Volume 21, Issue 3

We analyze a model of media bias under government capture and a free press. The government wants citizens to invest in a project. Citizens gain from investing only if the state of the economy is good. The state is unobserved. The media firm receives a noisy signal about the actual state and makes a report about whether or not the state of the economy is good. Citizens read the report and decide whether or not to invest. In this context, we show that media bias under government capture may be smaller (greater) than that under free press if the cost of investment is sufficiently high (low) provided that the signal noise is below a certain threshold. Finally, we show that the difference between the bias under government capture and free press diverges (converges) when the cost of investment is sufficiently high (low) in response to a reduction in noise.

We examine the roles of macro-level adaptation — including social comparison effects becoming more important over time — and macroeconomic loss aversion in the time-series relationship between national income and subjective well-being. Models allowing for these phenomena are applied to cross-country panel data. We find evidence for macroeconomic loss aversion that becomes more important over time: the effects of economic growth become small and statistically insignificant in the long run, whereas the effects of contractions are large and long-lasting. The results are consistent with the Easterlin paradox and point to it being explained by macro-level adaptation to economic growth. Our results highlight the importance of allowing for both dynamics to distinguish long-run from short-run effects and asymmetries to recognize the important effects of contractions. Failing to do the former leads to a misleading impression of the long-run relationship between economic growth and well-being.

This note seeks the socio-economic roots of racial disparities in COVID-19 mortality, using monthly county-level mortality, economic, and demographic data from 3140 counties through December 2020. The county-level approach shows a sharp disparity affecting all minority groups in the sample, peaking in spring or summer 2020 and then dissipating by the end of autumn. The effect disappears for Asian Americans when occupation and other controls are added, but not for other minorities; for them, the racial disparity, as long as it lasts, does not seem to be due to differences in income, poverty rates, education, occupational mix, or even access to healthcare insurance, although in April public transit use explains a large part of it. This is a puzzle, but the rapid change in the disparities over the year show that they are not immutable – an important message for future pandemics.

This paper contributes to the literature on whether targeted cash child benefits can affect fertility and, specifically, induce families to have more than two children. We exploit the introduction of a monthly non-means tested cash child benefit paid only to families with at least four children. We apply a quasi experimental methodology since the reform is expected to have increased births of fourth child relative to births of third child or higher than four. We find robust evidence that the reform increased significantly the treated family’s probability to have a (fourth) child by about 5% and had no effect on births greater than four. In the post reform period, the control group’s probability to have a (third) child was not significantly different than before the reform. In particular, the finding that the probability of birth among parities greater than four was not affected by the reform supports that what we are estimating is a response of the targeted family to the introduction of the child benefit and not a change in the fertility preferences of families with many children. Other changes (besides the reform) had a negative effect on the probability to have a child that was reversed only for the birth of fourth child among treated families due to the economic incentives created by the reform.

In Pennsylvania local property taxes are collected by elected officials, known as tax collectors, whose compensation varies widely in both structure and level across municipalities. This paper analyses the existence of a pay-performance relationship for these officials. Using data on the percentage of property taxes that are actually collected at the municipal level, the paper finds that as the compensation tax collectors receive goes up, they collect more in taxes. This relationship is however true only for collectors who are compensated on a commission basis and not for collectors compensated on the basis of a flat salary.

We consider a funding competition for targeted projects. Potential participants have stochastic opportunity costs, and do not know the number of competitors. The funding agency sets a budget cap indicating the maximum funding that participants may request. We show that raising the budget cap helps to attract more participants but causes an increase in the requested funds. A higher budget cap is optimal when the preferences of researchers and the funding agency are more congruent, competition is lower, targeted projects have larger social value, the cost of public funds is smaller, or bidding preparation costs are lower.

Child labour is a global issue which creates a need for evidence-based interventions such as cash and in-kind transfers. However, there is limited evidence about the effect of in-kind transfers on child labour, impeding policy development. We address this gap by examining the impacts of an unconditional in-kind transfer, a nation-wide subsidised rice program, on child labour and schooling using longitudinal household survey data from Indonesia. To identify the causal effect, we use coarsened exact matching with difference-in-differences estimator. The results indicate that the program is effective in decreasing the probability of working for boys though it does not have a significant impact on the probability of schooling. However, as an unconditional in-kind transfer, its ability to decrease child work for boys, especially of those who are both working and attending school, provides an important policy implication on how a food subsidy program can indirectly influence child wellbeing.

The paper analyses the impact of a preventive measure aimed at fighting the criminal organizations’ activities on the bank-firm relationship in the four Italian regions with the highest density of mafia over the period 2004–2016. Taking advantage of the staggered firm-level anti-mafia enforcement actions, we implement a difference-in-differences approach and find that after entering judicial administration mafia-infiltrated firms experience a 19 per cent contraction of bank credit and have a higher probability of being credit rationed than a matched sample of legal companies. We also find that firms confiscated from the mafia experience a negative change in some demand-driven (value of production) and supply-driven (profitability) determinants of loans. Finally, we study whether confiscation of infiltrated firms produces externalities on non-infiltrated companies, and show that banks do not reassess the overall credit risk in local markets.

This paper contributes to the literature on the gender wage gap by empirically analyzing those workers who hold the highest possible educational qualification, i.e., a Ph.D. The analysis relies on recent Italian cross-sectional data collected through a survey on the employment conditions of Ph.D. holders. The Oaxaca–Blinder decomposition analysis and quantile decomposition analysis are carried out, and the selection of Ph.D. holders into employment and STEM/non-STEM fields of specialization is taken into account. Findings suggest that a gender gap in hourly wages exists among Ph.D. holders, with sizeable differences by sector of employment and field of specialization.

This paper exploits the political cycle of Italian municipalities to test for the presence of strategic interactions in the collection of local taxation. The revenue from the personal income tax surcharge—a tax tool of low salience—is (positively) plagued by political manipulation and is found to be a strategic complement, but only when mayors run for re-election, a finding consistent with the yardstick competition hypothesis. More salient fiscal tools, such as property tax and user fees and charges, are also (negatively) affected by budget cycles, but they do not appear to be spatially correlated.

This paper examines the factors affecting U.S. industry employment change in the early months of the COVID-19 pandemic. Results show that the percentage of industry employment in occupations that require close physical proximity has a negative effect on year-over-year employment change in the six months of April through September of 2020. On the other hand, the percentage of industry employment in jobs that involve high interaction with the public has a negative effect on year-over-year employment change in April and May, but not in the months of June to September. These different results related to physical proximity and interaction with the public are driven, in part, by the uneven impacts of COVID-19 on hospitality and retail businesses.

We present the first demonstration of the influence of a quality rivalry on location choices under spatial price discrimination. The rivalry is shown to generate the socially efficient quality but to push locations inefficiently close together, a result not found under Hotelling pricing. We apply this new equilibrium to the anti-trust policy issue of collusion showing that introducing the quality rivalry reduces the likelihood of collusion.