Archives 2013-2014

Automne 2013

Vendredi 11 octobre 2013

TSCHOPP, Jeanne - University of British Columbia

Wage Bargaining as a Social Interaction Problem: An Application to Germany 


This paper examines the importance of workers’ outside options in the wage determination. In a model of search and bargaining, holding the marginal product constant, a worker’s wage is determined by a weighted average of the wages in alternate jobs, turning the wage formation into a social interaction problem. I develop a search and bargaining model with heterogeneous workers and propose novel strategies to identify the importance of this network structure in the formation of wages. Specifically, I explore differences in the mobility costs of workers as an additional source of variation for identification. Using a unique administrative panel database for Germany, I find that a 1% increase in the outside options of a worker generates a 0.7% wage increase. In addition, my results suggest that differences in workers’ mobility generate asymmetric wage externalities across occupations and industries and play an important role in the transmission of a labor demand shock on a worker’s wage. 

Vendredi 25 octobre 2013

QING, Li - Université de Sherbrooke

Cross-Sectional Exogeneity of Latent Variable? A Bounding Approach with Application


In the context of linear cross-sectional regression with available instrumental variable(s), the instrumental variable(s) can correct for measurement error, endogeneity, or both. However, so far it is not possible to separate the two. We provide bounds on the covariance between the latent regressor and the model error, in order to isolate endogeneity from measurement error. We illustrate this methodology in the context of a regression of income on health using data from rural China. We find health to be negatively correlated with the model error, and explain this endogeneity as a reverse effect of health on income.

Vendredi 8 novembre 2013

DUBOIS, Marc - Université Montpellier I

Transfers Principles in a Generalized Utilitarian Framework


In a Generalized Utilitarian framework, it is possible to represent formally the decisionmaker's value judgments about inequality. In this framework, the necessary and sucient conditions to ful ll the Pigou-Dalton and the Diminishing Transfers Principle are provided. The normative contents of these principles depend on assumptions on the individuals' utility function. On the other hand, these principles display weaker value judgments about inequality than it is usually claimed in a pure utilitarian framework. We investigate more precisely the normative contents of stochastic dominance results at the orders 2 and 3.

Vendredi 22 novembre 2013

SÉGUIN, Charles - UQAM

Environmental taxation in a federal system of government with equalization payments


We evaluate the potential for a double dividend of environmental taxation in a federation. We study the two-region framework of Boadway and Flatters (1982) with fully mobile citizens. Regions are unequally endowed in non-renewable resources, which extraction generates a global externality. The presence of a fixed stock of resources creates unequal rents across regions, thus calling for a corrective equalization scheme. Ideally, these rents should be the sole property of the central government. When they are not, there is a potential for a weak double dividend (Goulder, 1995) if equalization payments must otherwise be funded through distortive labor taxation. We also find a possibility for a strong double dividend, which remains to be characterized numerically. Finally, we find that Pigouvian taxation by the federal government reduces both the need and costs of equalization payments, both favoring and increase in the population of the resource poor region.

Vendredi 6 décembre 2013

STEFANSKI, Radek - Université Laval

Dirty Little Secrets: Inferring Fossil-Fuel Subsidies from Patterns in Emission Intensities


No comprehensive database of directly measured fossil-fuel subsidies exists at the international level. I develop an indirect method of inferring these subsidies by examining country-specific patterns in carbon emission-to-GDP ratios, known as emission intensities. I identify two regularities in the data: 1) Intensities tend to be hump-shaped with income and 2) the intensities of later developers tend to follow an envelope-pattern with time relative to those of earlier developers. I construct a simple model of structural transformation calibrated to the experience of the UK that reproduces these facts by generating an endogenously changing fuel mix. In the framework of the model, any deviation in a country's intensity from the above pattern is indicative of distortions within that economy - either in energy prices or in non-agricultural productivity. I use the calibrated model in conjunction with data on the size of a country's agricultural sector, its GDP per capita and its relative emission intensity to measure and disentangle the two distortions and to develop a database of comparable fossil-fuel subsidies for 155 countries from 1980 to 2010. Finally, I examine how emissions would have evolved without subsidization. I find that carbon subsidies accounted for 37% of global CO2 emissions between 1980-2010 and cost tax payers 1.3 trillion dollars in 2009 alone.

Hiver 2014

Mercredi 8 janvier 2014

LEROUX, Marie-Louise - UQAM

Public and Private Hospitals, congestion, and redistribution


This paper studies how congestion in the public health sector can be used as both an in-kind and in-cash redistributive tool. In our model, agents differ in productivity and they can obtain a health service either from a congested public hospital or from a non congested private one at a higher price. With pure in-kind redistribution, agents fail to internalize their impact on congestion, and the demand for the public hospital is higher than optimal. When productivities are not observable but the social planner can assign agents across hospitals, the optimal congestion is higher than in the first best in order to relax incentive constraints and foster income redistribution. Finally, if agents can freely choose across hospitals, the optimal subsidy on the private hospital price may be negative or positive depending on the relative importance of redistribution and efficiency concerns. In this case, in-kind redistribution is limited if the quality of the public facility depends on the number of users.

Vendredi 24 janvier 2014

CACCIATORE, Matteo - HEC Montréal

Trade, Unemployment, and Monetary Policy


We study the effects of trade integration for the conduct of monetary policy in a two-country model with heterogeneous firms, endogenous producer entry, and labor market frictions. The model reproduces important empirical regularities related to international trade, namely synchronization of business cycles across trading partners and reallocation of market shares across producers. Three key results emerge. First, when trade linkages are weak, the optimal policy is inward-looking and requires significant departures from price stability both in the long run and over the business cycle. Second, as trade integration reallocates market share toward more productive firms, the need of positive inflation to correct long-run distortions is reduced. Third, increased business cycle synchronization implies that country-specific shocks have more global consequences. The constrained efficient allocation generated by optimal cooperative policy can still be achieved by appropriately designed inward-looking policy rules. However, sub-optimal policy implies inefficient fluctuations in cross-country demands that result in large welfare costs and increased gains from cooperation when trade linkages are strong.

Mercredi 5 février 2014

MALUCCIO, John A. - Middlebury College

More Schooling, Learning, and Earnings: Effects of a 3-Year Conditional Cash Transfer Program in Nicaragua After 10 Years


CCT programs have become the anti-poverty program of choice in many developing countries. Numerous evaluations, often based on rigorous experimental designs, leave little doubt that such programs can increase enrollment and grades attained––in the short term. But evidence is notably lacking on whether these short-term gains translate into longer-term educational benefits needed to fully justify these programs.

This paper uses the randomized phase-in of the RPS CCT program in Nicaragua to estimate the long-term effects on educational attainment and learning for boys, measured 10 years after the start of the program. We focus on a cohort of boys aged 9–12 years at the start of the program in 2000 who, due to the program’s eligibility criteria and prior school dropout patterns, were likely to have benefitted more in the group of localities that were randomly selected to receive the program first.

We find that the short-term program effect of a half grade increase in schooling for boys was sustained after the end of the program and into early adulthood. In addition, results indicate significant and substantial gains in both math and language achievement scores, an approximately one-quarter standard deviation increase in learning outcomes for the now young men. Hence in Nicaragua, schooling and achievement gains coincided, implying important long-term returns to CCT programs.

Mercredi 19 février 2014

GUO, Huanxiu - CERDI-University of Auvergne

The environmental efficiency of non-certifi ed organic farming in China: a case study of paddy rice production


This case study compares the environmental efficiency of non-certifi ed organic and conventional rice production in southern China. Using plot-season level survey data, we fi rst test the existence of a "technology gap" between the two types of production, and then calculate the environmental efficiency scores based on the use of pure nitrogen, which is considered as an environmentally detrimental input within the framework of the stochastic frontier analysis. Our analysis reveals that organic farming loses its environmental performance at high nitrogen levels, especially during the initial expansion period of organic farming. Because newly converted organic farmers prefer to increase the use of external nutrients such as nitrogen to compensate for a potential yield loss. These results highlight the uncertainty with which conventional farmers tend to view organic farming. However, we find that the experience gained by organic farmers over time helps increase and maintain their environmental efficiency. We thus warn against the rapid expansion of organic farming and recommend more technical support and strict nutrient regulation to maintain the environmental efficiency of organic farming.

Jeudi 6 mars 2014

FLORES, Nicholas - University of Colorado, Boulder (ANNULÉ)

Mercredi 26 mars 2014

LAZKANO, Itziar - University of Wisconsin, Milwaukee

Adaptation to Climate Change: How does Heterogeneity in Adaptation Costs Affect Climate Coalitions?


We examine how adaptation to climate change affects the incentives to ratify international environmental agreements (IEAs). In particular, we study the effects of two aspects of adaptation on the incentives to join a coalition. First, we analyze cross-country differences in adaptation costs. Second, we investigate the role of carbon leakage. Our results show that cross-country differences in adaptation may discourage countries from joining IEAs when there is no carbon leakage, while these cross-country differences may strengthen the incentives to join IEAs with leakages. Our results emphasize that policies directed at reducing cost differences and carbon leakage may also affect the success and failure of IEAs.

Mercredi 2 avril 2014

CHAKRAVORTY, Ujjayant - Tufts University

Food for Fuel: US Biofuel Policy, Food Prices and Poverty in India


Many countries have adopted energy policies that promote biofuels as a substitute for gasoline in transportation. For instance, 40% of U.S. grain is now used for energy and this share is expected to rise significantly under the current Renewable Fuels Mandate. This paper does two things. First it examines the land use implications of the policy, using a dynamic, partial equilibrium framework. It shows that because of land-use changes and spatial leakage, there may be no net reduction of carbon emissions from the policy. However world food prices may rise, but less than what many have predicted. Second, using micro-level survey data from India, it estimates the distributional consequences of the US policy on India. The methodology accounts for negative consumption impacts as well as the positive effects through wages, considering both perfect and imperfect pass-through from world to domestic prices. The results show that the distributional effects of the U.S. biofuel mandate is progressive in rural areas, and regressive in urban areas. Under the perfect price pass-through, the mandate leads to a reduction in poverty in rural areas by approximately 4.6 percent (38 million people get out of poverty), and a smaller increase in poverty (4 million) in urban areas. Under imperfect price pass-through, the results show increases in poverty in both cases, albeit of a smaller magnitude. These results suggest that poverty may decline in rural areas due mainly to wage impacts and decline in urban areas, where consumption effects dominate.

Vendredi 4 avril 2014

MBITI, Isaac - Southern Methodist University 

Vocational Education in Kenya: Evidence from A Randomized Evaluation Among Youth


This paper describes the Technical and Vocational Vouchers Program (TVVP) in Kenya and provides  early results from the intervention. Implementation began in 2008 with the recruitment of approximately 2,160 out-of-school youths (ranging in age from roughly 18 to 30). Of the 2,160 youths that applied to the TVVP, a random half were awarded a voucher for vocational training, while the other half served as the control group. Of the voucher winners, a random half were awarded a voucher that could only be used in public (government) institutions, while the other half received a voucher that could be used in either private or public institutions. The program also included a cross-cutting information intervention, which exposed a randomly selected half of all treatment and control individuals to information about the actual returns to vocational education. We find that voucher winners were significantly more likely to enroll in vocational education institutions and were able to acquire an additional 0.6 years of education. However, the information treatment did not affect educational attainment. We find limited evidence that the program increased earnings, although we found the program led to a significant increase in wage earnings among wage earners.

Mercredi 16 avril 2014

FOLEY, Kelly - University of Saskatchewan

Self-selection and the timing of human capital investment


When the returns to education depend on the finite horizon of an individual’s working life, standard human capital models (for example, Ben Porath (1967)) predict that if any period of full-time schooling has a positive return, then that return is maximized if the schooling occurs without interruption at the beginning of one’s life.  We use administrative data from the Danish Population Registers to document, in apparent contradiction to this prediction, the common practice of delaying university among high school graduates.  We compare the post-schooling life-time earnings of university graduates who delayed by one year compared to those who transitioned immediately from high school.  We find important differences across gender and study program in the both the propensity to delay and the differences in lifetime earnings.  Because earnings profiles are flatter for women relative to men and for those who study in Humanities compared to Social Sciences, we find that the average gap in lifetime earnings between those who delay and those who do not is more negative among men and those who study in Social Science.  The probability of delaying is also lowest in those groups.  To explore the extent to which differences in mean earnings are a function of self-selection, we modify the approach suggested in Altonji, Elder and Taber (2005) for use with continuous outcomes.  Under the assumption that selection on observed covariates is equal to selection on unobserved characteristics, we find that those who delay university are a negatively selected group and the choice of faculty is a key dimension in that selection. This finding is of particular interest because faculty is closely linked to occupation in Denmark. Our results suggest that the factors which determine the choice of occupation also might be related to the timing of human capital investment.

Mercredi 30 avril 2014

DAVIDSON, Russell - McGill University

Bootstrap Tests for Overidentification in Linear Regression Models


Little attention has been paid to the finite-sample properties of tests for overidentifying restrictions in linear regression models with a single endogenous regressor and weak instruments. We study several such tests in models estimated by instrumental variables (IV) and limited-information maximum likelihood (LIML). Under the assumption of Gaussian disturbances, we derive expressions for a variety of test statistics as functions of eight mutually independent random variables and two nuisance parameters. The distributions of the statistics are shown to have an ill-defined limit as the parameter that determines the strength of the instruments tends to zero and as the correlation between the disturbances of the structural and reduced-form equations tends to plus or minus one. Simulation experiments demonstrate that this makes it impossible to perform reliable inference near the point at which the limit is ill-defined. Several bootstrap procedures are proposed. They alleviate the problem and allow reliable inference when the instruments are not too weak. We also study the power properties of the bootstrap tests.

Mercredi 21 mai 2014

LAMBERTINI Luisa - École Polytechnique Fédérale de Lausanne (EPFL)

Macroeconomic Implications of Bank Capital Requirements


This paper analyzes the macroeconomic eff ects of bank capital requirements. Using data for U.S. bank holding companies over the period 1993Q1 to 2012Q1 we document that: a) bank capital requirements bind especially for the largest banks; b) bank assets and deposits are pro-cyclical while equity is acyclical; c) an increase in loan loss provisions reduces output, raises the corporate bond spread and the bank equity-to-asset ratio. In our model fi nancial intermediaries are subject to a constant minimum equity-to-asset ratio requirement as in Basel II. The model, calibrated over the pre-crisis period, generates moments in line with the empirical evidence. A decline in bank assets generates a fall in asset prices and loans that reduces output and consumption. We also model Basel III regulation that speci es a capital conservation (in addition to the eight percent required by Basel II) and a counter-cyclical bu er for capital-to-asset ratios. Banks are less volatile under Basel III, but the mandated increase in the capital ratio is achieved primarily by a reduction in assets and therefore output. Banks respond to lower capital ratios during downturns by raising less capital but reducing loans as much as under Basel II. Hence, Basel III fails to de-amplify the e ffect of fi nancial shocks on the macroeconomy.

Vendredi 23 mai 2014

Alexandru Minea - Université d'Auvergne

Can Inflation Targeting Promote Institutional Quality in Developing Countries?


Although the question of when and how policy reforms are successful in terms of reducing inflation is a crucial one, most papers that attempted to address it were criticized for assuming policy reforms to be exogenous. To overcome this problem, we develop a theoretical model in which public spending can be financed by taxes and seigniorage, and where the quality of institutions exerts a positive effect on tax collection. To remove the inflation bias of monetary policy, we consider an appropriate inflation target. Then, the model emphasizes the role of the “political context” (the initial cost of reforms) as regards the link between institutional quality and the monetary regime. For high or low values of the political cost of reforms, no relation emerges between these two variables. For intermediate values, on the contrary, a tighter monetary regime induces government to undertake efforts for improving the quality of institutions, to increase the efficiency of tax collection, as seigniorage resources become insufficient. Using the propensity scores-matching method, which allows controlling for self-selection in policy adoption, along with a wide set of robustness checks, including GMM-based estimations and controlling for unobserved heterogeneity, we find that inflation targeting improves institutional quality, in accordance to our theoretical model.