This week from CEPR: September 05

Thursday, September 5, 2019

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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    • New Discussion Papers

      • BIRTH REGION OF COUNTRIES’ POLITICAL LEADERS RECEIVE DISPROPORTIONATE INTERNATIONAL RELIEF AFTER A NATURAL DISASTER 

    HOME BIAS IN HUMANITARIAN AID: The role of regional favoritism in the allocation of international disaster relief
    Christian Bommer, Axel Dreher and Marcello Perez-Alvarez  
    CEPR DP No. 13957 | 27 August

    A new CEPR study by Christian Bommer, Axel Dreher and Marcello Perez-Alvarez investigates whether regional favouritism and domestic political and commercial factors shape humanitarian aid flows. 

    Using a rich and unique dataset derived from reports of the Office of United States Foreign Disaster Assistance (OFDA), the research shows that substantially larger amounts of aid are disbursed when natural disasters hit the birth region of the recipient countries' political leader. The results find no evidence that US commercial or political interests affect the size of this home bias. But the bias is stronger in countries with a weaker bureaucracy and governance, suggesting that there is an absence of effective safeguards in the allocation of aid. 

    The authors conclude that favouritism in the extreme scenario of humanitarian need is alarming and more needs to be done to reduce the scope for manipulation by recipient country leaders. 


    • EXPOSURE TO MORE FEMALE PEERS AT SCHOOL WIDENS THE GENDER GAP IN SCIENCE PARTICIPATION AT COLLEGE: Evidence from Denmark 

    Exposure to More Female Peers Widens the Gender Gap in STEM Participation
    Anne Brenøe and Ulf Zölitz  
    CEPR DP No. 13966 | 29 August

    A new CEPR study by Anne Brenøe and Ulf Zölitz investigates how high school gender composition affects students' participation in science, technology, engineering and mathematics (STEM) at college. Using evidence from Denmark, the study exploits idiosyncratic within-school variation in gender composition. Among the findings:  

    • Having a larger proportion of female peers reduces women's probability of enrolling in and graduating from STEM programmes. 
    • Men's STEM participation increases with more female peers present. 
    • In the long run, women exposed to more female peers are less likely to work in STEM occupations, earn less and have more children.

    These findings indicate that the school peer environment has significant lasting effects on occupational sorting, the gender wage gap and fertility.

    Figure 1: Correlation between Proportion of Female Peers and STEM Degree Completion

    Note: The graph shows a bin scatter plot by gender using 30 bins. STEM Degree is measured as highest completed degree at the college level or higher 20 years after high school. 


    • PRICE DISCRIMINATION IN EUROPEAN MARKETS: Evidence from French exporters  

    PRIME DISCRIMINATION WITHIN AND ACROSS EMU MARKETS: Evidence from French Exporters
    Francois Fontaine, Julien Martin and Isabelle Mejean
    CEPR DP No. 13960 | 28 August

    A new CEPR study by Francois Fontaine, Julien Martin and Isabelle Mejean studies the cross-sectional dispersion of prices paid by European importers for French products. Results show a significant level of price dispersion both within product categories across exporters, and within exporters across buyers. The study finds that price discrimination:

    1. is substantial within the EU, within the euro area and within countries that are in the euro area. 
    2. has not decreased over the last two decades; 
    3. is more prevalent among the largest firms and for more differentiated products; 
    4. is lower among retailers and wholesalers; 
    5. is observed within almost perfectly homogenous product categories, which suggests that a non-negligible share of price discrimination is triggered by heterogeneous mark-ups rather than quality or composition effects.

    The authors suggest that these results shed new light on some of the ‘micro-mechanisms’ that could explain the observed increase in market power and how they potentially rely on informational frictions on the buyers’ side. 

    Figure 9: Mean level of prices, across destinations countries

    Note: This figure correlates the mean level of prices set by French firms to a destination with the country's GDP per capita (in 2006: World Bank). 



    NEGATIVE EFFECTS OF HIGH-ACHIEVING BOYS ON GIRLS’ LONG-RUN EDUCATION OUTCOMES: Evidence from the United States

    Angela Cools, Raquel Fernández, Eleonora Patacchini
    30 August 2019

    A new study by Angela Cools, Raquel Fernández and Eleonora Patacchini asks whether there are long-term consequences to attending a high school with a larger or smaller number of female or male high achievers.

    The results suggest that high-achieving boys have a negative impact on girl’s self-confidence and aspirations, and that the girls have a greater tendency to engage in risky behaviour including having a child before the age of 18. Greater exposure to ‘high-achieving’ female peers for boys decreases their risky behaviour and the probability of teenage fatherhood.


    THE POTENTIAL DANGERS OF AN IMMIGRATION ‘POINTS SYSTEM’: Lessons from Danish migration to the United States

    Nina Boberg-Fazlic, Paul Sharp  
    01 September 2019

    Can immigration points systems identify desirable immigrants? A new study by Nina Boberg-Fazlic and Paul Sharp investigates the lessons of 19th century migration from Denmark, which was then a poor country, to the United States. 
     

    The study finds that US areas with many Danes before the transformation of Danish agriculture (by 1890 Denmark had developed into a world-leading dairy producer) benefited from significant knowledge transfers thereafter, and specialised in high-tech dairying. The results provide a cautionary tale for those arguing that desirable migrants can be identified ex ante, as the host country may benefit from immigration even decades after the first arrival.


    GREATER WORKPLACE FLEXIBILITY FOR FATHERS IMPROVES MATERNAL HEALTH: Evidence from Sweden

    Petra Persson, Maya Rossin-Slater   
    01 September 2019

    A new study by Petra Persson and Maya Rossin-Slater uses a Swedish social insurance reform to show that fathers make use of workplace flexibility when it is available. Such flexibility for fathers has substantial positive spillover effects on maternal health. 
     

    The research shows that the reform led to a 14% reduction in the likelihood of a mother having an inpatient or specialist outpatient visit for childbirth-related complications, an 11% reduction in the likelihood of her having an antibiotic prescription drug in the first six months postpartum, and a 26% reduction in the likelihood of any anti-anxiety prescription drug in the first six months after childbirth. 


    HOW ROMAN TRANSPORT CONNECTIVITY SHAPES MODERN ECONOMIC INTEGRATION: Lessons for China’s Belt and Road initiative 

    Matthias Flückiger, Erik Hornung, Mario Larch, Markus Ludwig, Allard Mees  
    28 August 2019

    A new study by Matthias Flückiger, Erik Hornung, Mario Larch, Markus Ludwig and Allard Mees shows how connectivity within the Roman transport network influenced the intensity of economic interactions. What’s more, despite the transport revolution of the 19th century, today’s pattern of bilateral economic integration is still influenced by the network.

    The authors emphasise that we should be aware of the profound and lasting effects that past infrastructure investments have on economic and cultural integration. This is especially significant against the backdrop of megaprojects such as China’s Belt and Road initiative. 


    HOW SEGREGATED HOUSING ERODED THE WEALTH OF BLACK FAMILIES IN THE UNITED STATES 

    Prottoy A. Akbar, Sijie Li, Allison Shertzer, Randall Walsh   
    31 August 2019

    A new study by Prottoy Akbar, Sijie Li, Allison Shertzer and Randall Walsh assesses the economic impact of residential segregation and ghetto expansion in northern cities in the United States during the ‘Great Migration’ when millions of African Americans left the Jim Crow south.

    The study shows inflating rents and eroding housing values in declining neighbourhoods significantly undercut the gain in earnings for black families who migrated from the South. This is likely to have fuelled the link between racial transition and lending risk that was noted by both banks and government agencies in the early 20th century. The effects of this are still felt today. 

     

    SIMILARITIES IN THE TRANSATLANTIC PRODUCTIVITY GROWTH SLOWDOWN 

    Robert J. Gordon, Hassan Sayed   
    29 August 2019


     

    The industrial composition of the post-2005 productivity growth slowdown to below 1% a year has been similar in Europe and the United States, according to a new study by Robert Gordon and Hassan Sayed. They conclude that decelerating technical change, rather than slowing investment, is the primary driving force of the transatlantic slowdown.

    The researchers analyses data from the United States and ten European Union countries to argue that falling multifactor productivity growth explains both the magnitude and composition of falling productivity growth on both sides of the Atlantic.   


    THE FUTURE OF DIGITAL MONEY: A new Vox debate

    Stephen Cecchetti, Antonio Fatás 
    29 August 2019

    Stephen Cecchetti and Antonio Fatás introduce a new Vox online debate, which addresses the costs and benefits of current innovations and future scenarios for digital money: Will the use of private digital currencies (such as Libra) become widespread? Is there a role for a global digital currency? How will financial institutions evolve in response?

    Many see opportunities for improving the efficiency of finance and a mechanism to promote financial inclusion. At the same time, there are clear concerns about the impact these changes have on the stability of the financial system. Join the debate here


    HOW ATTITUDES AFFECT MARKET OUTCOMES 

    Marzio Bassanin, Ester Faia, Valeria Patella   
    30 August 2019

    Waves of optimism and pessimism play a large role in the leverage cycle. In times when communication and media news affect investor sentiments at a much faster pace, such considerations should have a fundamental role in monitoring financial markets. That is the conclusion of a study by Marzio Bassanin and Ester Faia.

    Their research introduces a new model in which investors’ beliefs about future collateral values are non-linear. Greater ambiguity optimism during booms and greater aversion during recessions closely model the empirical shifts seen before and during financial crises, highlighting the joint role of financial frictions and beliefs distortions for market developments.  


    ‘CHALLENGES IN THE DIGITAL AGE’: Takeaways from the European Central Bank conference

    Vincent Labhard, Peter McAdam, Filippos Petroulakis, Lara Vivian
    27 August 2019

    Vincent Labhard and colleagues summarise selected takeaways from the recent European Central Bank (ECB) conference: ‘Challenges in the digital era’. They address the three key themes: labour market implications of digitalisation; effects on inflation, market power and monetary policy; and the productivity promises of digital technologies.


    WHY DO COUNTRIES REPAY LOANS FROM THE IMF AND WORLD BANK BEFORE OTHERS? 

    Tito Cordella, Andrew Powell  
    23 August 2019

    A new study by Tito Cordella and Andrew Powell presents a framework for investigating this puzzle. They argue that the ability to restrict lending allows international financial institutions to lend at the risk-free rate and creates incentives for repayment. Loans from the International Monetary Fund and World Bank are thus complementary to commercial lending.  


    20 YEARS OF ECONOMIC AND MONETARY UNION IN EUROPE: Takeaways from the European Central Bank’s Sintra Forum

    Philipp Hartmann, Glenn Schepens   
    02 September 2019

    Philipp Hartmann and Glenn Schepens, two of the Forum organisers, summarise the main issues debated, including different perspectives on the experience with convergence among euro area countries, the evolution and roles of macroeconomic stabilisation policies and how they may be supported by completing the economic and monetary union (EMU), and the implications of demographic changes for growth and inflation.  



    AFRICA'S LANDS OF OPPORTUNITY

    Elias Papaioannou interviewed by Tim Phillips, 30 August 2019

    On average, if you are born in Africa today, you have a much better chance of succeeding than your parents or grandparents. But which countries have the best – and worst – intergenerational mobility? Elias Papaioannou tells Tim Phillips about the four-year hunt for Africa's lands of opportunity.