The Cyclical Volatility of Labor Markets under Frictional Financial Markets

By Nicolas Petrosky-Nadeau and Etienne Wasmer

American Economic Journal: Macroeconomics, January 2013

We provide a dynamic extension of an economy with search on credit and labor markets (Wasmer and Weil 2004). Financial frictions create volatility. They add an additional, almost acyclical, entry cost to procyclical job creation costs, thus increasing ...

Set-Asides and Subsidies in Auctions

By Susan Athey, Dominic Coey, and Jonathan Levin

American Economic Journal: Microeconomics, February 2013

Set-asides and subsidies are used extensively in government procurement and resource sales. We analyze these policies in an empirical model of US Forest Service timber auctions. The model fits the data well both within the sample of unrestricted sales ...

Revealed Preference in a Discrete Consumption Space

By Matthew Polisson and John K.-H. Quah

American Economic Journal: Microeconomics, February 2013

We show that an agent maximizing some utility function on a discrete (as opposed to continuous) consumption space will obey the generalized axiom of revealed preference (GARP), so long as the agent obeys cost efficiency. Cost efficiency will hold if th...

Decentralized Deterrence, with an Application to Labor Tax Auditing

By Edoardo Di Porto, Nicola Persico, and Nicolas Sahuguet

American Economic Journal: Microeconomics, February 2013

This paper studies a new strategic auditing game in which atomistic auditors maximize the success rate of audits, and provides a method to calibrate its parameters based on audit data. Calibrating the model to Italian auditing data, we provide an estim...

On the Relationship between Preferential and Multilateral Trade Liberalization: The Case of Customs Unions

By Kamal Saggi, Alan Woodland, and Halis Murat Yildiz

American Economic Journal: Microeconomics, February 2013

This paper compares equilibrium outcomes of two games of trade liberalization. In the Bilateralism game, countries choose whether to liberalize trade preferentially via a customs union (CU ), multilaterally, or not at all. The Multilateralism game is a...

Measuring the Efficiency of an FCC Spectrum Auction

By Jeremy T. Fox and Patrick Bajari

American Economic Journal: Microeconomics, February 2013

We propose a method to structurally estimate the deterministic component of bidder valuations in FCC spectrum auctions, and apply it to the 1995-1996 C block auction. We base estimation on a pairwise stability condition: two bidders cannot exchange two li...

Social Learning with Coarse Inference

By Antonio Guarino and Philippe Jehiel

American Economic Journal: Microeconomics, February 2013

We study social learning by boundedly rational agents. Agents take a decision in sequence, after observing their predecessors and a private signal. They are unable to make perfect inferences from their predecessors' decisions: they only understand the r...

The Welfare Effects of Use-or-Lose Provisions in Markets with Dominant Firms

By Ian Gale and Daniel P. O'Brien

American Economic Journal: Microeconomics, February 2013

A use-or-lose provision requires that firms employ a certain minimum fraction of their productive capacity. Variants have been used by regulators in the airline and wireless communications industries, among others. A typical stated objective is to limi...

Competition and the Use of Foggy Pricing

By Eugenio J. Miravete

American Economic Journal: Microeconomics, February 2013

Firms engage in foggy pricing when the menu of tariff options aims at profiting from consumer mistakes. The analysis of this paper concludes that the transition from monopoly to competition in the early US cellular telephone industry does not generally...

Front Matter

American Economic Journal: Microeconomics, February 2013

The Iceberg Theory of Campaign Contributions: Political Threats and Interest Group Behavior

By Marcos Chamon and Ethan Kaplan

American Economic Journal: Economic Policy, February 2013

We present a model where special interest groups condition contributions on the receiving candidate's support and also her opponent's. This allows interest groups to obtain support from contributions as well as from threats of contributing. Out-of-equilib...

Let Them Have Choice: Gains from Shifting Away from Employer-Sponsored Health Insurance and toward an Individual Exchange

By Leemore Dafny, Kate Ho, and Mauricio Varela

American Economic Journal: Economic Policy, February 2013

Most nonelderly Americans purchase health insurance through their employers, which sponsor a limited number of plans. Using a panel dataset representing over ten million insured lives, we estimate employees' preferences for different health plans and us...

Effects of Terms of Trade Gains and Tariff Changes on the Measurement of US Productivity Growth

By Robert C. Feenstra, Benjamin R. Mandel, Marshall B. Reinsdorf, and Matthew J. Slaughter

American Economic Journal: Economic Policy, February 2013

The acceleration in US productivity growth since 1995 is often attributed to declining prices for information technology (IT ) goods, and therefore enhanced productivity growth in that sector. We investigate an alternative explanation for these IT price m...

Political Price Cycles in Regulated Industries: Theory and Evidence

By Rodrigo M. S. Moita and Claudio Paiva

American Economic Journal: Economic Policy, February 2013

The early work of Stigler (1971) treats the regulatory process as the arbitration of conflicting economic and political interests rather than a pure welfare-maximizing effort. This paper builds on these ideas and models the regulatory process as a game...

Long-Term Impacts of Individual Development Accounts on Homeownership among Baseline Renters: Follow-Up Evidence from a Randomized Experiment

By Michal Grinstein-Weiss, Michael Sherraden, William G. Gale, William M. Rohe, Mark Schreiner, and Clinton Key

American Economic Journal: Economic Policy, February 2013

We examine the long-term effects of a 1998-2003 randomized experiment in Tulsa, Oklahoma with Individual Development Accounts that offered low-income households 2:1 matching funds for housing down payments. Prior work shows that, among households who r...

The Demand for Food of Poor Urban Mexican Households: Understanding Policy Impacts Using Structural Models

By Manuela Angelucci and Orazio Attanasio

American Economic Journal: Economic Policy, February 2013

We use Oportunidades, a conditional cash transfer to women, to show that standard demand models do not represent the sample's behavior: Oportunidades increases eligible households' food budget shares, despite food being a necessity; demand for food and...

Public Transfers and Domestic Violence: The Roles of Private Information and Spousal Control

By Gustavo J. Bobonis, Melissa González-Brenes, and Roberto Castro

American Economic Journal: Economic Policy, February 2013

We study whether transfer programs in which funds are targeted to women decrease the incidence of spousal abuse. We examine the impact of the Mexican Oportunidades program on spousal abuse rates and threats of violence using data from a specialized sur...

Targeting with Agents

By Paul Niehaus, Antonia Atanassova, Marianne Bertrand, and Sendhil Mullainathan

American Economic Journal: Economic Policy, February 2013

Targeting assistance to the poor is a central problem in development. We study the problem of designing a proxy means test when the implementing agent is corruptible. Conditioning on more poverty indicators may worsen targeting in this environment beca...

The Price Effects of a Large Merger of Manufacturers: A Case Study of Maytag-Whirlpool

By Orley C. Ashenfelter, Daniel S. Hosken, and Matthew C. Weinberg

American Economic Journal: Economic Policy, February 2013

Many experts speculate that US antitrust policy towards horizontal mergers has been too lenient. We estimate the price effects of Whirlpool's acquisition of Maytag to provide new evidence on this debate. We compare price changes in appliance markets mo...

Unemployment in an Interdependent World

By Gabriel J. Felbermayr, Mario Larch, and Wolfgang Lechthaler

American Economic Journal: Economic Policy, February 2013

How do changes in labor market institutions, like more generous unemployment benefits in one country, affect labor market outcomes in other countries? We set up a two-country Armingtonian trade model with frictions on the goods and labor markets. Contr...