Front Matter

American Economic Journal: Applied Economics, January 2022

The Long-Run Effects of Recessions on Education and Income

By Bryan A. Stuart

American Economic Journal: Applied Economics, January 2022

This paper examines the long-run effects of the 1980–1982 recession on education and income. Using confidential census data, I estimate difference-in-difference regressions that exploit variation across counties in recession severity and across cohorts ...

Finally a Smoking Gun? Compensating Differentials and the Introduction of Smoking Bans

By Daniel Wissmann

American Economic Journal: Applied Economics, January 2022

Using the staggered introduction of smoking bans in the German hospitality industry over 2007–2008, I find a robust 2.4 percent decline in the daily earnings of workers in bars and restaurants associated with the most comprehensive smoking ban. This eff...

Subways and Urban Air Pollution

By Nicolas Gendron-Carrier, Marco Gonzalez-Navarro, Stefano Polloni, and Matthew A. Turner

American Economic Journal: Applied Economics, January 2022

We investigate the effect of subway system openings on urban air pollution. On average, particulate concentrations are unchanged by subway openings. For cities with higher initial pollution levels, subway openings reduce particulates by 4 percent in the a...

Can Information Reduce Ethnic Discrimination? Evidence from Airbnb

By Morgane Laouénan and Roland Rathelot

American Economic Journal: Applied Economics, January 2022

We use data from Airbnb to identify the mechanisms underlying discrimination against ethnic minority hosts. Within the same neighborhood, hosts from minority groups charge 3.2 percent less for comparable listings. Since ratings provide guests with increas...

Rational Habit Formation: Experimental Evidence from Handwashing in India

By Reshmaan Hussam, Atonu Rabbani, Giovanni Reggiani, and Natalia Rigol

American Economic Journal: Applied Economics, January 2022

We test the predictions of the rational addiction model, reconceptualized as rational habit formation, in the context of handwashing in rural India. To track handwashing, we design soap dispensers with timed sensors. We test for rational habit formation b...

Information Frictions, Internet, and the Relationship between Distance and Trade

By Anders Akerman, Edwin Leuven, and Magne Mogstad

American Economic Journal: Applied Economics, January 2022

We examine how the adoption of information communication technology affects bilateral trade. The context is a public program in Norway that rolled out broadband access points leading to plausibly exogenous variation in the availability and adoption of bro...

Does Patient Demand Contribute to the Overuse of Prescription Drugs?

By Carolina Lopez, Anja Sautmann, and Simone Schaner

American Economic Journal: Applied Economics, January 2022

In an experiment in Mali, we tested whether patients pressure providers to prescribe unnecessary medical treatment. We varied patients' information about a discount for antimalarial tablets and measure demand for both tablets and costlier antimalarial inj...

The Origins of Common Identity: Evidence from Alsace-Lorraine

By Sirus H. Dehdari and Kai Gehring

American Economic Journal: Applied Economics, January 2022

We study how more negative historical exposure to the actions of nation-states—like war, occupation, and repression—affects the formation of regional identity. The quasi-exogenous division of the French regions Alsace and Lorraine allows us to impleme...

How Effective Are Monetary Incentives to Vote? Evidence from a Nationwide Policy

By Mariella Gonzales, Gianmarco León-Ciliotta, and Luis R. Martínez

American Economic Journal: Applied Economics, January 2022

We study voters' response to marginal changes to the fine for electoral abstention in Peru, leveraging variation from a nationwide reform. A smaller fine has a robust, negative effect on voter turnout, partly through irregular changes in voter registratio...

Front Matter

American Economic Journal: Macroeconomics, January 2022

Offshoring, Automation, Low-Skilled Immigration, and Labor Market Polarization

By Federico S. Mandelman and Andrei Zlate

American Economic Journal: Macroeconomics, January 2022

We show that the observed polarization of employment toward the high- and low-skill occupations disappears when only native workers are considered. Instead, low-skilled immigration explains employment growth at the low tail of the skill distribution. More...

Endogenous Separations, Wage Rigidities, and Unemployment Volatility

By Mikael Carlsson and Andreas Westermark

American Economic Journal: Macroeconomics, January 2022

We show that in microdata, as well as in a search and matching model with flexible wages for new hires, wage rigidities of incumbent workers have substantial effects on separations and unemployment volatility. Allowing for an empirically relevant degree o...

The Cyclical Behavior of Unemployment and Wages under Information Frictions

By Camilo Morales-Jiménez

American Economic Journal: Macroeconomics, January 2022

I propose a new mechanism for sluggish wages based on workers' noisy information about the state of the economy. Wages do not respond immediately to a positive aggregate shock because workers do not (yet) have enough information to demand higher wages. Th...

Collateral Shocks

By Yvan Becard and David Gauthier

American Economic Journal: Macroeconomics, January 2022

We estimate a macroeconomic model on US data where banks lend to households and businesses and simultaneously adjust lending requirements on the two types of loans. We find that the collateral shock, a change in the ability of the financial sector to rede...

Slow Debt, Deep Recessions

By Joachim Jungherr and Immo Schott

American Economic Journal: Macroeconomics, January 2022

Business credit lags GDP growth by about one year. This contributes to high leverage during recessions and slow deleveraging. We show that a model in which firms use risky long-term debt replicates this slow adjustment of firm debt. In the model, slow-mov...

How Sticky Wages in Existing Jobs Can Affect Hiring

By Mark Bils, Yongsung Chang, and Sun-Bin Kim

American Economic Journal: Macroeconomics, January 2022

We consider a matching model of employment with flexible wages for new hires but sticky wages within matches. Unlike most models of sticky wages, we allow effort to respond if wages are too high or too low. In the Mortensen-Pissarides model, employment is...

Capital Controls for Crisis Management Policy in a Global Economy

By J. Scott Davis and Michael B. Devereux

American Economic Journal: Macroeconomics, January 2022

Capital controls may be justified as a policy to combat a financial crisis. But for large economies, capital controls may have substantial spillovers to the rest of the world. We investigate the case for capital controls in a large open economy, when dome...

Knowledge Diffusion, Trade, and Innovation across Countries and Sectors

By Jie Cai, Nan Li, and Ana Maria Santacreu

American Economic Journal: Macroeconomics, January 2022

This paper provides a unified framework for quantifying the cross-country and cross-sector interactions among trade, innovation, and knowledge diffusion. This framework is used to study the effect of trade liberalization in an endogenous growth model in w...

The Rise and Fall of India's Relative Investment Price: A Tale of Policy Error and Reform

By Alok Johri and Md Mahbubur Rahman

American Economic Journal: Macroeconomics, January 2022

India's relative price of investment rose 44 percent from 1981 to 1991 and fell 26 percent from 1991 to 2006. We build a simple DGE model, calibrated to Indian data, in order to explore the impact of capital import substitution policies and their reform p...