Micro Risks and (Robust) Pareto-Improving Policies

By Mark Aguiar, Manuel Amador, and Cristina Arellano

American Economic Review, November 2024

We provide conditions for the feasibility of robust Pareto-improving (RPI) policies when markets are incomplete and the interest rate is below the growth rate. We allow for arbitrary heterogeneity in preferences and income risk and a wedge between the ret...

A Technology-Gap Model of 'Premature' Deindustrialization

By Ippei Fujiwara and Kiminori Matsuyama

American Economic Review, November 2024

We propose a parsimonious mechanism for generating premature deindustrialization (PD). In the baseline model, the Baumol effect drives the hump-shaped path of the manufacturing share. Countries follow different paths due to the difference in the sector-sp...

Quality Is in the Eye of the Beholder: Taste Projection in Markets with Observational Learning

By Tristan Gagnon-Bartsch and Antonio Rosato

American Economic Review, November 2024

We study how misperceptions of others' tastes influence beliefs, demand, and prices in markets with observational learning. Consumers infer a good's quality from the quantity demanded and price paid by others. When consumers exaggerate the similarity betw...

(Empirical) Bayes Approaches to Parallel Trends

By Soonwoo Kwon and Jonathan Roth

AEA Papers and Proceedings, May 2024

We consider Bayes and Empirical Bayes (EB) approaches for dealing with violations of parallel trends. In the Bayes approach, the researcher specifies a prior over both the pretreatment violations of parallel trends δpre and the posttr...

Social safety nets and long-run outcomes for children

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The effects of welfare cuts in Denmark.

Front Matter

American Economic Journal: Economic Policy, November 2024

Real-Time Pricing and the Cost of Clean Power

By Imelda, Matthias Fripp, and Michael J. Roberts

American Economic Journal: Economic Policy, November 2024

Solar and wind power are now cheaper than fossil fuels but are intermittent. The extra supply-side variability implies growing benefits of using real-time retail pricing (RTP). We evaluate the potential gains of RTP using a model that jointly solves inves...

Downward Revision of Investment Decisions after Corporate Tax Hikes

By Sebastian Link, Manuel Menkhoff, Andreas Peichl, and Paul Schüle

American Economic Journal: Economic Policy, November 2024

This paper estimates the causal effect of corporate tax hikes on firm investment based on more than 1,400 local tax changes. By observing planned and realized investment volumes in a representative sample of German manufacturing firms, we can study how ta...

Information Frictions and Skill Signaling in the Youth Labor Market

By Sara B. Heller and Judd B. Kessler

American Economic Journal: Economic Policy, November 2024

This paper provides evidence that information frictions limit the labor market trajectories of US youth. We provide credible skill signals—recommendation letters based on supervisor feedback—to a random subset of 43,409 participants in New York's summ...

Pricing Carbon: Evidence from Expert Recommendations

By Moritz A. Drupp, Frikk Nesje, and Robert C. Schmidt

American Economic Journal: Economic Policy, November 2024

We study the variation of carbon price recommendations and their determinants using survey evidence from more than 400 experts across almost 40 countries. We quantify the extent of disagreement and reveal that a majority of experts can agree on short- and...

Algorithmic Risk Assessment in the Hands of Humans

By Megan T. Stevenson and Jennifer L. Doleac

American Economic Journal: Economic Policy, November 2024

We evaluate the impacts of adopting algorithmic risk assessments in sentencing. We find that judges changed sentencing practices in response to the risk assessment, but that discretion played a large role in mediating its impact. Judges deviated from the ...

Remote Instruction and Student Mental Health: Swedish Evidence from the Pandemic

By Evelina Björkegren, Helena Svaleryd, and Jonas Vlachos

American Economic Journal: Economic Policy, November 2024

When COVID-19 reached Sweden, upper-secondary students (ages 17–19) transitioned to remote instruction, while lower-secondary schools (ages 14–16) remained open. We use this setting as a natural experiment to analyze how modes of instruction affect st...

Administrative Burden and Procedural Denials: Experimental Evidence from SNAP

By Eric Giannella, Tatiana Homonoff, Gwen Rino, and Jason Somerville

American Economic Journal: Economic Policy, November 2024

Many government program applications result in procedural denials due to administrative burdens associated with applying. We identify the intake interview as a key barrier to take-up of the Supplemental Nutrition Assistance Program and study the effect of...

Managers' Productivity and Recruitment in the Public Sector

By Pablo Muñoz and Mounu Prem

American Economic Journal: Economic Policy, November 2024

Governments face many constraints in attracting talented managers to the public sector, which often lacks high-powered incentives. In this paper, we study how a civil service reform in Chile changed the effectiveness of a vital group of public sector mana...

Identity in Court Decision-Making

By Ulrika Ahrsjö, Susan Niknami, and Mårten Palme

American Economic Journal: Economic Policy, November 2024

We explore the role of identity along multiple dimensions in high-stakes decision-making. Our data contain information about demographic and socioeconomic indicators for defendants and randomly assigned jurors in a Swedish court. Our results show that def...

Achieving Air Pollution Control Targets with Technology-Aided Monitoring: Better Enforcement or Localized Efforts?

By Lin Yang, Yatang Lin, Jin Wang, and Fangyuan Peng

American Economic Journal: Economic Policy, November 2024

Weak enforcement of environmental regulations remains a global issue due to inadequate monitoring and misaligned incentives. This paper examines the effects of automated monitoring on achieving air pollution control targets amidst China's war on pollution...

The School-to-Prison Pipeline: Long-Run Impacts of School Suspensions on Adult Crime

By Andrew Bacher-Hicks, Stephen B. Billings, and David J. Deming

American Economic Journal: Economic Policy, November 2024

Schools must balance student behavior management with the potential negatives of strict discipline. These policies can deter misbehavior but may stigmatize students and expose them to the criminal justice system early. We assess the impact of attending a ...

High Schools Tailored to Adults Can Help Them Complete a Traditional Diploma and Excel in the Labor Market

By Rebecca Brough, David C. Phillips, and Patrick S. Turner

American Economic Journal: Economic Policy, November 2024

Over 18 million adults in the United States lack a high school credential. While some go on to attain the GED, diplomas are potentially more valuable. A network of high schools helps adults graduate by providing tailored curricula, nonacademic coaching, o...

Education and Geographical Mobility: The Role of the Job Surplus

By Michael Amior

American Economic Journal: Economic Policy, November 2024

Better educated workers accept many more long-distance job offers, and relocate quicker following local shocks. I attribute this to a fundamental feature of their labor market experience, unrelated to geography: large returns to job match quality. If a go...

The Carrot and the Stick: Bank Bailouts and the Disciplining Role of Board Appointments

By Christian Mücke, Loriana Pelizzon, Vincenzo Pezone, and Anjan Thakor

American Economic Journal: Economic Policy, November 2024

We empirically examine the Capital Purchase Program (CPP) used by the US government to bail out distressed banks and its implications for regulatory policy. We find strong evidence that a feature of the CPP—the government's ability to appoint independen...