SEMINARIOS Y WORKSHOPS

The deterrence effect of legal sanctions has been widely studied and measured. Less attention has been given to the mechanisms by which some sanctions are more deterrent than others. This paper suggests one possible mechanism: the legitimacy of legal sanctions. I present a model in which individuals respond to a legal sanction for previously non-regulated behavior. An implication of the model is that more legitimate sanctions, those with higher social acceptance of the mandated behavior, cause a larger change in the targeted behavior. I test this hypothesis on the Cámaras Salvavidas Program, a speed-control intervention in Bogotá, Colombia. I estimate a Non-linear Difference in Difference equation, using the staggered implementation of the program as source of exogeneity. Legitimacy of legal sanctions is the source of heterogeneity. The program has a bigger effect in locations where the speed limit is more legitimate. It is shown that the result is robust to different ways of measuring legitimacy. Policy implications are discussed, suggesting that less strict but more legitimate sanctions might have a larger impact in reducing socially unwanted behavior.

This paper examines how heterogeneous insurance coverage with a tiered hospital network affects hospital prices. Hospitals are differentiated in both vertical and horizontal dimensions. Better-insured patients are more likely to choose hospitals that are perceived as of higher quality -- which I refer to as ``moral hazard in hospital choice". Serving well-insured, price-insensitive patients elevates the markups of high-quality ``star" hospitals. To save costs, insurers steer demand away from expensive star hospitals through tiered network plans that place higher-priced hospitals in a non-preferred tier with less coverage and more cost-sharing. Tiered networks may appear to mitigate patients' moral hazard in hospital choice and constrain hospital price dispersion. However, lower coverage at star hospitals weakens insurers' bargaining incentives with these hospitals and widens hospital price dispersion. I empirically evaluate the countervailing forces using market-wide claims data from Chile and find that tiered networks enlarge hospital price dispersion, hurt star hospitals' profitability and harm patients' welfare. My results provide new evidence of the negative equilibrium effects of insurance coverage heterogeneity on the hospital market.

What are the effects of taxing stock and derivative transactions on market liquidity and welfare? My theoretical model predicts asymmetric responses to equivalent tax rates across markets, resulting in welfare improvements upon taxation. Stock volume decreases significantly relative to options volume, and liquidity improves in the taxed market due to reduced adverse selection. I causally test the model’s predictions by leveraging three separate FTT introductions on stocks and derivatives. Empirical results show reduced trading in the taxed markets and migration of informed trading to the untaxed market. I reject the common conception that the synthetic replication of stocks is a practiced alternative to avoid the tax.

Looking for jobs is complicated and frustrating. We present the results of a randomised multi-treatment intervention offering jobseekers access to online tools aimed to improve the effectiveness of their job search. In one treatment arm, jobseekers have access to a purposely designed online job search platform that recommends vacancies by proximity with the jobseeker’s skill profile (Jobs-for-You, J4U ). The second treatment consists of online cognitive training sessions that help maintain crucial skills during unemployment (Cognition, COG). The intervention also includes a treatment arm with both the online platform and the cognitive training (J4U&COG) and a control group. We implemented the intervention in the Swiss cantons of Neuchatel and Vaud in 2021 and 2022.

Results show that participants in both the J4U and COG group search jobs closer to their skill profiles than the control group, but only if they were mismatched in their previous jobs. For participants aged 35 or older, we find jobs more rapidly than the control group, and job finding increases primarily through J4U participants locating jobs in occupations they had not worked before entering unemployment, i.e. occupational mobility. Those participants with cognitive training (COG) tend to find higher skilled jobs more rapidly than the control group. Younger participants take longer to find jobs, mostly because they are less likely to return to the pre-unemployment occupation. We find no difference in outcomes between the group receiving the combined treatment J4U&COG and the controls, possibly because of a form of task congestion.

Individuals simultaneously inhabit marriage and labor markets. Labor market decisions are strongly influenced by an individual’s relationship status and individual’s relationship choices are functions of the individual’s labor market status and of the one of her current or prospective mate. Although these interdependencies are widely recognized, there is a paucity of analyses that attempt to examine these relationships within an equilibrium framework in which labor market and relationship decisions are made in a fully dynamic setting. In this paper, we develop and estimate such a model that also includes a binary schooling decision for individuals of each gender. In estimating the model, we employ the Method of Simulated Moments and labor market information from the Current Population

Survey and marriage
market information from the American Community Survey. Using estimates of the model parameters, we compute the returns to schooling for men and women, where these returns reflect advantages that highly-educated individuals enjoy in both the labor and the marriage markets. We perform a number of comparative statics exercises showing that the marriage market is relatively more important for women than men when making schooling choices. We also show that ignoring the jointness of marriage and labor market decisions may lead to incorrect inference about gender gaps in the labor market.

In this paper, I develop an aggregation theory for distorted production network economies with heterogeneous households. I provide general decompositions for how the aggregate and distributional effects of shocks are sensitive to underlying consumer and firm heterogeneity. The workers’ value-added over labor income ratios (distortion centralities) gauge the importance of workers in the production of heavily distorted firms and are sufficient statistics for the effect of income distribution variations on TFP. The average distortion centrality faced by a household’s expenditure (expenditure centrality) and a firm’s revenue (revenue centrality) are sufficient statistics for the effect of expenditure variations on TFP. Labor misallocation rises and TFP falls as labor income shifts toward high distortion centrality workers, consumption shifts toward high expenditure centrality households, or demand shifts toward high revenue centrality firms. The reason is that when aggregate expenditure on relatively undistorted firms rises, their labor demand increases, reallocating workers from distorted firms with high marginal productivity to relatively undistorted firms with low marginal productivity. These second-best results show how distributional variations affect aggregate output by changing the aggregate allocation efficiency of workers. I estimate the first production network model with household heterogeneity for the United States. I show that variations in the income distribution have been responsible for 20% of the TFP volatility. Additionally, income distribution variations reduced misallocation between 2001 and 2009, and accentuated misallocation after the Great Recession. Heterogeneities in the production network are essential in explaining income and real consumption inequalities.

In a sequential auction with global and local bidders, we analyze which of the heterogenous goods to sell first for generating higher efficiency or revenue. We show that selling the good with (very) small variance first results in higher revenue, while selling it second results in higher social welfare with almost probability 1. We link the correct order of selling to the probability of various types of inefficient outcomes. Specifically, selling the good with small variance first, results in a high probability of ex-post loss for the global bidder, which increases the seller's revenue at the expense of the global bidder and social welfare.

La Facultad de Economía lo invita al Seminario de Investigación
Plata y Plomo: How Higher Salaries Expose Politicians to Criminal Violence

Abstract:

Adequate wages are an important tool to shield public officials from special interests and corruption. But what is the equilibrium effect of higher wages in the presence of criminal pressure groups, who use both bribes and violence? By means of a regression discontinuity design, we show that an increase in the remuneration of Italian municipal cabinets triggers a sizable and significant increase in criminal attacks against their members. We argue that this is triggered by higher-paid officials' lower likelihood of catering to criminal interests. In particular, we show that better-paid politicians are significantly more likely to prevent corruption in public procurement, a key area of illicit interactions between the state and criminal organizations. Additional analyses reveal that the disciplining effect of wages is driven by a change in incumbents' behavior rather than improved selection. These findings reveal how -- in the presence of criminal groups -- higher wages may limit corruption, but also foster the use of violence as an alternative tool to influence policymaking