ניירות דיון 2022
1-2022 "ההשפעה של תוכנית תעסוקה עבור אנשים מבוגרים – ממצאים מניסוי מבוקר"
איתי ספורטא אקשטין ואנליה שלוסר
מאמר זה בוחן את ההשפעה של מתן הכשרה בחיפוש עבודה בקרב פרטים מבוגרים ישראלים, תוך התמקדות באוכלוסייה בעלת היסטוריה תעסוקתית במקצועות עם רמה של מיומנות גבוהה באמצעות ניסוי מבוקר רחב היקף. בעזרת ניתוח אקונומטרי המשוא בין הפרטים אשר הוגרלו לקבל הצעה להשתתף בתוכנית לבין פרטים אשר הוגרלו לקבוצת ביקורת, אנו בוחנים את השפעת התוכנית על תעסוקה והכנסה של משתתפיה במהלך 12 החודשים הראשוניים לאחר הקצאתם לקבוצת הטיפול. הממצאים מלמדים כי לתוכנית היתה השפעה חיובית על תעסוקה ועל הכנסות מעבודה של משתתפיה, בעיקר בקרב גברים בעלי השכלה גבוהה.
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2-2022 "Sampling-Based Reasoning and the Emergence of Reciprocity"
I study an infinite-horizon trust game, in which at each period, a distinct player chooses whether to put trust in the next player. Players are limited to bounded-recall strategies. Each player forms his belief regarding his opponent’s strategy on the basis of sample data, drawn from the long-run play path. In equilibrium, players best-reply to their belief. I demonstrate how the combination of sampling error and the representative-sample aspect of players’ sampling procedure lead to the emergence of reciprocal behavior.
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3-2022 "Money under the Mattress: Inflation and Lending of Last Resort"
Gadi Barlevy, Daniel Bird, Daniel Fershtman and David Weiss
Central banks create money to lend during credit crunches, which, might lead to inflation. We examine whether the two key functions of central banks— price stability and last-resort lending— conflict. We develop a nominal model of bank runs à la Diamond and Dybvig (1983) in which individuals can store the money they withdraw “under the mattress” or use it to buy assets. This feature allows for lending of last resort without creating inflation. Our analysis also provides a new rationale for the “Bagehot rule”: High interest rates prevent inflation, rather than mitigate the risk of lending during credit crunches.
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4-2022 "On the Provision of Unemployment Insurance when Workers are Ex-ante Heterogeneous"
Ofer Setty and Yaniv Yedid-Levi
Labor market outcomes demonstrate considerable variation between and within skill groups. We construct a general equilibrium model with incomplete markets and exogenous differences that matches these facts. We study the role of exogenous heterogeneity in choosing the optimal replacement rate and the maximum benefit for an unemployment insurance (UI) system. The optimal average replacement rate is 27%, compared to 0% in a model without exogenous heterogeneity. The relatively generous choice is due to the redistributive role of UI, which is a manifestation of two elements. First, workers who are unemployed more often receive positive net transfers from the UI system because they draw resources more frequently. Second, the existence of a cap on benefits makes UI progressive. Our main result holds in the presence of a generous progressive taxation system.
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Published in Journal of the European Economic Association, Volume 19, Issue 1, February 2021, Pages 664–706
5-2022 "Toxic Types and Infectious Communication Breakdown"
Kfir Eliaz and Alexander Frug
We study an environment where an informed sender has conflicting interests with an uninformed receiver only in some states. Using an \infection-like" argument, we show that the presence of such disagreement states, even if they are very rare, leads to coarse communication in all states, even those where, following communication, it is commonly known that the players' interests are perfectly aligned. We also show that introducing a second stage with noisy signals on the sender type may further hinder first-stage communication.
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6-2022 "Universal Basic Income: Inspecting the Mechanisms"
Nir Jaimovich, Itay Saporta-Eksten, Ofer Setty, Yaniv Yedid-Levi
We consider the aggregate and distributional impact of Universal Basic Income (UBI). We develop a model to study a wide range of UBI programs and financing schemes and to highlight the key mechanisms behind their impact. The most crucial channel is the rise in distortionary taxation (required to fund UBI) on labor force participation. Second in importance is the decline in self-insurance due to the insurance UBI provides, resulting in lower aggregate capital. Third, UBI creates a positive income effect lowering labor force participation. Alternative tax-transfer schemes mitigate the impact on labor force participation and the cost of UBI.
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7-2022 "On the Optimal Scheduling of Attention"
Kfir Eliaz, Daniel Fershtman, Alexander Frug
We consider a decision-maker sequentially choosing which task to attend to when payoffs depend on both the chosen and unchosen tasks. We show that when tasks are substitutes (complements) such that the flow payoffs are a sum (product) of the tasks’ outputs, the optimal policy is an index policy, generalizing the independence of irrelevant alternatives (IIA) property known in the classic multi-armed bandit problem. We illustrate the usefulness of our model through several applications, including repeated bargaining, dynamic occupational choice, on-the-job training, R&D, and dynamic supervision.
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8-2022 "Women’s Revolution and Son Preference in the US"
In this paper, we examine whether granting married women economic rights, which has been shown in other work to increase their bargaining power, results in a decrease in son preference. While the theoretical argument for such a finding is clear, the data are less clear. We are not able to draw a firm conclusion.
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9-2022 "Ageing and Welfare State Policy: A Macroeconomic Perspective"
Assaf Razin, Alexander Schwemmer
It has been widely recognized that population ageing could generate structural changes centered around a dwindling labor force, on one hand, and an expanding dependency on the generosity of the welfare state, on the other hand. Welfare state policy related to population ageing entails both fiscal and migration issues. This paper employs a general-equilibrium model with a policy making focus to help illuminate the mechanisms governing social benefit provision, labor income taxation, capital income taxation, and migration curbs on low-skilled and high-skilled workers, all driven by population ageing. Greater generosity of the welfare state comes together with a more liberal migration policy when incentives are compatible with the interests of the majority of voters. The effects of ageing on the tax and benefit sides of the welfare state depend on the number of dependents in the population and whether the country is a capital importer (in which case the capital tax burden is shared with foreigners) or a capital exporter (in which case the age-related wage increase skews taxation towards labor income). Low ageing evolution correlates with a relatively labor-abundant country (low retirement), which turns into a labor-scarce country (high retirement). Parallel to the evolution of the labor force, a country that is a capital importer (with a high rate of return) becomes a capital exporter (with a low rate of return). Greater demand for social benefits from an ageing population is balanced against the rising costs of labor income taxation and capital income taxation.
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10-2022 "Decomposing the Rise of the Populist Radical Right"
Oren Danieli, Noam Gidron, Shinnosuke Kikuchi, Ro’ee Levy
The support for populist radical right parties in Europe has dramatically increased in the 21st century. We decompose the rise of radical right parties into four potential factors: changes in party positions, changes in voter demographics and opinions, changes in voters’ priorities, and a residual. We merge data on voter characteristics from the Integrated Value Survey with data on party positions from the Comparative Manifesto Project. Using a probabilistic voting model, we estimate voting priorities: the parameters of the utility function, which determine the weights voters place on different party positions, given their characteristics. We find no evidence that changes in voters’ opinions and demographics, or shifts in party positions explain the rise of the radical right. Instead, the main driver behind the success of radical right parties lies in changing priorities. Specifically, we find that voters increasingly place a higher priority on cultural issues compared to economic issues, allowing radical right parties to tap into a preexisting reservoir of culturally conservative voters.
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11-2022 "Short and Long-Term Effects of Universal Preschool: Evidence from the Arab Population in Israel"
Elad Demalach, Analia Schlosser, Tatiana Baron
We estimate the short and long-term effects of universal preschool education by analyzing the impact of the Israeli Preschool Law, which mandated the provision of public preschool for ages 3 and 4 since 2000. We focus on the Arab population, who were the main beneficiaries of the first phase of the implementation of the Law, and exploit exogenous variation in universal preschool provision across localities due to the Law’s gradual implementation. Our difference-in-differences research design compares between cohorts of children in treated localities before and after the Law introduction relative to equivalent cohorts in comparison localities. We find that individuals benefitted from the provision of universal preschool along various dimensions: their academic performance in elementary, middle school, and high school improved significantly, and their post-secondary enrollment rates increased substantially. We also find beneficial effects of universal preschool on additional outcomes, such as a reduction in juvenile delinquency among boys and a decline in early marriage among women. These findings highlight the benefits of providing universal preschool education for disadvantaged communities.
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12-2022 “Behavioral Spillovers from Promoting Healthier Consumer Choices”
Mathias Wagner Barløse, Kfir Eliaz, Neil Thakral, and Sarit Weisburd
This project analyzes data from a large-scale randomized controlled experiment run on about 10,000 shoppers on an online grocery platform. During the four-month intervention period of the Swap and Be Healthy experiment, 50 per cent of the users were randomly allocated to the Swap and be Healthy treatment nudge. When these treatment shoppers added a less healthy product to their basket, a popup appeared with the option to swap to a healthier substitute (lower fat, less salt, etc.) with the click of an icon. We find that the nudge had a significant effect on the purchase of healthier products and that this effect persists over time even after the intervention period ends. Interestingly, the nudge also tended to decrease the price sensitivity of shoppers, reduce their demand for produce, and cause them to shorten both the length of their trip and the size of their purchase. We apply machine learning analysis to examine what types of consumers are most impacted by the intervention, as well as the relationship between a shopper’s propensity to respond to the nudge (by adding a healthier product) and the overall effect of the nudge on shopping behaviour. We find that this overall effect is present across all treatment shoppers, even those that were unlikely to respond to the nudge directly by adding a healthier product to their basket. We examine multiple mechanisms that could explain this result and conclude that guilt-costs may have played an important role in the impact of the healthy nudge on overall shopping behavior.
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13-2022 “International Evidence on Vaccines and the Mortality to Infections Ratio in the Pre-Omicron Era”
Joshua Aizenman, Alex Cukierman, Yothin Jinjarak and Weining Xin
Prior to the appearance of the Omicron variant, observations on countries like the UK that have accumulated a large fraction of inoculated individuals suggest that, although initially, vaccines have little effect on new infections, they strongly reduce the share of mortality out of a given pool of infections. This paper examines the extent to which this phenomenon is more general by testing the hypothesis that the ratio of lagged mortality to current infections is decreasing in the total number of vaccines per one hundred individuals in the pre-Omicron period. This is done in a pooled time-series, cross-section sample with weekly observations for up to 208 countries. The main conclusion from the statistical analysis is that vaccines moderate the share of mortality from a given pool of lagged infections. This is essentially a favorable shift in the tradeoff between life preservation and economic performance. Controlling for income per capita, stringency of containment measures, and the fraction of recovered and old individuals, estimation is carried out by linear least squares, with standard errors clustered by country and region. The main result is robust to sensitivity analysis with a logarithmic specification. The practical lesson is that, in the presence of a sufficiently high share of inoculated individuals, governments can shade down containment measures, even as infections are still rampant, without significant adverse effects on mortality.
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14-2022 "Representative Sampling Equilibrium"
Tuval Danenberg and Ran Spiegler
We present an equilibrium concept based on the idea that agents evaluate actions using sample data drawn from the equilibrium distribution, where the number of observations about an alternative is proportional to its usage in a relevant population. Agents naively extrapolate from their data, using the sample mean payoff from each alternative as a predictor of their payoff from choosing it. The endogeneity of sample sizes gives rise to a novel equilibrium effect: Players’ assessment of less frequently played actions is noisier. We study the implications of this effect in a single-agent, binary-choice model, as well as in various examples of games.
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15-2022 “The Arab Economy in Israel: Dynamics of Barriers”
This paper studies the dynamics of barriers to labor market participation in terms of human capital acquisition (pre-labor market) and in the labor market itself. It analyzes the barriers, their relative role, and the resulting effects on labor market outcomes using data on Israeli Arabs, as compared to the Jewish majority. I find a downward trend in total barriers facing men in low- and intermediate-skill occupations, which is the result of the decline in labor market barriers, and an increase in barriers in high- skill occupations as a result of rising human capital barriers, offset only partially by lower labor market barriers. For women there was a downward trend of barriers at all skill levels engendered by a significant decrease in labor market barriers.
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16-2022 “A Note on the Equilibrium Effects of Predictive Credit-Risk Models"
I present a simple model of a credit market in which lenders use predictive models to evaluate borrowers’ credit risk. Each firm trades off its ability to predict borrowers’ risk according to their observed characteristics against their simplicity. Firms are heterogeneous in the weights they attach to each conisderation. Crucially, firms evaluate risk models’ predictive success against the aggregate distribution of active borrowers. I show that in this model, lenders that attach low importance to explainability exert a positive externality on other lenders, because their complex predictive models make the aggregate distribution of active borrowers less adversley selective.