Abstract
During the 1918–1919 influenza pandemic, many local authorities made the controversial decision to close schools. We use newly digitized data from newspaper archives on the length of school closures for 165 large U.S. cities during the 1918–1919 flu pandemic to assess the long-run consequences of closing schools on children. We find that the closures had no detectable impact on children's school attendance in 1920, nor on their educational attainment and adult labor market outcomes in 1940. We highlight important differences between the 1918–1919 and COVID-19 pandemics and caution against extrapolating from our null effects to modern-day settings. Author Archives: The Review of Economics and Statistics Current Issue
Cohesive Institutions and Political Violence
Abstract
Can revenue sharing of resource rents be a source of distributive conflict? Can cohesive institutions avoid such conflicts? We exploit exogenous variation in local government revenues and new data on local democratic institutions in Nigeria to study these questions. We find a strong link between rents and conflict. Conflicts are highly organized and concentrated in districts and time periods with unelected local governments. Once local governments are elected these relationships are much weaker. We argue that elections produce more cohesive institutions that help limit distributional conflict between groups. Throughout, we confirm these findings using individual level survey data. Strategic or Confused Firms? Evidence from “Missing” Transactions in Uganda
Abstract
Are firms sophisticated maximizers, or do they appear to make mistakes? Using transaction data from Ugandan value-added tax returns, we show that sellers and buyers report different amounts 79% of the time, despite invoices being easily cross-checked. Our estimates suggest that most firms are “advantageous misreporters,” but that 25% are “disadvantageous misreporters” who systematically overreport own sales minus purchases such that their tax liability increases. Similarly, many firms—especially disadvantageous misreporters—fail to VAT-report imported inputs they themselves reported at Customs, increasing their liability. On net, unilateral VAT misreporting cost Uganda about US$384 million in foregone 2013–2016 tax revenue. Judging under Public Pressure
Abstract
We study the circumstances under which public pressure affects judging. We show that crowd pressure biases decisions in favor of the crowd for “subjective decisions” with respect to which the judge has more discretion but not for “objective decisions.” The bias is strengthened after a judge's error against the crowd and when errors are costlier to the crowd. We use data about referees' decisions and errors from the Bundesliga. We exploit three regimes where, due to the introduction of Video Assistance Refereeing (VAR) and COVID-19, both crowd pressure and the likelihood of errors vary. The Effect of Information on Market Activity: Evidence from Vehicle Recalls
Abstract
We evaluate the effect of vehicle recalls on vehicle transactions in the second-hand market. Using a rich data set of Dutch vehicle registrations, we exploit the quasiexperimental variation in recalls across nearly identical cars. We find strong heterogeneities across market segments: transactions increased for cars with lower listed price or with defects, and decreased for those with higher price or no defects. Based on our theoretical model, this suggests that recalls increase sorting in low-end markets, yet exacerbate adverse selection in high-end markets. Our results shed light on the effect of information arrival in markets subject to uncertainty and information asymmetries. (Non-)Parametric Recoverability of Preferences and Choice Prediction
Abstract
Simple functional forms for utility require restrictive structural assumptions that are often contrary to observed behavior. Even so, they are widely used in applied economic research. I address this issue using a two-part adaptive experimental design to compare the predictions of a popular parametric model of decision making under risk to those of non-parametric bounds on indifference curves. Interpreting the latter as an approximate upper bound, I find the parametric model sacrifices very little in terms of predictive success. This suggests that, despite their restrictiveness, simple functional forms may nevertheless be useful representations of preferences over risky alternatives. How Green Is Sugarcane Ethanol?
Abstract
Biofuels offer one approach for reducing carbon emissions. However, the necessary agricultural expansion may endanger tropical forests. I use a dynamic model of land use to disentangle the roles of acreage and yields in the supply of sugarcane ethanol in Brazil. The model is estimated using remote sensing (satellite) information of sugarcane activities. Estimates imply that, at the margin, 92% of new ethanol comes from increases in area and only 8% from increases in yield. Direct deforestation accounts for 19% of area expansion at the margin in the long run. I further assess carbon emissions and deforestation implications from ethanol policies. Contracts and Firms’ Inflation Expectations
Abstract
We use novel survey data to study firms’ inventory contracts. We document facts about the usage of purchase and sale contracts. We find that firms purchase and sell inventory through three contractual arrangements: fixed price and quantity, fixed price only, and fixed quantity only. Those using fixed price and quantity hold the largest share of contracts. The average duration of purchase contracts is not very different from the average duration of sale contracts. We then find that the upward bias in inflation expectations is a feature of firms that do not purchase or sell largely through contracts. Our findings are useful in the calibration of sticky price models. Incentivizing Demand for Supply-Constrained Care: Institutional Birth in India
Abstract
If overcrowding harms health care quality, the impacts of encouraging more people to use services are not obvious. Impacts will depend on whether marginal entrants benefit and whether they benefit enough to offset the congestion externalities imposed on inframarginal users. We develop a general-equilibrium model that formalizes these ideas. We examine them empirically by studying JSY, a program in India that paid women to give birth in medical facilities. We find evidence that JSY increased perinatal mortality in areas with low health-system capacity, was particularly harmful in more-complex births, reduced the quality of facilities' postnatal care, and generated harmful spillovers onto other services.