Page 23 – The Review of Economic Studies

Competition and Career Advancement

9 October 2023

Julian V. Johnsen, Hyejin Ku, and Kjell G. Salvanes

In standard promotion tournaments, contestants are ranked based on their output or productivity. We argue that workers’ career progression may also depend on their relative rankings in dimensions a priori unrelated to their job performance, such as visibility or in-person presence. Such implicit tournaments may rationalize a variety of seemingly counterproductive practices in the workplace, including long working hours, low uptake of statutory leave, and presenteeism.

Incorporating Diagnostic Expectations into the New Keynesian Framework

9 October 2023

Jean-Paul L'Huillier, Sanjay R. Singh, and Donghoon Yoo

Diagnostic expectations constitute a realistic behavioral model of inference. This paper shows that this approach to expectation formation can be productively integrated into the New Keynesian framework. Diagnostic expectations generate endogenous extrapolation in general equilibrium.

Unequal expenditure switching: Evidence from Switzerland

1 October 2023

Raphael Auer, Ariel Burstein, Sarah Lein, and Jonathan Vogel

What are the unequal effects of changes in consumer prices on the cost of living? In the context of changes in import prices (driven by, e.g., changes in trade costs or exchange rates), most analyses focus on variation across households in initial expenditure shares on imported goods.

Path dependency in physician decisions

24 September 2023

Lawrence Jin, Rui Tang, Han Ye, Junjian Yi, and Songfa Zhong

We examine path dependency in physician decisions in an emergency department setting, and find that physicians’ treatment decisions for the current and previous patients are positively correlated. We show that the positive autocorrelation is higher when the current patient is of greater medical uncertainty or more similar to the previous patient in terms of observed characteristics and when the physician is less experienced or more fatigued.

Exploiting Growth Opportunities: The Role of Internal Labor Markets

12 September 2023

Giacinta Cestone, Chiara Fumagalli, Francis Kramarz, and Giovanni Pica

We explore how business groups use internal labor markets (ILMs) in response to changing economic conditions. We show that following the exit of a large industry competitor, group-affiliated firms expand and gain market share by increasing their reliance on the ILM to ensure swift hiring, especially of technical managers and skilled blue collar workers.

Informality, Consumption Taxes and Redistribution

12 September 2023

Pierre Bachas, Lucie Gadenne, and Anders Jensen

Can taxes on consumption redistribute in developing countries? Contrary to consensus, we show that taxing consumption is progressive once we account for informal consumption. Using household expenditure surveys in 32 countries we proxy for informal consumption using the type of store where purchases occur.

Evaluating the accuracy of counterfactuals: Heterogeneous survival expectations in a life cycle model

4 September 2023

Jochem de Bresser

This paper shows that individual-level heterogeneity in survival expectations derived from subjective survey information improves the out-of-sample predictions of a dynamic model of retirement and saving. We consider three approaches to modelling survival: life tables, average subjective expectations and individual-specific estimates based on reported survival probabilities.

Fixed Effects and the Generalized Mundlak Estimator

4 September 2023

Dmitry Arkhangelsky and Guido Imbens

We develop a new approach for estimating average treatment effects in observational studies with unobserved group-level heterogeneity. We consider a general model with group-level unconfoundedness and provide conditions under which aggregate balancing statistics – group-level averages of functions of treatments and covariates – are sufficient to eliminate differences between groups.

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