Assessing the Precision of Compositional Data in a Stratified Double Stage Cluster Sample: Application to the Swiss Earnings Structure Survey

Precision of released figures is not only an important quality feature of official statistics,it is also essential for a good understanding of the data. In this paper we show a casestudy of how precision could be conveyed if the multivariate nature of data has to betaken into account. In the official release of the Swiss earnings structure survey, the totalsalary is broken down into several wage components. We follow Aitchison's approachfor the analysis of compositional data, which is based on logratios of components. Wefirst present diferent multivariate analyses of the compositional data whereby the wagecomponents are broken down by economic activity classes. Then we propose a numberof ways to assess precision

Evidence-based Economic Policy - Three Essays in Applied Microeconometrics

Over thirty years ago, Leamer (1983) - among many others - expressed doubts about the quality and usefulness of empirical analyses for the economic profession by stating that "hardly anyone takes data analyses seriously. Or perhaps more accurately, hardly anyone takes anyone else's data analyses seriously" (p.37). Improvements in data quality, more robust estimation methods and the evolution of better research designs seem to make that assertion no longer justifiable (see Angrist and Pischke (2010) for a recent response to Leamer's essay). The economic profes- sion and policy makers alike often rely on empirical evidence as a means to investigate policy relevant questions. The approach of using scientifically rigorous and systematic evidence to identify policies and programs that are capable of improving policy-relevant outcomes is known under the increasingly popular notion of evidence-based policy. Evidence-based economic policy often relies on randomized or quasi-natural experiments in order to identify causal effects of policies. These can require relatively strong assumptions or raise concerns of external validity. In the context of this thesis, potential concerns are for example endogeneity of policy reforms with respect to the business cycle in the first chapter, the trade-off between precision and bias in the regression-discontinuity setting in chapter 2 or non-representativeness of the sample due to self-selection in chapter 3. While the identification strategies are very useful to gain insights into the causal effects of specific policy questions, transforming the evidence into concrete policy conclusions can be challenging. Policy develop- ment should therefore rely on the systematic evidence of a whole body of research on a specific policy question rather than on a single analysis. In this sense, this thesis cannot and should not be viewed as a comprehensive analysis of specific policy issues but rather as a first step towards a better understanding of certain aspects of a policy question. The thesis applies new and innovative identification strategies to policy-relevant and topical questions in the fields of labor economics and behavioral environmental economics. Each chapter relies on a different identification strategy. In the first chapter, we employ a difference- in-differences approach to exploit the quasi-experimental change in the entitlement of the max- imum unemployment benefit duration to identify the medium-run effects of reduced benefit durations on post-unemployment outcomes. Shortening benefit duration carries a double- dividend: It generates fiscal benefits without deteriorating the quality of job-matches. On the contrary, shortened benefit durations improve medium-run earnings and employment possibly through containing the negative effects of skill depreciation or stigmatization. While the first chapter provides only indirect evidence on the underlying behavioral channels, in the second chapter I develop a novel approach that allows to learn about the relative impor- tance of the two key margins of job search - reservation wage choice and search effort. In the framework of a standard non-stationary job search model, I show how the exit rate from un- employment can be decomposed in a way that is informative on reservation wage movements over the unemployment spell. The empirical analysis relies on a sharp discontinuity in unem- ployment benefit entitlement, which can be exploited in a regression-discontinuity approach to identify the effects of extended benefit durations on unemployment and survivor functions. I find evidence that calls for an important role of reservation wage choices for job search be- havior. This can have direct implications for the optimal design of unemployment insurance policies. The third chapter - while thematically detached from the other chapters - addresses one of the major policy challenges of the 21st century: climate change and resource consumption. Many governments have recently put energy efficiency on top of their agendas. While pricing instru- ments aimed at regulating the energy demand have often been found to be short-lived and difficult to enforce politically, the focus of energy conservation programs has shifted towards behavioral approaches - such as provision of information or social norm feedback. The third chapter describes a randomized controlled field experiment in which we discuss the effective- ness of different types of feedback on residential electricity consumption. We find that detailed and real-time feedback caused persistent electricity reductions on the order of 3 to 5 % of daily electricity consumption. Also social norm information can generate substantial electricity sav- ings when designed appropriately. The findings suggest that behavioral approaches constitute effective and relatively cheap way of improving residential energy-efficiency.

Lithuania’s Food Demand During Economic Transition, January 2000

The linear approximate version of the AIDS model is estimated using data from the Lithuanian household budget survey covering the period from July 1992 to December 1994. Price and real expenditure elasticities for twelve food groups were estimated based on the estimated coefficients of the model. Very little or nothing is known about the demand parameters of Lithuania and other former socialist countries, so the results are of intrinsic interest. Estimated expenditure elasticities were positive and statistically significant for all food groups while all own-price elasticities were negative and statistically significant, except for that of eggs which was insignificant. Results suggest that Lithuanian household consumption did respond to price and real income changes during their transition to a market-oriented economy.

Italy's Path to Very Low Fertility : The Adequacy of Economic and Second Demographic Transition Theories

The deep drop of the fertility rate in Italy to among the lowest in the world challenges contemporary theories of childbearing and family building. Among high-income countries, Italy was presumed to have characteristics of family values and female labor force participation that would favor higher fertility than its European neighbors to the north. We test competing economic and cultural explanations, drawing on new nationally representative, longitudinal data to examine first union, first birth, and second birth. Our event history analysis finds some support for economic determinants of family formation and fertility, but the clear importance of regional differences and of secularization suggests that such an explanation is at best incomplete and that cultural and ideational factors must be considered.

Motivation, Test Scores, and Economic Success

This paper argues that low-stakes test scores, available in surveys, may be partially determined by test-taking motivation, which is associated with personality traits but not with cognitive ability. Therefore, such test score distributions may not be informative regarding cognitive ability distributions. Moreover, correlations, found in survey data, between high test scores and economic success may be partially caused by favorable personality traits. To demonstrate these points, I use the coding speed test that was administered without incentives to National Longitudinal Survey of Youth 1979 (NLSY) participants. I suggest that due to its simplicity its scores may especially depend on individuals' test-taking motivation. I show that controlling for conventional measures of cognitive skills, the coding speed scores are correlated with future earnings of male NLSY participants. Moreover, the coding speed scores of highly motivated, though less educated, population (potential enlists to the armed forces) are higher than NLSY participants' scores. I then use controlled experiments to show that when no performance-based incentives are provided, participants' characteristics, but not their cognitive skills, affect effort invested in the coding speed test. Thus, participants with the same ability (measured by their scores on an incentivized test) have significantly different scores on tests without performance- based incentives.

The Economic Effects of Christian Moralities

This article examines the different influences that Catholicism and Protestantism exert on economically relevant values. It argues that Catholic theology and practice facilitate personal transactions while Protestantism favors values and types of moral and legal enforcement better adapted for impersonal trade. Protestantism may thus be more conducive to economic growth through anonymous exchange while Catholicism may provide better support for personal contracting. Several components of this hypothesis are confirmed using statistical models with data from the 1998 ISSP international survey on religion. These show that Protestants are more trusting of anonymous counter parties, develop more reliable institutions for legal enforcement and are more willing to spend resources on monitoring and punishing other members of the community. Catholicism is more protective of the family and small-group relationships, and provides more tolerant and less motivating beliefs. Relatively smaller and less consistent differences appear in terms of worldly personal success and incentives.

A global view of economic growth

This paper integrates in a unified and tractable framework some of the key insights of the field of international trade and economic growth. It examines a sequence of theoretical models that share a common description of technology and preferences but differ on their assumptions about trade frictions. By comparing the predictions of these models against each other, it is possible to identify a variety of channels through which trade affects the evolution of world income and its geographical distribution. By comparing the predictions of these models against the data, it is also possible to construct coherent explanations of income differences and long-run trends in economic growth.

Estimating the effect of transitory economic shocks on civil conflict

This note tries to clarify some remaining issues in the debate on the effect of income shocks oncivil conflict. Section 1 discusses the discrepant findings on the effect of rainfall shocks oncivil conflict in Miguel and Satyanath (2010, 2011) and Ciccone (2011). Section 2 develops aninstrumental variables approach to estimate the effect of transitory (rainfall-driven) incomeshocks on civil conflict and contrasts the conclusions with those of Miguel, Satyanath, andSergenti (2004) and Miguel and Satyanath (2010, 2011). Throughout, the note uses the data ofMiguel, Satyanath, and Sergenti to focus on the methodological issues at the core of the debate(for results using the latest data see Ciccone, 2011).

Geographical effects on the accuracy of textile trade data:an international approach for 1913

Foreign trade statistics are the main data source to the study of international trade.However its accuracy has been under suspicion since Morgernstern published hisfamous work in 1963. Federico and Tena (1991) have resumed the question arguing thatthey can be useful in an adequate level of aggregation. But the geographical assignmentproblem remains unsolved. This article focuses on the spatial variable through theanalysis of the reliability of textile international data for 1913. A geographical biasarises between export and import series, but because of its quantitative importance it canbe negligible in an international scale.

Catalan government popularity. An example of economic effects on sub-national government support

The aim of this essay is to deal with economic voting in contexts ofmultilevel governance and to be a contribution to the debate on attribution of responsibilities in popularity functions literature. We use aggregate and individual data from Catalonia in order to analyse the relation between the state of the economy and the support for a sub-state government. The empirical analysis shows that the responsibility hypothesis works in regional governments without explicit macroeconomic competencies. We have also considered the evaluations of government performance on certain specific policies in order to clarify and determine the factors that drive Catalan government support. The article considers the implications of the findings for future attempts to model party support in a context of the European Union.

Motivation, test scores and economic success

This paper argues that low-stakes test scores, available in surveys, may be partially determinedby test-taking motivation, which is associated with personality traits but not with cognitiveability. Therefore, such test score distributions may not be informative regarding cognitiveability distributions. Moreover, correlations, found in survey data, between high test scoresand economic success may be partially caused by favorable personality traits. To demonstratethese points, I use the coding speed test that was administered without incentives to NationalLongitudinal Survey of Youth 1979 (NLSY) participants. I suggest that due to its simplicityits scores may especially depend on individuals' test-taking motivation. I show that controllingfor conventional measures of cognitive skills, the coding speed scores are correlated with futureearnings of male NLSY participants. Moreover, the coding speed scores of highly motivated,though less educated, population (potential enlists to the armed forces) are higher than NLSYparticipants' scores. I then use controlled experiments to show that when no performance-basedincentives are provided, participants' characteristics, but not their cognitive skills, affect effortinvested in the coding speed test. Thus, participants with the same ability (measured by theirscores on an incentivized test) have significantly different scores on tests without performance-based incentives.

Measuring and explaining farm inefficiency in a panel data set of mixed farms

This paper aims to estimate a translog stochastic frontier production function in the analysis of a panel of 150 mixed Catalan farms in the period 1989-1993, in order to attempt to measure and explain variation in technical inefficiency scores with a one-stage approach. The model uses gross value added as the output aggregate measure. Total employment, fixed capital, current assets, specific costs and overhead costs are introduced into the model as inputs. Stochasticfrontier estimates are compared with those obtained using a linear programming method using a two-stage approach. The specification of the translog stochastic frontier model appears as an appropriate representation of the data, technical change was rejected and the technical inefficiency effects were statistically significant. The mean technical efficiency in the period analyzed was estimated to be 64.0%. Farm inefficiency levels were found significantly at 5%level and positively correlated with the number of economic size units.

Economic integration and corruption: The corrupt soul of the European Union

We study the link between corruption and economic integration. We show that if an economic union establishes a common regulation for public procurement, the country more prone to corruption benefits more from integration. However, if the propensities to corruption are too distinct, the less corrupt country will not be willing to join the union. This difference in corruption propensities can be offset by a difference in efficiency. We also show that corruption is lower if integration occurs. A panel data analysis for the European Union confirms that more corrupt countries are more favorable towards integration but less acceptable as potential new members.

The economic effects of the Protestant Reformation: Testing the Weber hypothesis in the German Lands

Many theories, most famously Max Weber s essay on the Protestant ethic, have hypothesizedthat Protestantism should have favored economic development. With their considerablereligious heterogeneity and stability of denominational affiliations until the 19th century, theGerman Lands of the Holy Roman Empire present an ideal testing ground for this hypothesis.Using population figures in a dataset comprising 272 cities in the years 1300 1900, I find no effectsof Protestantism on economic growth. The finding is robust to the inclusion of a varietyof controls, and does not appear to depend on data selection or small sample size. In addition,Protestantism has no effect when interacted with other likely determinants of economic development.I also analyze the endogeneity of religious choice; instrumental variables estimates ofthe effects of Protestantism are similar to the OLS results.

Economic shocks and civil conflict: A comment

Miguel, Satyanath, and Sergenti (2004) argue that lowerrainfall levels and negative rainfall shocks increase conflictrisk in Sub-Saharan Africa. This conclusion rests on theirfinding of a negative correlation between conflict in t andrainfall growth between t-1 and t-2. I argue that this findingis driven by a positive correlation between conflict in t andrainfall levels in t-2. If lower rainfall levels or negativerainfall shocks increased conflict, one might have expectedMSS s finding to reflect a negative correlation betweenconflict in t and rainfall levels in t-1. In the latest data,conflict is unrelated to rainfall.