in-the! -field experiment suggest thatthe initially worse performance stems from negative beliefs of workers aboutthe abilities of female supervisors.
35. Immigration and Violent Crime: Evidence from the Colombia-Venezuela Border
Brian G. Knight and Ana Tribin #27620
Abstract: This paper investigates the linkbetween violent crime and immigration using data from Colombian municipalitiesduring the recent episode of immigration from Venezuela. The key finding isthat, following the closing and then re-opening of the border in 2016, whichprecipitated a massive immigration wave, homicides in Colombia increased inareas close to the border with Venezuela. Using information on the nationalityof the victim, we find that this increase was driven by homicides involvingVenezuelan victims, with no evidence of a statistically significant increase inhomicides in which Colombians were victimized. Thus, in contrast to xenophobicfears that migrants might victimize natives, it was migrants, rather thannatives, who faced risks associated with immigration. Using arrests data, thereis no corresponding increase in arrests for homicides in these areas. Takentogether, these results suggest that the increase in homicides close to theborder documented here are d! riven by crimes against migrants and haveoccurred without a corresponding increase in arrests, suggesting that some ofthese crimes have gone unsolved.
36. The Targeting and Impact of Paycheck Protection Program Loans to Small Businesses
Alexander W. Bartik, Zoe B. Cullen, Edward L. Glaeser, Michael Luca, Christopher T. Stanton, and Adi Sunderam #27623
Abstract: The Paycheck Protection Program(PPP) aimed to quickly deliver hundreds of billions of dollars of loans tosmall businesses, with the loans administered via private banks. In this paper,we use firm-level data to document the demand and supply of PPP funds. Using aninstrumental variables approach, we find that PPP loans led to a 14 to 30percentage point increase in a business’s expected survival, and a positive butimprecise effect on employment. Moreover, the effects on survival were heterogeneousand highlight an important tradeoff faced by policymakers: while administeringthe loans via private banks allowed for rapid delivery of funds, it alsolimited the government’s ability to target the funding - instead allowingpre-existing connections between businesses and banks to determine which firmswould benefit from the program.
37. Twenty Year Economic Impacts of Deworming
Joan Hamory, Edward Miguel, Michael W. Walker, Michael Kremer, and Sarah J. Baird #27611
Abstract: This study exploits a randomizedschool health intervention that provided deworming treatment to Kenyan childrenand utilizes longitudinal data to estimate impacts on economic outcomes up to20 years later. The effective respondent tracking rate was 84%. Individuals whoreceived 2 to 3 additional years of childhood deworming experience an increaseof 14% in consumption expenditure, 13% in hourly earnings, 9% innon-agricultural work hours, and are 9% more likely to live in urban areas.Most effects are concentrated among males and older individuals. Givendeworming's low cost, a conservative annualized social internal rate of returnestimate is 37%.