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Unemployment insurance reforms and labor market dynamics

Benjamin Hartung, Philip Jung, and Moritz Kuhn

A key question in labor market research is how the unemployment insurance system affects unemployment rates and labor market dynamics. We provide new answers to this old question by studying one of the largest unemployment insurance reforms in recent decades, the German Hartz reforms. On average, lower separation rates into unemployment account for 76% of declining unemployment after the reform, a fact unexplained by existing research focusing on job-finding rates.

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‘Bad’ Oil, ‘Worse’ Oil and Carbon Misallocation

Renaud Coulomb, Fanny Henriet, and Léo Reitzmann

Not all barrels of oil are created equal: their extraction varies in both private cost and carbon intensity. Leveraging a comprehensive micro-dataset on world oil fields, alongside detailed estimates of carbon intensities and private extraction costs, this study quantifies the additional emissions and costs from having extracted the ’wrong’ deposits. We do so by comparing historical deposit-level supplies to counterfactuals that factor in pollution costs, while keeping annual global consumption unchanged.

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Identification and Inference in First-Price Auctions with Risk Averse Bidders and Selective Entry

Xiaohong Chen, Matthew Gentry, Tong Li, and Jingfeng Lu

We study identification and inference in first-price auctions with risk averse bidders and selective entry, building on a flexible framework we call the Affiliated Signal with Risk Aversion (AS-RA) model. Assuming exogenous variation in either the number of potential bidders (N) or a continuous instrument (z) shifting opportunity costs of entry, we provide a sharp characterization of the nonparametric restrictions implied by equilibrium bidding. This characterization implies that risk neutrality is nonparametrically testable.

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Institutions, Comparative Advantage, and the Environment

Joseph S. Shapiro

This paper proposes that strong institutions provide comparative advantage in clean industries, and thereby improve a country’s environmental quality. I study financial, judicial, and labor market institutions. Five complementary tests evaluate and assess implications of this hypothesis. First, industries that depend on institutions are clean. Second, strong institutions increase relative exports in clean industries. Third, an industry’s complexity helps explain the link between institutions and clean goods.

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A Network Formation Model Based on Subgraphs

Arun G. Chandrasekhar and Matthew O. Jackson

We develop a new class of random graph models for the statistical estimation of network formation—subgraph generated models (SUGMs). Various subgraphs—e.g., links, triangles, cliques, stars—are generated and their union results in a network. We show that SUGMs are identified and establish the consistency and asymptotic distribution of parameter estimators in empirically relevant cases. We show that a simple four-parameter SUGM matches basic patterns in empirical networks more closely than four standard models (with many more dimensions).

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Simultaneous Search and Adverse Selection

Sarah Auster, Piero Gottardi, and Ronald Wolthoff

We study the effect of diminishing search frictions in markets with adverse selection by presenting a model in which agents with private information can simultaneously contact multiple trading partners. We highlight a new trade-off: facilitating contacts reduces coordination frictions but also the ability to screen agents’ types. We find that, when agents can contact sufficiently many trading partners, fully separating equilibria obtain only if adverse selection is sufficiently severe. When this condition fails, equilibria feature partial pooling and multiple equilibria co-exist.

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Affiliated Common Value Auctions with Costly Entry

Pauli Murto and Juuso Välimäki

Many auctions and procurement contests entail nontrivial bidding costs, which makes the bidders’ participation decisions endogenous to the auction design. We analyze the effect of different auction rules on potential bidders’ incentives to participate. We focus on first-price auctions with affiliated common values and a large pool of potential bidders. Our main interest is on auctions where the realized number of bidders is unknown at the bidding stage.

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Chris Cronin's recent Review of Economic Studies (@RevEconStudies) article, "What Good Are Treatment Effects Without Treatment? Mental Health and the Reluctance to Use Talk Therapy," with Forsstrom and Papageorge, is one of their "featured" articles.

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Recently accepted to #REStud, "Overconfidence and Prejudice," from Heidhues, Kőszegi and Strack:

https://www.restud.com/overconfidence-and-prejudice/

#econtwitter

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"Can communities sustain cooperation when players can add or erase signals from their records?
Sufficiently long-lived players can hardly sustain any cooperation, but players w/ intermediate lifespans can sustain some cooperation."

From @harry_toulouse:

https://www.restud.com/community-enforcement-with-endogenous-records/

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Recently accepted to #REStud, "Behavioral Causal Inference," from Ran Spiegler:

https://www.restud.com/behavioral-causal-inference/

#econtwitter

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