Services Development and Comparative Advantage in Manufacturing — by Xuepeng Liu, Aaditya Mattoo, Zhi Wang, Shang-Jin Wei

Most manufacturing activities use inputs from the financial and business services sectors. But these services sectors also compete for resources with manufacturing activities, provoking concerns about deindustrialization attributable to financial services in developed countries like the United States and United Kingdom, and business services in developing countries like India and the Philippines. This paper examines … Read moreServices Development and Comparative Advantage in Manufacturing — by Xuepeng Liu, Aaditya Mattoo, Zhi Wang, Shang-Jin Wei

Hidden in Plain Sight: Venture Growth with or without Venture Capital — by Christian Catalini, Jorge Guzman, Scott Stern

The majority of IPOs and acquisitions are achieved without venture capital financing, yet research has focused mostly on VC backed firms. Using founding choices and a predictive analytics approach on virtually all US registered businesses, we shed light into these “missing” growth firms. Founding choices that predict raising venture capital also strongly predict equity exits … Read moreHidden in Plain Sight: Venture Growth with or without Venture Capital — by Christian Catalini, Jorge Guzman, Scott Stern

Estimating Biases in Smoking Cessation: Evidence from a Field Experiment — by Frank J. Chaloupka IV, Matthew R. Levy, Justin S. White

We conduct a randomized field experiment to quantify biases that affect consumers of addictive goods: present-biased preferences, naïve beliefs regarding present bias, and projection-biased beliefs over future abstinence. These biases reflect departures from the neoclassical benchmark needed to accommodate intertemporal and state-dependent prediction errors and have important theoretical and policy ramifications. Our experiment employs a … Read moreEstimating Biases in Smoking Cessation: Evidence from a Field Experiment — by Frank J. Chaloupka IV, Matthew R. Levy, Justin S. White

Does a One-Size-Fits-All Minimum Wage Cause Financial Stress for Small Businesses? — by Sudheer Chava, Alexander Oettl, Manpreet Singh

Do increases in federal minimum wage impact the financial health of small businesses? Using intertemporal variation in whether a state’s minimum wage is bound by the federal rate and credit-score data for approximately 15.2 million establishments for the period 1989–2013, we find that increases in the federal minimum wage worsen the financial health of small … Read moreDoes a One-Size-Fits-All Minimum Wage Cause Financial Stress for Small Businesses? — by Sudheer Chava, Alexander Oettl, Manpreet Singh

The Geography of Prescription Pharmaceuticals Supplied to the U.S.: Levels, Trends and Implications — by Neriman Beste Kaygisiz, Yashna Shivdasani, Rena M. Conti, Ernst R. Berndt

Prescription pharmaceuticals are frequently used consumer products, whose manufacturing location is commonly held as a trade secret by firms and U.S. regulatory agencies. Here we use previously non-publicly available data to describe levels and trends in the manufacturing locations of the most commonly used prescription pharmaceuticals, off-patent generic drugs, intended to be consumed by Americans. … Read moreThe Geography of Prescription Pharmaceuticals Supplied to the U.S.: Levels, Trends and Implications — by Neriman Beste Kaygisiz, Yashna Shivdasani, Rena M. Conti, Ernst R. Berndt

The Firm’s Role in Displaced Workers’ Earnings Losses — by Brendan Moore, Judith Scott-Clayton

We use employer-employee matched administrative data from Ohio to study the role of firm pay premiums in explaining the large, persistent earnings losses of displaced workers. We estimate that earnings for displaced workers from the mid-2000s are depressed by 22 percent after four years, consistent with prior work. Drawing upon empirical approaches from the displaced … Read moreThe Firm’s Role in Displaced Workers’ Earnings Losses — by Brendan Moore, Judith Scott-Clayton

The Shrinking Advantage of Market Potential — by Marius Brülhart, Klaus Desmet, Gian-Paolo Klinke

How does a country’s economic geography evolve along the development path? This paper documents recent employment growth in 18,961 regions in eight of the world’s main economies. Overall, market potential is losing importance, and local density is gaining importance, as correlates of local growth. In mature economies, growth is strongest in low-market-potential areas. In emerging … Read moreThe Shrinking Advantage of Market Potential — by Marius Brülhart, Klaus Desmet, Gian-Paolo Klinke

Income and Wealth Volatility: Evidence from Italy and the U.S. in the Past Two Decades — by Conchita D’Ambrosio, Giorgia Menta, Edward N. Wolff

Income volatility and wealth volatility are central objects of investigation for the literature on income and wealth inequality and dynamics. Here we analyse the two concepts in a comparative perspective for the same individuals in Italy and the U.S. over the last two decades. Contrary to our expectations, we find that in both countries wealth … Read moreIncome and Wealth Volatility: Evidence from Italy and the U.S. in the Past Two Decades — by Conchita D’Ambrosio, Giorgia Menta, Edward N. Wolff

Does Household Electrification Supercharge Economic Development? — by Kenneth Lee, Edward Miguel, Catherine Wolfram

In recent years, electrification has re-emerged as a key priority in low-income countries, with a particular focus on electrifying households. Yet the microeconomic literature examining the impacts of electrifying households on economic development has produced a set of conflicting results. Does household electrification lead to measurable gains in living standards or not? Focusing on grid … Read moreDoes Household Electrification Supercharge Economic Development? — by Kenneth Lee, Edward Miguel, Catherine Wolfram

Measuring and Using Happiness to Support Public Policies — by John F. Helliwell

This paper summarizes the philosophical and empirical grounds for giving a primary role to the evaluations that people make of the quality of their lives. These evaluations permit comparisons among communities, regions, nations and population subgroups, enable the estimation of the relative importance of various sources of happiness, and provide a well-being lens to aid … Read moreMeasuring and Using Happiness to Support Public Policies — by John F. Helliwell

The Old Boys’ Club: Schmoozing and the Gender Gap — by Zoë B. Cullen, Ricardo Perez-Truglia

The old boys’ club refers to the alleged advantage that male employees have over their female counterparts in interacting with powerful men. For example, male employees may schmooze with their managers in ways that female employees cannot. We study this phenomenon using data from a large financial institution. We use an event study analysis of … Read moreThe Old Boys’ Club: Schmoozing and the Gender Gap — by Zoë B. Cullen, Ricardo Perez-Truglia

The Investment Network, Sectoral Comovement, and the Changing U.S. Business Cycle — by Christian vom Lehn, Thomas Winberry

We argue that the input-output network of investment goods across sectors is an important propagation mechanism for understanding business cycles. First, we show that the empirical network is dominated by a few “investment hubs” that produce the majority of investment goods, are highly volatile, and are strongly correlated with the cycle. Second, we embed this … Read moreThe Investment Network, Sectoral Comovement, and the Changing U.S. Business Cycle — by Christian vom Lehn, Thomas Winberry

Using Machine Learning to Target Treatment: The Case of Household Energy Use — by Christopher R. Knittel, Samuel Stolper

We use causal forests to evaluate the heterogeneous treatment effects (TEs) of repeated behavioral nudges towards household energy conservation. The average response is a monthly electricity reduction of 9 kilowatt-hours (kWh), but the full distribution of responses ranges from -30 to +10 kWh. Selective targeting of treatment using the forest raises social net benefits by … Read moreUsing Machine Learning to Target Treatment: The Case of Household Energy Use — by Christopher R. Knittel, Samuel Stolper

Health Insurance and Mortality: Experimental Evidence from Taxpayer Outreach — by Jacob Goldin, Ithai Z. Lurie, Janet McCubbin

We evaluate a randomized pilot study in which the IRS sent informational letters to 3.9 million taxpayers who paid a tax penalty for lacking health insurance coverage under the Affordable Care Act. Drawing on administrative data, we study the effect of the intervention on taxpayers’ subsequent health insurance enrollment and mortality. We find the intervention … Read moreHealth Insurance and Mortality: Experimental Evidence from Taxpayer Outreach — by Jacob Goldin, Ithai Z. Lurie, Janet McCubbin

More (or Less) Economic Limits of the Blockchain — by Joshua S. Gans, Neil Gandal

This paper extends the blockchain sustainability framework of Budish (2018) to consider proof of stake (in addition to proof of work) consensus mechanisms and permissioned (where the number of nodes are fixed) networks. It is demonstrated that an economically sustainable network will involve the same cost regardless of whether it is proof of work or … Read moreMore (or Less) Economic Limits of the Blockchain — by Joshua S. Gans, Neil Gandal

Rethinking Production Under Uncertainty — by John H. Cochrane

Conventional models of production under uncertainty specify that output is produced in fixed proportions across states of nature. I investigate a representation of technology that allows firms to transform output from one state to another. I allow the firm to choose the distribution of its random productivity from a convex set of such distributions, described … Read moreRethinking Production Under Uncertainty — by John H. Cochrane

The Effects of Immigration on the Economy: Lessons from the 1920s Border Closure — by Ran Abramitzky, Philipp Ager, Leah Platt Boustan, Elior Cohen, Casper W. Hansen

In the 1920s, the United States substantially reduced immigrant entry by imposing country-specific quotas. We compare local labor markets with more or less exposure to the national quotas due to differences in initial immigrant settlement. A puzzle emerges: the earnings of existing US-born workers declined after the border closure, despite the loss of immigrant labor … Read moreThe Effects of Immigration on the Economy: Lessons from the 1920s Border Closure — by Ran Abramitzky, Philipp Ager, Leah Platt Boustan, Elior Cohen, Casper W. Hansen

China’s Unconventional Nationwide CO2 Emissions Trading System: The Wide-Ranging Impacts of an Implicit Output Subsidy — by Lawrence H. Goulder, Xianling Long, Jieyi Lu, Richard D. Morgenstern

China is planning to implement the largest CO2 emissions trading system in the world. To reduce emissions, the system will be a tradable performance standard (TPS), an emissions pricing mechanism that differs significantly from the emissions pricing instruments used in other countries, such as cap and trade (C&T) and a carbon tax. We employ matching … Read moreChina’s Unconventional Nationwide CO2 Emissions Trading System: The Wide-Ranging Impacts of an Implicit Output Subsidy — by Lawrence H. Goulder, Xianling Long, Jieyi Lu, Richard D. Morgenstern

Q-factors and Investment CAPM — by Lu Zhang

The q-factor model shows strong explanatory power and largely summarizes the cross section of average stock returns. In particular, the q-factor model fully subsumes the Fama-French (2018) 6-factor model in head-to-head factor spanning tests. The q-factor model is an empirical implementation of the investment CAPM. The basic philosophy is to price risky assets from the … Read moreQ-factors and Investment CAPM — by Lu Zhang

Conceptual Aspects of Global Value Chains — by Pol Antràs

I offer an overview of some key conceptual aspects associated with the rise of global value chains (GVCs). I outline a series of alternative interpretations and definitions of what the rise of GVCs entails, and I trace the implications of these alternative conceptualizations for the measurement of the phenomenon, as well as for elucidating the … Read moreConceptual Aspects of Global Value Chains — by Pol Antràs

Going Green in China: Firms’ Responses to Stricter Environmental Regulations — by Haichao Fan, Joshua S. Graff Zivin, Zonglai Kou, Xueyue Liu, Huanhuan Wang

This paper examines the effect of stringent environmental regulations on firms’ environmental practices, economic performance, and environmental innovation. Reducing COD levels by 10% relative to 2005 levels is an aim of the Chinese 11th Five-Year Plan. Using a difference-in-differences framework based on a comprehensive firm-level dataset, we find that more stringent environmental regulations faced by … Read moreGoing Green in China: Firms’ Responses to Stricter Environmental Regulations — by Haichao Fan, Joshua S. Graff Zivin, Zonglai Kou, Xueyue Liu, Huanhuan Wang

From Fog to Smog: the Value of Pollution Information — by Panle Jia Barwick, Shanjun Li, Liguo Lin, Eric Zou

During 2013-2014, China launched a nation-wide real-time air quality monitoring and disclosure program, a watershed moment in the history of its environmental regulations. We present the first empirical analysis of this natural experiment by exploiting its staggered introduction across cities. The program has transformed the landscape of China’s environmental protection, substantially expanded public access to … Read moreFrom Fog to Smog: the Value of Pollution Information — by Panle Jia Barwick, Shanjun Li, Liguo Lin, Eric Zou

Evaluating the Success of President Johnson’s War on Poverty: Revisiting the Historical Record Using a Full-Income Poverty Measure — by Richard V. Burkhauser, Kevin Corinth, James Elwell, Jeff Larrimore

We evaluate progress in President’s Johnson’s War on Poverty. We do so relative to the scientifically arbitrary but policy relevant 20 percent baseline poverty rate he established for 1963. No existing poverty measure fully captures poverty reductions based on the standard that President Johnson set. To fill this gap, we develop a Full-income Poverty Measure … Read moreEvaluating the Success of President Johnson’s War on Poverty: Revisiting the Historical Record Using a Full-Income Poverty Measure — by Richard V. Burkhauser, Kevin Corinth, James Elwell, Jeff Larrimore

Using Network Method to Measure Financial Interconnection — by Ying Xu, Jennifer Corbett

This paper uses a new approach to measuring financial openness, highlighting interconnectedness in a network of financial flows. Applying an adapted version of eigenvector centrality, often used in network analysis, the new measure captures multidimensional and high-degree financial relations among countries. It provides a nuanced picture of financial integration and interconnectedness in the global and … Read moreUsing Network Method to Measure Financial Interconnection — by Ying Xu, Jennifer Corbett

Stranded Fossil Fuel Reserves and Firm Value — by Christina Atanasova, Eduardo S. Schwartz

Do capital markets reflect the possibility that fossil fuel reserves may become “stranded assets” in the transition to a low carbon economy? We examine the relation between oil firms’ value and their proved reserves. Using a sample of 679 North American oil firms for the period 1999 to 2018, we document that while reserves are … Read moreStranded Fossil Fuel Reserves and Firm Value — by Christina Atanasova, Eduardo S. Schwartz

Does Electricity Drive Structural Transformation? Evidence from the United States — by Paul Gaggl, Rowena Gray, Ioana Marinescu, Miguel Morin

Electricity is a general purpose technology and the catalyst for the second industrial revolution. Developing countries are currently making huge investments in electrification, with a view to achieving structural change. What does history say about its impact on the structure of employment? We use U.S. Census data from 1910 to 1940 and measure electrification with … Read moreDoes Electricity Drive Structural Transformation? Evidence from the United States — by Paul Gaggl, Rowena Gray, Ioana Marinescu, Miguel Morin

Is the Public Investment Multiplier Higher in Developing Countries? An Empirical Investigation — by Alejandro Izquierdo, Ruy E. Lama, Juan Pablo Medina, Jorge P. Puig, Daniel Riera-Crichton, Carlos A. Vegh, Guillermo Vuletin

Over the last decade, empirical studies analyzing macroeconomic conditions that may affect the size of government spending multipliers have flourished. Yet, in spite of their obvious public policy importance, little is known about public investment multipliers. In particular, the clear theoretical implication that public investment multipliers should be higher (lower) the lower (higher) is the … Read moreIs the Public Investment Multiplier Higher in Developing Countries? An Empirical Investigation — by Alejandro Izquierdo, Ruy E. Lama, Juan Pablo Medina, Jorge P. Puig, Daniel Riera-Crichton, Carlos A. Vegh, Guillermo Vuletin

Does the Lack of Financial Stability Impair the Transmission of Monetary Policy? — by Viral V. Acharya, Björn Imbierowicz, Sascha Steffen, Daniel Teichmann

We investigate the transmission of central bank liquidity to bank deposits and loan spreads in Europe over the period from January 2006 to June 2010. We find evidence consistent with an impaired transmission channel due to bank risk. Central bank liquidity does not translate into lower loan spreads for high-risk banks for maturities beyond one … Read moreDoes the Lack of Financial Stability Impair the Transmission of Monetary Policy? — by Viral V. Acharya, Björn Imbierowicz, Sascha Steffen, Daniel Teichmann

Teacher Effects on Student Achievement and Height: A Cautionary Tale — by Marianne Bitler, Sean Corcoran, Thurston Domina, Emily Penner

Estimates of teacher “value-added” suggest teachers vary substantially in their ability to promote student learning. Prompted by this finding, many states and school districts have adopted value-added measures as indicators of teacher job performance. In this paper, we conduct a new test of the validity of value-added models. Using administrative student data from New York … Read moreTeacher Effects on Student Achievement and Height: A Cautionary Tale — by Marianne Bitler, Sean Corcoran, Thurston Domina, Emily Penner

The Impact of the General Data Protection Regulation on Internet Interconnection — by Ran Zhuo, Bradley Huffaker, kc claffy, Shane Greenstein

The Internet comprises thousands of independently operated networks, where bilaterally negotiated interconnection agreements determine the flow of data between networks. The European Union’s General Data Protection Regulation (GDPR) imposes strict restrictions on processing and sharing of personal data of EU residents. Both contemporary news reports and simple bilateral bargaining theory predict reduction in data usage … Read moreThe Impact of the General Data Protection Regulation on Internet Interconnection — by Ran Zhuo, Bradley Huffaker, kc claffy, Shane Greenstein

Delineating Urban Areas Using Building Density — by Marie-Pierre de Bellefon, Pierre-Philippe Combes, Gilles Duranton, Laurent Gobillon, Clément Gorin

We develop a new dartboard methodology to delineate urban areas using detailed information about building location, which we implement using a map of all buildings in France. For each pixel, our approach compares actual building density after smoothing to counterfactual smoothed building density computed after randomly redistributing buildings. We define as urban any area with … Read moreDelineating Urban Areas Using Building Density — by Marie-Pierre de Bellefon, Pierre-Philippe Combes, Gilles Duranton, Laurent Gobillon, Clément Gorin

The Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers — by Enrico Moretti, Claudia Steinwender, John Van Reenen

In the US and many other OECD countries, expenditures for defense-related R&D represent a key policy channel through which governments shape innovation, and dwarf all other public subsidies for innovation. We examine the impact of government funding for R&D – and defense-related R&D in particular – on privately conducted R&D, and its ultimate effect on … Read moreThe Intellectual Spoils of War? Defense R&D, Productivity and International Spillovers — by Enrico Moretti, Claudia Steinwender, John Van Reenen

Leaning In or Not Leaning Out? Opt-Out Choice Framing Attenuates Gender Differences in the Decision to Compete — by Joyce He, Sonia Kang, Nicola Lacetera

In most organizations, promotions often require self-nomination and competition among applicants. However, research on gender differences in preferences for competition suggests that this process might result in fewer women choosing to participate. We study whether changing promotion schemes from a default where applicants must opt in (i.e., self-nominate) to a default where applicants must opt … Read moreLeaning In or Not Leaning Out? Opt-Out Choice Framing Attenuates Gender Differences in the Decision to Compete — by Joyce He, Sonia Kang, Nicola Lacetera

The Specialness of Zero — by Joshua S. Gans

A model is provided whereby a monopolist firm chooses to price its product at zero. This outcome is shown to be driven by the assumption of ‘free disposal’ alongside selection markets (where prices impact on a firm’s costs). Free disposal creates a mass point of consumers whose utility from the product is zero. When costs … Read moreThe Specialness of Zero — by Joshua S. Gans

Choosing Racial Identity in the United States, 1880-1940 — by Ricardo Dahis, Emily Nix, Nancy Qian

This paper documents that many black males experienced a change in racial classification to white in the United States, 1880 – 1940, while changes in racial classification were negligible for other races. We provide a rich set of descriptive evidence on the lives of black men “passing” for white, such as their patterns of marriage, … Read moreChoosing Racial Identity in the United States, 1880-1940 — by Ricardo Dahis, Emily Nix, Nancy Qian

Financing Entrepreneurship through the Tax Code: Angel Investor Tax Credits — by Sabrina T. Howell, Filippo Mezzanotti

A central issue in public finance is the tradeoff between maintaining tax revenues and using the tax code to incentivize particular economic activities. One important dimension of this tradeoff is whether incentive policies are used in practice as policymakers intend. This paper examines one particular tax program that many U.S. states use to stimulate entrepreneurship. … Read moreFinancing Entrepreneurship through the Tax Code: Angel Investor Tax Credits — by Sabrina T. Howell, Filippo Mezzanotti

Driving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data — by Christopher R. Knittel, Shinsuke Tanaka

We use novel microdata on on-road fuel consumption and prices paid for fuel in Japan to estimate short-run price elasticities of demand for gasoline consumption. We have three main findings. First, our elasticity estimates of roughly -0.37 are in orders of magnitude larger than previously estimated using more aggregate data. Second, we are one of … Read moreDriving Behavior and the Price of Gasoline: Evidence from Fueling-Level Micro Data — by Christopher R. Knittel, Shinsuke Tanaka

Water Purification Efforts and the Black-White Infant Mortality Gap, 1906-1938 — by D. Mark Anderson, Kerwin Kofi Charles, Daniel I. Rees, Tianyi Wang

According to Troesken (2004), efforts to purify municipal water supplies at the turn of the 20th century dramatically improved the relative health of blacks. There is, however, little empirical evidence to support the Troesken hypothesis. Using city-level data published by the U.S. Bureau of the Census for the period 1906-1938, we explore the relationship between … Read moreWater Purification Efforts and the Black-White Infant Mortality Gap, 1906-1938 — by D. Mark Anderson, Kerwin Kofi Charles, Daniel I. Rees, Tianyi Wang

Spillover Effects of IP Protection in the Inter-war Aircraft Industry — by Walker Hanlon, Taylor Jaworski

Can granting IP protection to producers of one good affect the innovation rate in other related goods? To answer this question we exploit a unique policy experiment in the inter-war military aircraft industry. Airframe designs had little IP protection before 1926, but changes passed by Congress in 1926 provided airframe manufacturers with enhanced property rights … Read moreSpillover Effects of IP Protection in the Inter-war Aircraft Industry — by Walker Hanlon, Taylor Jaworski

The Effects of Foreign-Born Peers in US High Schools and Middle Schools — by Jason Fletcher, Jinho Kim, Jenna Nobles, Stephen Ross, Irina Shaorshadze

The multi-decade growth and spatial dispersion of immigrant families in the United States has shifted the composition of US schools, reshaping the group of peers with whom students age through adolescence. US-born students are more likely to have foreign-born peers and foreign-born students are more likely to be educated outside of enclaves. This study examines … Read moreThe Effects of Foreign-Born Peers in US High Schools and Middle Schools — by Jason Fletcher, Jinho Kim, Jenna Nobles, Stephen Ross, Irina Shaorshadze