LIT Flashcards
Brot-Goldberg et al. (2023) study the effect of rising healthcare spendings on employment and wages, through employers-sponsored health insurance contracts.
What instrument do they use to get exogenous variations in health care price?
Hospital mergers.
Hospital mergers affect the price of health insurance but has been shown to have little effect on quantity or quality of spending.
What are the different problems associated with the literature studying entrepreneurship using survey data?
- Top coding
- Short panel
- Small sample
Larrimore et al. (2023) study the earnings business cycle around recessions.
What characterized the earnings dynamics in the U.S. following the Covid crisis compared to other crisis (e.g 2008 or 2001)?
The earning recovery was far more progressive in 2020. Total earnings actually increased for workers in the bottom quintile after the crisis (due to the fiscal reliefs) and remained higher than before 2020 even after the reliefs measures stoped.
Earnings Business Cycles: the Covid recession, recovery and policy response. WP by J. Larrimore, J. Mortensen and D. Splinter.
List et al. (2022) study the efficiency of nudges versus taxes as policy instrument.
Theoretically, in a model with behavioral bias and externalities, what can nudges do that taxes cannot?
- Nudges is the only tool that can reduce the variation in bias.
- Taxes and nudges can correct the average bias of the marginal consumer.
- Only taxes can internalize marginal externalities.
The authors do a meta-study and collect reduced form effect of various nudges and taxes.
”Judging Nudging: Understanding the Welfare Effects of Nudges versus Taxes”By J. List, M. Rodemeier, S. Roy and G. Sun (WP, 2022)
In Garbinti et al. (2023), what is the variation in the French wealth tax schedule that the authors use to study behavioral responses in reported wealth?
They use non-linearities in the wealth tax threshold, associated with changes in reporting requirement (e.g the threshold at which people need to fill a wealth tax return and the threshold at which people need to fill a detailed tax return instead of a simplified).
They find sharp bunching at these thresholds but no bunching at pure tax threshold kinks.
Tax Design, Information, and Elasticities: Evidence From the French Wealth Tax, by Garbinti, Goupille, Muñoz, Stantcheva and Zucman (WP 2023)
In Garbinti et al. (2023), what is the main result?
Taxpayers bunch significantly at reporting tax threshold. Only few taxpayers react but those who do bunch a lot. They bunch using two strategies:
- under-reporting of their wealth stock
- under-reporting of their wealth stock’s growth
The authors use a dynamic bunching method which basically uses a normalized wealth growth rate as the outcome.
They emphasize that tax evasion in the case of wealth is by nature different than for income because wealth is a stock. Tax cheating becomes a dynamic problem where the ability to cheat today depends on how much cheating has been done yesterday.
Tax Design, Information, and Elasticities: Evidence From the French Wealth Tax, by Garbinti, Goupille, Muñoz, Stantcheva and Zucman (WP 2023)
What creates diffuse bunching around kinks in the model developed by Anagol et al. (2022)?
The sparsity of the opportunity set.
Agents draw a random set of possible earnings around their optimal earning y, but this set is sparse and thus might not contain exactly y.
Diffuse Bunching with Frictions: Theory and Estimation, by Anagol, Davids, Lockwood and Ramadorai (2022, WP)
In Conlon and Rao (2023), when is the use of market power as a tool to curb negative externalities worse than the use of taxes from a welfare perspective?
With differentiated products.
The authors show that with differentiated products, market power is worse than the use of corrective taxes. This is because, the markup set by the firms will differ along other features (e.g branding, quality) than simply the feature of the good generating the externality (e.g ethanol in the case of a bottle of spirit). This would distort consumer behavior. While a tax would be blind to these other features and directly tax the externality-producing feature of the good thus generating only the wished distortion.
However, with homogenous products, taxes and market power should perform the same.
The Cost of Curbing Externalities with Market Power: Alcohol Regulations and Tax Alternatives by Conlon and Rao (2023, WP)
In Chetty, Friedman and Saez (2013, AER), do self-employed bunch more at the EITC kink in the South or in the North?
In the South, though there is still lots of variation within nearby areas.
In Montag (2023), what trade-offs in terms of social welfare associated with mergers do the author study?
The paper study the trade-off between consumer and workers welfare associated with mergers.
In a globalized world with foreign competition, domestic mergers can sometimes be seen as a tool to save domestic jobs, though at the price of hurting consumers.
The author study the case of the acquisition of Maytag by Whirlpool (two US companies that were leaders in the washing machine market). While the merger indeed saved jobs, the magnitude of the consumer welfare loss seem to be too high relative to the number of jobs saved to justify the merger.
Mergers, Foreign Competition, and Jobs: Evidence from the U.S. Appliance Industry by F. Montag (WP 2023)
In his seminal paper in the QJE in 2000, what counter-intuitive fact does Christoper Ruhm document?
The pro-cyclicality of deaths: total mortality is lower during economic recessions.
Are recessions good for your health? by C. Ruhm (2000, QJE)
What is the gender gap in the likelihood for college students to ask and get favorable regrades of their exams found by Li and Zafar (2023, AEJ:EP)?
Using data from a large public university, the authors find that male students are about 20% more likely to get favorable regrades than female students.
What is the main result found by the two seminal papers by Dale & Krueger (2002 QJE, 2014 JHR)?
There is a zero causal effect of attending elite schools on future earnings in the U.S.
Controlling for SAT scores, graduate scores and for where a student applied, the college choice do not have any effect on their earnings at age 40-50. However, attending these schools do boost earnings for those from disadvantaged backgrounds (non-white, parents with low education or low earnings).
One criticism of the study is that it only looks at very elite colleges and a bit less elite colleges but not at the «worse» colleges.
What states the famous Reinhart-Rogoff (2010) result?
The result states that when the ratio of debt over GDP exceeds 90%, economic growth is reduced.
This result is debated because they use data about various countries and time periods to establish a stylized fact but without proving causality.
Additionally, this paper has been famous because of a coding error that, once corrected, greatly diminishes the magnitude of the results. The authors were using Excel to make an average and forgot to select some rows (e.g Belgium etc.).
Sources:
- Reinhart, Rogoff (2010, AEA:P&P)
- Their book «This Time Is Different: Eight Centuries of Financial Folly» (2009)
What is the obesity premium documented by Macchi (2023, AER) in an RCT in Uganda?
The author finds that being obese facilitates access to credit in a market with asymmetric information, as obesity is perceived as a sign of wealth.
“Status concerns are often seen as futile and potentially wasteful. Where credible financial information is unavailable or costly, however, like in developing countries, models of statistical discrimination predict that the noisy information that visible signs of status provide may be used in economic transactions.”
