This week from CEPR: July 15
Highlights from some of the latest research reports published in the Centre for Economic Policy Research (CEPR) network’s long-running series of discussion papers, as well as some other recent CEPR publications.
Also, links to some of the latest columns on Vox, the Centre’s policy portal, which provides ‘research-based policy analysis and commentary from leading economists’.
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HHOW ECONOMIC SHOCKS AND UNEMPLOYMENT AFFECTS DOMESTIC VIOLENCE: Evidence from Brazil
JOB DISPLACEMENT, UNEMPLOYMENT BENEFITS AND DOMESTIC VIOLENCE
Sonia Bhalotra, Diogo G.C. Britto, Paolo Pinotti, Breno Sampaio
CEPR Discussion Paper No. 16350 | July 2021
As many as one in three women report having ever experienced domestic violence at some stage in their lives. It is both a marker and a cause of gender inequality in the economic domain and, yet, it has attracted far less attention from economists than other dimensions of gender discrimination such as the gender pay gap. One reason for relatively limited causal research, is that large-scale systematic data on Domestic Violence are scarce.
A new CEPR study by Sonia Bhalotra, Diogo G.C. Britto, Paolo Pinotti and Breno Sampaio estimates the impact of male job loss, female job loss, and male unemployment benefits on domestic violence in Brazil. The authors use data on Domestic Violence cases brought to Brazilian courts in 2009-2018 (a total of about 2.4 million cases), use of public shelters by victims and mandatory notifications of domestic violence by health providers. They link these data to longitudinal employer-employee registers containing a total of 100 million workers and 60 million yearly employment spells. Among the Findings:
- The negative income shock brought by job loss may trigger stress and re-negotiation of a shrunken household budget, opening the door for conflict.
- Job loss constitutes a positive time shock, increasing women's exposure to Domestic Violence risk as displaced workers spend more time at home, which is particularly relevant during the stressful period following job loss.
- Both male and female job loss, independently, lead to large and pervasive increases in domestic violence.
- In particular, male job loss leads to a 32% increase in the risk of perpetration, and female job loss to a 56% increase in the risk of victimisation.
- These effects are pervasive along the distribution of perpetrator age, education and baseline income, and also across area-level characteristics including baseline Domestic Violence rates, the gender pay gap, population size, GDP per capita, and the labour informality rate. They are evident among first-time as well as repeat perpetrators (and victims).
- Eligible men are not less likely to commit domestic violence while benefits are being paid, and more likely to commit it once benefits expire.
These findings are consistent with job loss increasing domestic violence on account of a negative income shock and an increase in exposure of victims to perpetrators, with unemployment benefits partially offsetting the income shock while reinforcing the exposure shock.
HOW CHINA LENDS: A Rare Look into 100 Debt Contracts with Foreign Governments
HOW CHINA LENDS: A Rare Look into 100 Debt Contracts with Foreign Governments
Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks, Christoph Trebesch
CEPR Discussion Paper No. 16331 | July 2021
China is the world's largest official creditor, but we lack basic facts about the terms and conditions of its lending. Very few contracts between Chinese lenders and their government borrowers have ever been published or studied. A new CEPR study by Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks and Christoph Trebesch provides the first systematic analysis of the legal terms of China's foreign lending.
The authors collect and analyse 100 contracts between Chinese state-owned entities and government borrowers in 24 developing countries in Africa, Asia, Eastern Europe, Latin America, and Oceania, and compare them with those of other bilateral, multilateral, and commercial creditors. Three main insights emerge:
- The Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt.
- Chinese lenders seek advantage over other creditors, using collateral arrangements such as lender-controlled revenue accounts and promises to keep the debt out of collective restructuring ("no Paris Club" clauses).
- Cancellation, acceleration, and stabilization clauses in Chinese contracts potentially allow the lenders to influence debtors' domestic and foreign policies. Even if these terms were unenforceable in court, the mix of confidentiality, seniority, and policy influence could limit the sovereign debtor's crisis management options and complicate debt renegotiation.
Overall, the contracts use creative design to manage credit risks and overcome enforcement hurdles, presenting China as a muscular and commercially-savvy lender to the developing world.
Figure 2: Map of countries with Chinese debt contracts in authors’ dataset
HOW COVID-19 MEDICAL SUPPLY SHORTAGES LED TO EXTRAORDINARY TRADE AND INDUSTRIAL POLICY
When Bonuses Backfire: Evidence from the Workplace
Chad P. Bown
CEPR Discussion Paper No. 16359 | July 2021
Early in the COVID-19 pandemic, a global shortage of hospital gowns, gloves, surgical masks, and respirators caused policymakers around the world to panic. A new CEPR study by Chad P. Brown examines international trade in this personal protective equipment (PPE) during the crisis, with a focus on China, the European Union, and the United States. Among the findings:
- As the pandemic first hit, China increased imports and decreased exports of PPE, removing considerable quantities of supplies from global markets.
- For the European Union and United States, the decrease in their imports from China was not immediately replaced by increased trade from other foreign suppliers.
- Early shortages led to EU and US export controls on their own, domestically produced PPE and other extraordinary policy actions, including a US effort to reserve for itself supplies manufactured in China by a US-headquartered multinational.
- By April 2020 China's exports had mostly resumed, and over the rest of 2020 its export volumes of some products surged, more than doubling compared to pre-pandemic levels.
- But China's export prices also skyrocketed and remained elevated through 2020, reflecting severe and continued shortages.
This study documents these facts in details. It also explores these and other government actions, such as US trade war tariffs and the emergence of over $1 billion of US industrial policy to build out its domestic PPE supply chain, as well as potential lessons for future pandemic preparedness and international policy cooperation.
Figure 4: The trade war put the US at a pandemic preparedness disadvantage
Note: PPE products included in US section 301 List 4A and subject to new 15% tariff in September 2019.
Source: PIIE, US Census.
CEPR is creating a new programme area in political economy. Helios Herrera of the University of Warwick and Ronny Razin of LSE tell Tim Phillips how they plan to attract a wide range of economists and social scientists to the discipline, and how we can do a better job of translating polecon research into policy.
If some kids lie a little, and some lie a lot, is that just the way they are, or can we increase a child’s honesty in day-to-day life? Johannes Abeler tells Tim Phillips about how mentors can create lasting behaviour change.
The paper discussed is:
Abeler, J, Falk, A and Kosse, F. 2021. 'Malleability of preferences for honesty'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=16164.