Untying the Knot: How Child Support and Alimony Affect Couples’ Dynamic Decisions and Welfare 1 November 2024 Hanno FoersterIn many countries, divorce law mandates post-marital maintenance payments (child support and alimony) to insure the lower earner in married couples against financial losses upon divorce. This paper studies how maintenance payments affect couples’ intertemporal decisions and welfare. I develop a dynamic model of family labor supply, home production, savings, and divorce and estimate it using Danish register and survey data. The model captures the policy tradeoff between providing insurance to the lower earner and enabling couples to specialize efficiently, on the one hand, and maintaining labor supply incentives for divorcees, on the other hand.
Markups and Inequality 18 October 2024 Corina Boar and Virgiliu MidriganWe characterize optimal product market policy in an unequal economy in which firm ownership is concentrated and markups increase with firm market shares. We study the problem of a utilitarian regulator who designs revenue-neutral interventions in the product market. We show that optimal policy increases product market concentration. This is because policies that encourage larger producers to expand improve allocative efficiency, increase the demand for labor and equilibrium wages.
The Child Penalty Atlas 18 October 2024 Henrik Kleven, Camille Landais, and Gabriel Leite MarianteThis paper builds a world atlas of child penalties in employment based on micro data from 134 countries. The estimation of child penalties is based on pseudo-event studies of first child birth using cross-sectional data. The pseudo-event studies are validated against true event studies using panel data for a subset of countries. Most countries display clear and sizable child penalties: men and women follow parallel trends before parenthood, but diverge sharply and persistently after parenthood. While this pattern is pervasive, there is enormous variation in the magnitude of the effects across different regions of the world.
On the family origins of human capital formation: Evidence from donor children 18 October 2024 Petter Lundborg, Erik Plug, and Astrid Würtz-RasmussenWe introduce a novel strategy to study the intergenerational transmission of human capital skills, net of genetic skill transfers. For this purpose, we use unique Danish data on children conceived through sperm and egg donation in IVF treatments to estimate the relationship between child test scores and parental years of schooling. Because the assignment of donors is not selective, these parental schooling estimates allow for a causal nurture interpretation.
Firm Inattention and the Efficacy of Monetary Policy: A Text-Based Approach 18 October 2024 Wenting Song and Samuel SternThis paper provides empirical evidence of the importance of firm attention to macroeconomic dynamics. We construct a text-based measure of attention to macroeconomic news and document that attention is polarized across firms and countercyclical. Differences in attention lead to asymmetric responses to monetary policy: expansionary monetary shocks raise market values of attentive firms more than those of inattentive firms, and contractionary shocks lower values of attentive firms by less.
Standard Errors for Calibrated Parameters 8 October 2024 Matthew D. Cocci and Mikkel Plagborg-MøllerCalibration, the practice of choosing the parameters of a structural model to match certain empirical moments, can be viewed as minimum distance estimation. Existing standard error formulas for such estimators require a consistent estimate of the correlation structure of the empirical moments, which is often unavailable in practice. Instead, the variances of the individual empirical moments are usually readily estimable. Using only these variances, we derive conservative standard errors and confidence intervals for the structural parameters that are valid even under the worst-case correlation structure.
Who Bears the Welfare Costs of Monopoly? The Case of the Credit Card Industry 8 October 2024 Kyle Herkenhoff and Gajendran RaveendranathanWe measure the distribution of welfare losses from non-competitive behavior in the U.S. credit card industry during the 1970s and 1980s. The early credit card industry was characterized by regional monopolies. Ensuing legal decisions led to competitive reforms that resulted in greater, but still limited, oligopolistic competition. We measure the distributional consequences of these reforms by developing and estimating a heterogeneous agent, defaultable debt framework with oligopolistic lenders.
Moment Conditions for Dynamic Panel Logit Models with Fixed Effects 8 October 2024 Bo Honore and Martin WeidnerThis paper investigates the construction of moment conditions in discrete choice panel data with individual specific fixed effects. We describe how to systematically explore the existence of moment conditions that do not depend on the fixed effects, and we demonstrate how to construct them when they exist. Our approach is closely related to the numerical “functional differencing” construction in Bonhomme (2012), but our emphasis is to find explicit analytic expressions for the moment functions.
