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Three essays in empirical economics

Three essays in empirical economics

This thesis aimed at offering a comprehensive analysis of a multitude of factors impact- ing the well-being of individuals in the spirit of Samuelson & Nordhaus (1998). The motivation was to identify core factors impacting individual well-being both directly or indirectly via various transmission channels. Chapter 2 was devoted to the assessment of the correlates and causes of US gun violence. It comprised a stylised model of economic crime in which assailants decide between using or not using a firearm while committing a crime. This model implicates that the utilisation of firearms is increasing in the avail- ability of illegal guns and decreasing in both the level of social capital as well as in police intensity. The second part of chapter 2 focussed on empirically testing the hypotheses derived from the theoretical model. Using a detailed panel data set on the county level which was created by combining data published by the FBI, we found empirical support for our main hypotheses. In order to be able to make a statement about the magnitude and direction of the causal effect of the availability of illegal guns, we used the plausibly exogenous variation in the number of stolen guns in neighbouring states. The empirical evidence presented in chapter 2 suggests that the higher prevalence of illegal guns causally increases the rate at which offenders use firearms in order to achieve their criminal goals. From our insights, we could derive a number of policy recommendations. First, a possible tool in order to reduce gun-related crime could be to impose higher penalties for armed crime. Secondly, another area in which lawmakers could coerce criminals is by introducing more strict legislation regarding the possession of illegal firearms. Finally, gun violence could be lowered by strengthening social cohesion. Such increased cohesion could lower
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Three essays on family economics

Three essays on family economics

Self-interest is the main driving force of human behavior, but it is not the only one. Altruism is widely observed, and thus commonly modeled in many fields including economics [Becker (1976); Simon (1993); Fehr and Schmidt (2006)]. Parental love is probably the kind of altruism to which people pay the most attention. Two kinds of methods are usually used to model parental love in the literature. One kind is called pure altruism. A behavior is motivated by pure altruism if its only motive is to improve the welfare of others. In the literature of modeling parental love, pure altruism implies that parents care about the lifetime utility of their children [Becker (1974); Becker (1976); Becker and Barro (1986)]. The implication of pure altruism in Becker’s model is that the higher the children’s lifetime utility is, the higher their parents’ utility will be. The alternative method used to model parental love is warm glow. An agent with warm glow preferences receives utility from the behavior of giving, instead of the welfare impact on receivers. Although giving will probably improve the welfare of others, the giver does not care about the consequences of her giving. The mixture of pure altruism and warm glow is called impure altruism which is originally proposed to explain charity and public donations [Andreoni (1989, 1990)].
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Three Essays in Financial Economics

Three Essays in Financial Economics

The particular choice of the Beta distribution for the probability of a buy under independent trading is not strictly necessary for the denition of our measure of dependent trading. Any distribution that can be consistently estimated will work (subject to small sample performance). The Beta distribution, however, presents itself as a natural candidate. In Bayesian inference on a Bernoulli distributed random variable, for example, the Beta distribution is often chosen as a prior over the success probability due to its conjugacy property (Bishop, 2009, p. 71) and the Beta-Binomial distribution and its generalization the Dirichlet-Multinomial distribution if often chosen to model overdispersion in count data, similarly to our application, (e.g. Neerchal and Morel, 1998). More importantly, however, we nd empirical support for our assumption which is presented in the Appendix and in more detail in Boortz (2016).
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Three essays in labor economics

Three essays in labor economics

In the last part of the paper, we simulate the total wage effects of new migration inflows for the period 1999–2017 focusing on model C, which better models workers’ skill mix. In the long run, with full capital adjustment, the overall effect of immigration on wages is, by construction, zero. Nevertheless, considering the wage impact of immigration by education group we find that highly educated workers comparatively experience the most adverse impact of immigration, probably because of the large inflow of highly educated workers in the period considered. Also, we compute short run wage effects on native and foreign workers’ wages subdividing the time span of our dataset into three sub-periods corresponding to migration policy changes or to changes in economic conditions. We find that the short run yearly negative impact of migration inflows on native wages increases after the enactment of the bilateral agreements with the EU on the free movement of persons in 2002, and then mitigates after the beginning of the economic crisis in 2009. Furthermore, highly educated workers bear the most adverse consequences of migration, with a yearly decrease in wages after the enactment of the bilateral agreements of 0.9% for natives and 1.6% for foreigners. Again, this can be explained by the upsurge in highly educated foreign workers that moved to Switzerland after the enactment of the bilateral agreements, especially from Germany.
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Three Essays in Financial Economics

Three Essays in Financial Economics

Table 1.3 reports regression estimates of the sensitivity of changes in monthly credit spreads (CS t ) to changes in interest rates (TB t ) for the January 1973 to December 2014 period for two regimes and four different cases, with t-statistics displayed in parentheses and with the “L” index representing up to three lags. The bootstrapped P-values are reported in brackets below the t-statistics. In regime I&III, shocks to interest rates and credit spreads are either average or significantly positive, while in regime II&III they are either average or significantly negative, as defined by their magnitude with respect to a one-sigma deviation from the mean. Case 1 is the base model where the residuals 𝛼 t  t and + t 𝛽 t in the VAR system (CS t = (TB L +CS L + 𝛼 t  t )/(1-αβ) and TB t = (CS L +TB L + t 𝛽 t )/(1- αβ)) are estimated without any extra variable(s). Case 2 is the model where the residuals in the VAR system (CS t = (TB L +CS L +  D t + 𝛼 t  t )/(1-αβ) and TB t =(CS L +TB L +  D t + t 𝛽 t )/(1-αβ)) are estimated with a dummy variable D t set to 1 between January 1973 and August 1981 and set to zero between September 1981 and December 2014. Case 3 is the model where the residuals in the VAR system (CS t = (TB L +CS L +  [TB t -K t ]+ 𝛼 t  t )/(1-αβ)and TB t =(CS L +TB L +  [TB t -K t ]+ t 𝛽 t ))/(1-αβ)) are estimated with a mean-reverting level K t of interest rates calculated as a 5-year moving average. Case 4 is the model where the residuals in the VAR system (CS t =(TB L +CS L +  D t +  [TB t -K t ]+ 𝛼 t  t )/(1-αβ)and TB t =(CS L +TB L +  D t +  [TB t - K t ]+ t 𝛽 t )/(1-αβ)) are estimated with both a dummy D t and a mean-reverting level K t . Panel A reports the results for investment-grade bonds, while panel B reports the results for high-yield bonds.
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Three Essays in Applied Economics.

Three Essays in Applied Economics.

When denoted with “yes”, regressions additionally include Distance from the 1993 reform 6 twoyear dummies; Province FE 104 dummies; Year dummies 2000-2004; City characteristics judicial [r]

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Three essays on the economics of patents

Three essays on the economics of patents

Nevertheless, some analysts think that in the last step, the strength of a patent comes from a position of the responsible court that in some cases could be pro patent protection (Bessen and Meurer, 2005). This proposition has important consequences on markets and social welfare in the actual system of incentives to innovation and in all sec- tors and systems related with innovations. Many of these arguments and results of several years of empirical and theoretical research sum- marized in Bessen and Meurer (2008), show the importance of the study of the actual patent litigation policies and its deficiencies in some cases.
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Three essays in development economics

Three essays in development economics

Firstly, the analysis of Beninese statistics has echoed the findings of, for example, Sandefur and Glassman (2015) who found that administrative statistics (in this case either from INSAE or UIS) overstated school enrolment compared to household surveys (DHS). For the school year 2005-06, DHS estimates of enrolment (attendance) were around 15 percentage points lower than those from UIS or INSAE. Secondly, large regional disparities existed during the year of study (2005-06) and indeed, still do in the most recent DHS data. Analysis at the commune level has been made possible due to detailed education statistics made available by INSAE for the years 2003-2010. The empirical analysis has presented strong evidence that factors on both the demand and supply side are predictors of whether or not a child will be enrolled in school. Richer households, those following a Christian religion and those with more educated household heads were more likely to send their children to school. Despite the narrowing gender gap in Benin at the time, girls still faced a lower likelihood of attending school than boys; adopted girls seemed at the greatest disadvantage. Focusing on the role of child labour, the empirical results highlight that those boys that worked alongside studying faced a higher opportunity cost of travel time to school. In particular, a larger distance to school for boys that worked in the field decreased the likelihood that they would attend school, to a much greater extent than those not working.
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Three essays on financial economics

Three essays on financial economics

This table lists summary statistics of the innovation factor, Fama-French three factors (from Kenneth French’s website), and Carhart momentum factor (constructed according to Carhart (1997). The five factors are denoted by RDCA (innovation factor), M KT (market factor), SM L (size factor), HM L (value factor), and M OM (momentum factor), respectively. In June of each year t, NYSE, Amex, and NASDAQ stocks are divided into three size groups using the breakpoints for the bottom 30%(Low), middle 40%(Medium), and top 30%(High) of the ranked values of market equity (price times shares outstanding from CRSP) in June for NYSE stocks. In each June, I also independently break NYSE, Amex, and NASDAQ stocks into three book-to-market groups based on the breakpoints for the bottom 30%, middle 40%, and top 30% of the ranked values of book-to-market ratio for NYSE stocks. Book-to-market ratio is calculated as the book value of equity in year t − 1 divided by the market value of equity in December of year t − 1. Aslo independently, in each June, I sort NYSE, Amex, and NASDAQ stocks into three innovation groups based on the breakpoints for the bottom 30%, middle 40%, and top 30% of the ranked value of RDCA, which is defined as R&D capital scale by total assets. 27 portfolios are formed from the intersections of the three size groups, three book-to-market groups, and three innovation groups. Monthly value-weighted returns on the 27 portfolios are calculated from July of year t to June of year t + 1, and the portfolios are rebalanced in June of each year. Thus, every month there are nine low R&D portfolios and nine high R&D portfolios. The innovation factor is defined as the difference, each month, between the simple average of the returns on the nine high R&D portfolios and the simple average of the returns on the nine low R&D portfolios. Panel A lists some basic statistics of the five factors. SKEW and KU RT refer to skewness and kurtosis, respectively. Panel B lists the correlation matrix of these factors. Panel C reports the coefficients of the regressions of innovation factor on traditional factors using two different asset pricing models: Fama-French three-factor model, and Carhart (1997) four-factor model. The sample period is from July 1963 to December 2009.
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Three Essays on Financial Economics

Three Essays on Financial Economics

Writing a dissertation is a journey, a journey that requires inspiration, perseverance, and deep commitment. For me, this journey could not have been completed without guidance and help from a large group of people. I wish to express my deepest gratitude to all of those who helped to make this journey a wonderful experience in my life and helped me contribute to the scholarly literature in economics.

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Three Essays on Information Economics

Three Essays on Information Economics

Consider a worker trying to choose a job and a career. Each career consists of different jobs. Both the fit of the worker for a career and a job are uncertain. In order to learn about these uncertainties, she need to experiment with a job. The outcome from experimentation contains both job- and career-specific information. For example, a worker may choose to become an economist by first experimenting with research in macroeconomics. In the process, she may learn about her ability or fit for a career in economics as well as for a job in macroeconomics. While it is easy to learn whether she has the basic required skill for the career, learning about job- specific information is conditional on her having acquired the basic skills. Inability to produce a publishable result in macroeconomics may lead her to doubt her ability to engage in economic research in general, but not whether macroeconomics is indeed an appropriate field for her. The latter can only be learnt after she has produced a publishable result and sent it to a journal.
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Three Essays on the Economics of Education

Three Essays on the Economics of Education

and students’ personal safety. We find that retained students’ parents are slightly less satisfied (although not statistically significant) with their child’s education in the year after retention, but significantly happier (roughly 35 percent of a standard deviation) two and three years after retention. The fact that we see an immediate improvement in academic performance (at least relative to same-grade peers) but a delayed effect on parental satisfaction is interesting. On one hand, it may be that satisfaction from academic improvement is wiped out by negative aspects of retention (e.g., stigma). On the other hand, since surveys are administered before test results are known each year, it may be that parents do not know how much their child has improved (at least relative to his/her new same-grade peers) one year after retention. One might naturally wonder whether improvements in test scores relative to same- grade peers might possibly explain the positive effects on parental satisfaction that we find over three years. This is an important issue; if parents simply value their child’s performance rank relative to same-grade peers, then retention may simply re-order students so that parents of those retained are happier but parents of low-achieving students in the younger cohort are made less happy. 26 A purely ordinal interpretation would essentially mean that retention is a zero-sum game. 27 To investigate this question a bit further, we ran cross sectional regressions of parental satisfaction on on students’ test scores and find that a one standard deviation increase in both mathematics and ELA test scores increases parental satisfaction by about 1.3 points.
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Three essays in behavioral economics

Three essays in behavioral economics

In Chapter 4, I (along with my co-author) study another application of behavioral economics to under- stand road-safety behavior of the automotive drivers. Influenced by the nudge revolution, this chapter tests the effectiveness of public information nudge in changing behaviors. Nudges are defined as “choice archi- tecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.” These benign behavioral interventions have become increasingly popu- lar with the researchers and the governments all over the world to address various policy problems. There have been hundreds of studies which show that nudges are effective in influencing behavior ranging from donating organs, reducing energy consumption, and saving more money. While there is considerable evidence on the effectiveness of nudges, there is not much known about what kind of nudges are most effective and if poorly designed nudges can backfire? In this paper, we study the effectiveness of different nudges on road safety behavior and examine whether all nudges are created equal and if not which ones are most effective in ensuring road safety?
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Three essays in labor economics

Three essays in labor economics

We present a method for identifying a very large number of pairs of individuals who are likely married to each other in the German administrative data. While room for type 1 (false positives) and type 2 (false negatives) errors exists, our analysis suggests that our final sample still contains about 89 to 94 percent true couples and that we have a fairly representative sample of couples where both individuals would be covered in the Integrated Employment Biographies. The method appears accurate enough to open the door for future research projects analyzing research questions in labor and public economics that rely on household (couple) identifiers using administrative data. The particular strength of this data will undoubtedly be the very large sample sizes possible with this ap- proach as well as the possibility to link the cross-sectional information to longitudinal employment histories. We finish by using the identified couples to examine the topic of within-couple relative income; our large sample size allows us to look at small intervals in the relative wage distribution and interesting subgroups of couples, and we find differing patterns for couples who work in the same establishment and those who do not. Although it is not immediately apparent why this is the case, this application points to the importance of having a large, high-quality sample for this and
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Three Essays in the Economics of Education

Three Essays in the Economics of Education

Figure B8: Quality of education effects based on first round scores of the French Baccalaureate exam (Global polynomial graphs). 10[r]

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Three Essays in Financial Economics

Three Essays in Financial Economics

In the last two columns, I revise the assumption behind the exclusion restriction. The prior three regressions assumed that if subject to a variety of controls, being on the board is exogenous. In the last two specifications, I present an alternative argument. Under the assumption being on the board is an endogenous event, where the pair is on the board is plausibly exogenous. Thus, in the last instrumental variable design, I promote being “on the board” to the second stage. Column 7 shows that even after doing so, it appears where the stocks are on the board is relevant for co- posting (F-stat of 12.08), within-pair, within-time, after controls. The coefficient of the time the pair is on the board interacts with the coefficient on co-posting to enlarge it to 0.884. This large jump is interesting because it may suggest my prior estimates about the role of social media are underestimated. The rationale is simple. Social media posters are likely to discuss stock pairs when their components are newsworthy. News events, all else equal, attenuate correlations, as evidenced in Table 5. Commonalities in coverage on social media may serve to reverse this effect, but without correcting for endogeneity, the actual point estimate may be attenuated significantly. Accounting for such an idiosyncratic event pushes the estimated magnitude upward. This argument is compatible with the findings of Table 5, when I find that the release of corporate news events actually diminishes the social media-comovement relation as opposed to capturing it.
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Three Essays on Migration Economics

Three Essays on Migration Economics

In our data the average foreign peer share is at 10.5% of students in a major- university, with 60 students being foreigners on average and a standard deviation of the share of 10.8 percentage points, see table 4.3. The average EU student share is 4.1% and non-EU 6.3%, with standard deviations of 4 and 8.3 percentage points. When we introduce our set of fix effects they, obviously, reduced the amount of vari- ation available. The standard deviation for foreign peer shares goes from 10.8 to 2.3 percentage points when looking at levels and residuals from fix effects regressions. For EU student shares standard deviations go from 4 to 1.3 percentage points and for non-EU from 8.3 to 2. This reduction on variation is desirable because it implies that we only exploit within group variation. In figure 4.9, we show that international students are mostly represented (about 20% of the whole undergraduate population) in Business studies, Engineering and Economics; followed by Maths and Computer science and Technologies. For EU students the most selected subjects are Economics, Business, Engineering and Architecture, figure 4.10. The non-homogeneous distribu- tion of foreign students across majors suggest that there may be substantial differences in terms of incentives and therefore selection across majors and universities. 31 This makes cross major-university variation not really useful in terms of identification of the effect of foreign students on natives, as we discussed in section 4.3.
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Three Essays on the Economics of Sport

Three Essays on the Economics of Sport

The role of history in determining current expectations is probably greater in college football than in any other major team sport. The best programs attract the best recruits and the best coaches, leading to the persistence of success: the best teams today are largely the same as the best teams from thirty years ago. In college basketball, individual players can have a much greater impact on outcomes than in football; and salary caps and new-player drafts in professional sports reduce the persistence of success in those outlets. Historical win percent should then be a strong indicator of current expectations, and the higher the current expectations, the more likely it should be that a coach is fired, holding current performance constant. But “current performance” appears to be measured only by performance in the most recent three seasons, with the impact decaying quickly over these three years. This reflects two facts. Coaches’ abilities may change, so that the most recent performance should be the most relevant. In addition, earlier
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Three essays in economics and finance

Three essays in economics and finance

It would not have been possible to complete this long process without many people. As I write this acknowledgements, I realize how lucky I am to receive their support. To begin with, I wish to express my sincere gratitude to my adviser, Dan Bernhardt, who is very patient and always willing to help. I have no idea how he can manage his time to help so many students. He is absolutely an invaluable asset to all grad students here. I am so grateful that Marty Perry came to the department. Without his encouragement, I must have given up this journey. I also like to thank the other committee members, George Deltas and Steven Williams, for their support and comments. I am indebted to the economics department. Many thanks to Carol Banks and Tera Martin Roy for being always attentive to my questions and requests that are usually made at short notice.
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Three Essays in Public Economics

Three Essays in Public Economics

In the first chapter “Titles For Me But Not For Thee: Transitional Gains Trap of Property Rights Extension in Colombia” I apply Tullock’s “transitional gains trap” to the formalization of property titles in Latin America to understand public choice problems in institutional reform. In a country where land is governed by formal and informal institutions, policies to extend property rights will not be supported by voters holding legal title because it will devalue their properties. To test that prediction, I use data from Colombia where a peace deal to end a 50-year conflict with FARC (Revolutionary Armed Forces of Colombia) rebels was reached in 2016 and submitted to a public referendum. The deal included formalization of property titles across the nation as well as an end to the conflict. Using municipal-level data on voting and property ownership and controlling for the conflict’s history, I find that potential losses to formal property holders pushed median voter preferences toward opposition. A 1 % increase in legally titled land increases the dissenting vote share by three percentage points. These results are relevant to institutional reforms anywhere with corrupted property rights.
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