Hello! Welcome to the webiste of the 1st edition of the MPhil Seminar Series: Novel Ideas (TT2022). Below you can find a miscellaneous of all the papers and some complementary materials provided by the authors in relation to their presentations.

28/04 Is charitable fundraising really worth it? by Danyal Khan

Broad Topic: Applied Microeconomics. Specific Topic: Charitable Fundraising, Structural Estimation.

Abstract

Fundraising is a form of investment for charities: they invest a certain amount on marketing each year and expect to generate a return in the form of donations. Data seems to show a positive association between fundraising spending and donations, but does this accurately reflect the causal returns on the fundraising efforts? I will present a structural model which characterises the revenue generation and decision making of charities, in addition to an empirical strategy which enables identification of the own charity returns, spillover effects and strategic effects between charities. I find (extremely) tentative evidence that the collective returns outweigh the individual returns amongst Green Charities in the UK, as fundraising by one charity encourages fundraising by other charities (strategic complementarity), and also generates higher returns for other charities (positive spillovers). I will also discuss the limitations of using the fundraising ROI as a measure of fundraising efficiency, the effect of competition in the charity sector and the implications of these findings for charity managers and regulators.

05/05 Two Americas and One Central Bank: Did QE Work? by Carissa Chen and Aditya Dhar

Broad Topic: Macroeconomics. Specific Topic: Unconventional Monetary Policy, Heterogeneous impacts of QE.

Abstract

We estimate a causal effect of QE1 on quarterly wage income in every county in the U.S including Puerto Rico. For each of the 3,195 counties, we run difference-in-differences regressions with controls for county-level American Recovery and Reinvestment Act transfers, the local tax rate, manufacturing employment shares, population, and time fixed-effects. We then use these estimates to (a) construct a national index of the geography of ZLB-constrained monetary policy effectiveness in the United States, (b) construct regressions with county-characteristics related to industry, education, inequality, and political preference, and (c) check the robustness of our findings by building VAR models for every county, state, and region in the United States to estimate whether monetary policy has become more or less effective over time. There is substantial variation in counties’ causal effects and we find our coefficients for geographic differences in wage income response to be significant at the 95% level for 2,013 of the 3,195 counties we test. We characterize the types of counties where QE1 was more effective: Counties with lower local tax rates per capita, lower government expenditures per capita, less population loss, less racial segregation, more colleges per capita, more Democrat votes, and more urban areas were more likely to have stronger wage-income responses to QE1. Of particular note, counties with an economic reliance on mining and farming had significantly less wage-income effects to QE1 and counties which changed their Presidential Election vote from Republicans to Democrats from 2008 to 2016 were overwhelmingly counties with stronger wage-income responses to QE1. Ultimately, this paper suggests that monetary policy constrained by the zero-lower bound is significantly less effective at stimulating wage income for some regions in the United States than others, and these distributional impacts can and already have exacerbated the growing divide within our country.

12/05 When the East goes West: The impact of GATT on Socialist countries by Marco Cokic

Broad Topic: Economic History. Specific Topic: Trade History of Socialist Countries.

Abstract

There is a growing body of literature on the economic history of Eastern Europe during the Cold War, thereby mainly trying to explain the demise of the Eastern block by discussing a range of different aspects. Trade has been largely excluded so far, even though Socialist countries were participating in international trade. This essay aims to discuss the impact of one of the most remarkable events in this period, the accession of four Socialist countries into the General Agreement on Tariffs and Trade (GATT), which is an explicitly Capitalist trade treaty, between 1966 and 1973. The results suggest that the signing of GATT is associated with a 35–81 per cent increase in export volume. Moreover, the essay finds a small but sizeable impact of GATT on welfare in three out of four countries. Given the methodological limitations, the results can be understood as the lower boundary of the actual impact of GATT on Socialist countries, thereby suggesting that trade deals between countries with different economic and political structures can be beneficial.

19/05 Unwanted daughters: The unintended consequences of a ban on sex-selection on the educational attainment of women by Garima Rastogi

Broad Topic: Development Economics, Applied Microeconomics. Specific Topic: Gender Economics, Education Economics.

Abstract

We study whether legal restrictions on prenatal discrimination against females leads to a shift by parents towards postnatal discrimination, focusing on the impact on educational attainment. We exploit the differentially timed in troduction of a ban on sex-selective abortions across states in India to find that a legal restriction on abortions led to an increase in the number of females born, as well as a widening in the gender gap in educational attainment. Females born in states affected by the ban are 2.3, 3.5 and 3.2 percentage points less likely to complete Grade 10, complete Grade 12 and enter university relative to males. These effects are concentrated among non-wealthy households that lacked the resources to evade the ban. Investigating mechanisms, we find that the relative reduction in investments in female education were not driven by family size but because surviving females were now relatively unwanted, whereas surviving males are relatively more valued, leading to an increasing concentration of household resources on them. Discrimination is amplied among higher order births and among females with relatively few sisters. Finally, these negative effects exist despite the existence of a marriage market channel through which parents increase investments in their daughters' education to increase the probability that they make a high-quality match. This suggests that policymakers need to address the unintended welfare consequences of interventions aimed at promoting gender equity.

26/05 Lessons from implementing algorithmic school choice in Sweden by Nils Lager

Broad Topic: Microeconomic Theory. Specific Topic: Market Design, Mechanism Design.

Abstract

Throughout the seminar, I will connect dots from the school choice literature to my two years of experience from working at Mitt Skolval, a Swedish research-driven social enterprise. The company was founded in 2016 by market designers and currently handles almost a fifth of Swedish elementary school placements. The school choice literature has pointed out the SOSM/DA as a suitable matching algorithm for school choice, because of its strategy-proofness and optimal stability. But market designers also need to think about other factors when designing a school choice system, such as the role of information, obligatory schooling, guaranteeing a school close to home, the ability to explain the matching for households and courts, and school segregation (as Al Roth likes to remind of: the devil is in the detail!). Furthermore, implementation of the system must be done in co-operation with school districts and their municipal officers, which involves competing in public procurement processes. Finally, the political economy of school choice further complicates matters. The following paper School Choice: A market design approach by Abdulkadiroglu & Sönmez (2003) will also be discussed during the presentation.

02/06 Altruism: How Others Affect our Contribution to Public Goods by Stefania Merone

Broad Topic: Experimental Economics, Microeconomic Theory, Behavioral Economics. Specific Topic: Public Goods, Altruism.

Abstract

Mainstream theoretical results on voluntary contributions to public goods are inconsistent with empirical data: while standard models predict that the dominant strategy is to free-ride by not contributing to the public account, experimental research usually detects positive contributions. Moreover, the contribution magnitude has been showed to be sensitive to many features of the environment: the very same decision maker may behave differently according to the setting in which the action takes place. To account for this evidence, I modify the standard Voluntary Contribution Mechanism by adding a non-monetary reward in the decision maker’s payoff which factors in the warm-glow, that is the private emotional reward entailed by the contribution, the number of beneficiaries of the public good and the income inequality among the players. I obtain three main results. First, the decision maker’s optimal choice can be to contribute with a part of her income to the public account. Second, the optimal choice is smoothly increasing in the Marginal Per Capita Return of the public good. Third, all else equal, the optimal choice responds positively to the number of beneficiaries of the public good and negatively to the relative income of the other players. This implies that both the quantitative and the qualitative compositions of the community affect the optimal contribution. To test this last result, I develop three experimental designs: two Dictator Games adjusted for public goods aimed at exploring the relation between the voluntary contribution to a public good and the number of its beneficiaries, and a one-shot Voluntary Contribution Mechanism with asymmetric rewards to analyse the relation between the voluntary contribution and the income inequality among the players.

09/06 How Childhood Exposure to the Eritrean-Ethiopian War Affected Intimate Partner Violence by Drummond Orr

Broad Topic: Development Economics. Specific Topic: Adverse Childhood Experiences.

Abstract

Intimate Partner Violence (IPV) is common in war-torn areas. However, few studies have examined the relationship between childhood exposure to armed conflict and IPV. This paper examines how childhood exposure to the Eritrean–Ethiopian War affected attitudes towards and experiences of IPV against women. For attitudes towards IPV, I examine the extent to which women are willing to tolerate IPV and in what circumstances men believe it is justified. For experiences of IPV, I investigate whether childhood exposure to armed conflict made men more likely to perpetrate IPV and exhibit controlling behaviours in their intimate relationship. I exploit the war’s variation across cohorts and geography to investigate this topic. I find that men exposed to armed conflict as a child are more likely to justify IPV against their wife or partner. I also find that males fully exposed to the war in adolescence (12–18) are more likely to perpetrate IPV by 0.226 standard deviations compared to other periods in childhood. Furthermore, the paper finds that female childhood exposure to the war did not affect their tolerance for IPV. This paper adds to the small literature that identifies groups at risk of perpetrating IPV, which helps policymakers design early-intervention policies.

16/06 Can Decentralisation Be a Force for Bad? New Evidence from Decentralising Environmental Clearances in India by Brooklyn Han and Eddy Zou

Broad Topic: Development Economics, Environmental Economics. Specific Topic: Environmental Regulations in India.

Abstract

We exploit India's 2006 reform of Environmental Impact Assessment (EIA) regulations to assess whether decentralising environmental regulations improve firms' pollution abatement behaviours and their impacts on firm performance. Using a nationally representative panel of registered manufacturing firms from 2002 to 2018, we exploit temporal and industry-level variation using a difference-in-differences strategy to estimate impacts of decentralisation at the firm, industry-state and district levels. We then explore heterogeneous effects of decentralisation by regulatory stringency, prior regulatory compliance, and construction of local regulatory authorities at the state level. For formal sector firms, we find that decentralisation reduced the likelihood of installing pollution control machineries, led to large and persistent reductions in investments and employment, but also reduced fuel intensity. We further examine spillover effects of decentralisation on unregistered firms in the informal sector, finding that districts more exposed to decentralisation saw faster informal sector employment and output growth. Overall, these results suggest India's decentralisation of environmental clearance was not effective at improving firm pollution control and brought with it economic costs.