Volume 23, Issue 2

We show that overconfident individuals are likely to be arrested for public intoxication by using arrest records from a university town police log. This relationship is robust to various control variables such as risk aversion, time discounting, present bias, self-control, selfishness, loss aversion, and socializing with peers arrested for public intoxication. However, this relationship is no longer significant using only self-reported arrest data. We hypothesize that overconfident individuals are likely to underreport their arrests. This result has important implications for the use of self-reported data on public intoxication arrests rather than actual arrest records.

Following decades of increasing crime rates in the U.S., crime participation declined substantially throughout the 1990s, and have remained low in the 2000s. Using the 1979 and 1997 waves of the National Longitudinal Survey of Youth, we identify the determinants of criminal involvement and antisocial behavior. In the 1980s compared to the 2000s, youth from disadvantaged family backgrounds, those with lower skills, and those in urban areas were more disproportionately represented in crime participation. Our results suggest that most of the decline in crime is related to changes in the socio-economic environment and public policy shifts.

We study the impact of the pandemic crisis using monthly data covering the universe of individuals registered as unemployed in mainland Portuguese municipalities, complemented with electronic payments, linked employer–employee data, and furlough records. Event study designs identify a sharp increase in unemployment, driven mostly by termination of temporary contracts, and a decrease in new job placements. With triple difference-in-differences, we show that the effects are stronger in more dual municipal labour markets, i.e. with a higher share of temporary jobs, concentrated in young workers and middle educated individuals. The asymmetries are exacerbated by the duality of the municipal labour market.

We investigate the impact of mergers and product innovation on labour productivity through a unique panel data set of roughly 2000 publicly traded U.S. manufacturing firms from 1980 to 2003. OLS estimates reveal that mergers interacted with citation-weighted patents are significantly correlated with increases in labour productivity. OLS and IV estimates of citation-weighted patent stocks with respect to firm-specific labour productivity are positive and consistently significant. Further, mergers are significantly correlated with a rise in citation-weighted patent stocks and research and development (R&D) spending. In tandem, our findings suggest that larger firms resulting from mergers spend more on innovation, which results in higher quality patents, and increased labour productivity.

Given an endogenous market structure, this research investigates the effects of tariff and equivalent quota policies on foreign firms’ FDI decisions. Findings show that foreign firms have symmetric (asymmetric) decisions in terms of FDI versus export under a tariff (quota) policy. Furthermore, FDI is more likely to occur under the tariff than the quota regime, but the former is definitely more (less) desirable than the latter in terms of domestic (world) welfare. Finally, a more cost-efficient firm is more likely to engage in FDI under either the tariff or the quota regime.

This paper examines the extent to which the incidence of dual job holding is cyclically sensitive in the context of hours constraints on a worker’s weekly labor supply to their main job. Random effects logit models of the probability of dual job holding are estimated separately for men and women for each of three mutually exclusive, hours-constrained regimes: overemployment, unconstrained hours, and underemployment. As measured by the deviation of each individual’s current regional unemployment rate from their time-averaged mean regional unemployment rate, transitory business cycle movements have no effect on the probability of dual job holding. However, a permanent/steady-state increase (decrease) in the local unemployment rate reduces (raises) the probability of dual job holding among hours-unconstrained workers for both males and females. Furthermore, permanent employment contracts reduce the likelihood of having two jobs.

This paper explores how environmental taxation affects wage inequality in the presence of subsidizing renewable energy. It is necessary to take both traditional dirty energy and renewable energy into account. Take the case where the renewable energy sector is more skill-intensive than the traditional energy sector as an example. If the final product sector is more skill-intensive than the whole energy sector, an increment of the output tax in the traditional energy sector will widen wage inequality unambiguously. However, if the final product sector is less skill-intensive than the whole energy sector, an increment of the output tax in the traditional energy sector may narrow down wage inequality when the substitution elasticity between energy and labor in the final product sector is sufficiently large. The interaction between environmental taxation and subsidization on renewable energy plays a key role in the mechanism. We also analyze the relationship between environmental taxation and welfare.

Price cap regulation (PCR) as commonly implemented closely approximates atomistic Cournot competition in terms of the pass-through of industry and firm-specific cost-reducing innovation when the invariance property holds. A key finding is that the aggregate pass-through of cost-reducing innovation under PCR exceeds that under Cournot, holding the number of firms constant. The welfare gains under PCR are greater than Cournot when cost-reducing innovation is endogenous, the invariance property holds and demand is highly inelastic.

The link between technological change and income inequality is central to the Kuznets hypothesis. In a time of technological transition towards the digitization and intelligentization of manufacturing processes (the fourth industrial revolution), this paper investigates the relationship between economic development and income distribution through the implementation of both a system generalized method of moments (system-GMM) and a semiparametric fixed effects model approach. Based on a panel of 31 European-area countries over a period of 12 years (2007–2018), accounting for the endogeneity bias arising from the transitional dynamics of income inequality and per capita income, our main results confirm the existence of an inverted U-shaped relationship between income inequality and economic development. Moreover, our analysis shows that the change in the share of labour employed in high-tech sectors is the main driver of this evolutionary pattern.

The Lindahl-Samuelson condition is adapted to derive the range, or interval, of the efficient/Pareto levels of a public good. The size and bounds of the interval are shown to be dependent on the curvature of the marginal rate of substitution functions and the degree of heterogeneity of preferences. A policy implication is that unlike Nash or private provision, the relationship between the efficient level of a public good and income inequality can be ambiguous.

We study the optimal use of imprisonment when enforcement efforts are general (i.e. when the probability of detection is common for a range of acts). In contrast to the conventional wisdom that optimal imprisonment rises with the act’s harmfulness and is equal to the maximum level only for the most harmful acts, we show that – when the distribution of criminal benefits exhibits a standard monotone hazard rate – optimal imprisonment can only be zero or maximal. Thus, having general as opposed to specific enforcement effort does not alter the fact that only extreme sanction levels should optimally be employed.

Using data from an involuntary survey experiment in Germany, we investigate whether priming people on immigration affects their self-perceived social standing. Our findings suggest that individuals who are administered a module concerning attitudes toward immigration perceive themselves as in a higher social position than would otherwise. Consistently with previous literature, we find that this effect is driven by right-wing-leaning individuals.