Front Matter

American Economic Journal: Applied Economics, October 2018

Why Has Urban Inequality Increased?

By Nathaniel Baum-Snow, Matthew Freedman, and Ronni Pavan

American Economic Journal: Applied Economics, October 2018

This paper examines mechanisms driving the more rapid increases in wage inequality in larger cities between 1980 and 2007. Production function estimates indicate strong evidence of capital-skill complementarity and increases in the skill bias of agglomera...

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

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

American Economic Journal: Applied Economics, October 2018

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

Access to Migration for Rural Households

By Cynthia Kinnan, Shing-Yi Wang, and Yongxiang Wang

American Economic Journal: Applied Economics, October 2018

This paper exploits a unique feature of China's history, the "sent-down youth" (SDY) program, to study the effects of access to internal migration. We show that temporary migration due to the SDY program created lasting inter-province links. We interact t...

Foreign Rivals Are Coming to Town: Responding to the Threat of Foreign Multinational Entry

By Cathy Ge Bao and Maggie Xiaoyang Chen

American Economic Journal: Applied Economics, October 2018

How do domestic firms respond to the threat of foreign competition? This paper quantifies foreign competition threats by exploiting news of potential multinational investments from over 35,000 media outlets around the world. Using firm-specific measures o...

Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization

By Rafael Dix-Carneiro, Rodrigo R. Soares, and Gabriel Ulyssea

American Economic Journal: Applied Economics, October 2018

This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reducti...

Mentors or Teachers? Microenterprise Training in Kenya

By Wyatt Brooks, Kevin Donovan, and Terence R. Johnson

American Economic Journal: Applied Economics, October 2018

We use a randomized controlled trial to demonstrate that inexperienced female microenterprise owners in a Kenyan slum benefit from mentorship by an experienced entrepreneur in the same community. Mentorship increases profits by 20 percent on average with ...

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

By Jeanne Lafortune, Julio Riutort, and José Tessada

American Economic Journal: Applied Economics, October 2018

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

The Effect of Terrorism on Employment and Consumer Sentiment: Evidence from Successful and Failed Terror Attacks

By Abel Brodeur

American Economic Journal: Applied Economics, October 2018

This paper examines the economic consequences of terror attacks by exploiting the inherent randomness in the success or failure of terror attacks. The findings suggest that successful attacks, in comparison to failed attacks, reduce the number of jobs and...

Modern Family? Paternity Leave and Marital Stability

By Daniel Avdic and Arizo Karimi

American Economic Journal: Applied Economics, October 2018

We study how relationship stability of couples is affected by an increase in fathers' involvement in staying home from work with young children. We make use of a parental leave reform in Sweden that earmarked one month of paid leave to each parent in a re...

Diabetes and Diet: Purchasing Behavior Change in Response to Health Information

By Emily Oster

American Economic Journal: Applied Economics, October 2018

Individuals with obesity and related conditions are often reluctant to change their diet. Evaluating the details of this reluctance is hampered by limited data. I use household scanner data to estimate food purchase response to a diagnosis of diabetes. I ...

Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations

By Hannes Schwandt

American Economic Journal: Applied Economics, October 2018

Do wealth shocks affect the health of elderly in developed countries? I exploit the booms and busts in the US stock market as a natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the 19...

Does Electoral Competition Curb Party Favoritism?

By Marta Curto-Grau, Albert Solé-Ollé, and Pilar Sorribas-Navarro

American Economic Journal: Applied Economics, October 2018

We study whether incumbents facing uncontested elections channel public spending towards co-partisan officials more than is the case of incumbents that are worried about reelection. We draw on data on capital transfers allocated by Spanish regions to loca...

Identifying Sorting in Practice

By Cristian Bartolucci, Francesco Devicienti, and Ignacio Monzón

American Economic Journal: Applied Economics, October 2018

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

Front Matter

American Economic Review, October 2018

Learning from Others' Outcomes

By Alexander Wolitzky

American Economic Review, October 2018

I develop a simple model of social learning in which players observe others' outcomes but not their actions. A continuum of players arrives continuously over time, and each player chooses once-and-for-all between a safe action (which succeeds with known p...

Narrative Sign Restrictions for SVARs

By Juan Antolín-Díaz and Juan F. Rubio-Ramírez

American Economic Review, October 2018

We identify structural vector autoregressions using narrative sign restrictions. Narrative sign restrictions constrain the structural shocks and/or the historical decomposition around key historical events, ensuring that they agree with the established na...

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

By Ilyana Kuziemko and Ebonya Washington

American Economic Review, October 2018

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

Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan

By Joshua Blumenstock, Michael Callen, and Tarek Ghani

American Economic Review, October 2018

We report on an experiment examining why default options impact behavior. By randomly assigning employees to different varieties of a salary-linked savings account, we find that default enrollment increases participation by 40 percentage points—an effec...

Estimating Group Effects Using Averages of Observables to Control for Sorting on Unobservables: School and Neighborhood Effects

By Joseph G. Altonji and Richard K. Mansfield

American Economic Review, October 2018

We consider the classic problem of estimating group treatment effects when individuals sort based on observed and unobserved characteristics. Using a standard choice model, we show that controlling for group averages of observed individual characteristics...