Working papers

Renewable energy support: pre-announced policies and (in)-efficiency
Nandeeta Neerunjun
Hubert Stahn

This paper is essentially based on the assumption that policies supporting investment in intermittent renewable technologies cannot be contingent on meteorological events causing this intermittence. This decision was taken by most policymakers to avoid overly complex policy prescriptions. But in doing so, the first-best energy mix may be out of reach. We compare, in a unified second-best setting, the feed-in tariff, renewable premiums and tradable green certificates policy. We consider a "two-period, S-state" model. The S states reflect intermittency. Production decisions for renewable electricity are taken prior to the resolution of the uncertainty while the fossil-fuel sector adjusts its decision in each state. Retailers buy electricity on a state-dependent wholesale market which they deliver to consumers according to a fixed-tariff or a real-time-pricing contract. All these elements matter in the efficiency assessment of these policies.

Keywords: intermittency, renewables, feed-in tariff, premiums for renewable, tradable green certi ficates
Download PDF icon wp_2023_-_nr_35.pdf (587.51 KB)
Who Gets Jobs Matters: Monetary Policy and the Labour Market in HANK and SAM
Uroš Herman
Matija Lozej

This paper first provides empirical evidence that labour market outcomes for the less educated workers, who also tend to be poorer, are substantially more volatile than those for the well-educated, who tend to be richer. We estimate job finding rates and separation rates by educational attainment for several European countries and find that job finding rates are smaller and separation rates larger at lower educational attainment levels. At cyclical frequencies, fluctuations of the job finding rate explain up to 80% of unemployment fluctuations for the less educated. We then construct a stylised HANK model augmented with search and matching and ex-ante heterogeneity in terms of educational attainment. We show that monetary policy has stronger effects when the job market for the less educated and, hence, poorer workers is more volatile. The reason is that these workers have the most procyclical income coupled with the highest marginal propensity to consume. An expansionary monetary policy shock that increases labour demand disproportionally affects the labour market segment for the less educated, causing a strong increase in consumption. This further amplifies labour demand and increases the labour income of the poor even more, amplifying the initial effect. The same mechanism carries over to forward guidance.

Keywords: heterogeneous agents, Search and matching, monetary policy, business cycles, Employment
Download PDF icon wp_2023_-_nr_34.pdf (8.2 MB)
The impact of parents' health shocks on children's health behaviors
Sylvie Blasco
Eva Moreno Galbis
Jeremy Tanguy

In this paper we assess how two smoking-related parental health shocks, the diagnosis of lung cancer and the diagnosis of another smoking-related cancer, affect offspring smoking behavior depending on the timing of the health shock. We use two strategies to isolate the informational shock effect from the transmission effect associated with parental smoking. We first focus on individuals whose parents were diagnosed with smoking-related cancer and exploit heterogeneity in the individual's age at diagnosis. We then build a retrospective panel and use individual fixed effects to absorb the transmission effect. We find that receiving a parental diagnosis at the age when the decision to smoke is about to be made reduces the long-term probability of being a smoker and the duration of smoking.

Keywords: smoking, health shocks, intergenerational transmission
Download PDF icon wp_2023_-_nr_33.pdf (518.95 KB)
Terrorism and violence against the North African community in France
Eva Moreno Galbis
Mariana Benitez Rubiano

We seek to evaluate if terror attacks perpetrated by the Islamic State in France in 2015 and 2016 induced an increase in violence against people associated with the Islamic religion. A simple behavioral model of conflict with a fully public prize predicts that conflict intensity is driven by distance across groups in conflict and polarization. Exploiting data from the French survey "Cadre de Vie et Securite" 2009-2019 we implement a difference-indifferences approach to compare before-after changes in violence against Maghrebis using European immigrants as a comparison group. We find no evidence that terror attacks promoted an increase in violence against Maghrebis during the years following the attacks. Moreover, by utilizing data from the European Social Survey, we do not find significant changes following the terror attacks in various indicators proxying distance across groups and polarization. French natives did not radicalize towards far-right positions but rather developed empathy towards immigrants. Maghrebis did not become more dissatisfied with the police, they were not more afraid of retaliation, they did not feel more discriminated against, and they did not change their degree of religiosity.

Keywords: conflict, terrorism, xenophobia, polarization
Download PDF icon wp_2023_-_nr_32.pdf (635.91 KB)
Dynamic Theory of The Balassa-Samuelson Effect
Harutaka Takahashi
Alain Venditti

The Balassa-Samuelson effect is still an important phenomenon in the theory of economic development, as Balassa states, "As economic development is accompanied by greater inter-country differences in the productivity of tradable goods, differences in wages and service prices increase, and correspondingly so do differences in purchasing power parity and exchange rates." To the best of our knowledge, the Balassa-Samuelson effect has not been formally examined in the framework of optimal growth theory. By embedding the Balassa-Samuelson’s original model in an optimal growth model setting, we investigate the validity of the Balassa-Samuelson effect in such a case and show that the Balassa-Samuelson effect follows from one of the properties of the optimal steady state.

Keywords: Two sector optimal growth, optimal steady state, saddle-point stability, phase diagram, Hamiltonian, capital intensity
Download PDF icon wp_2023_-_nr_31.pdf (982.59 KB)
The Priced Survey Methodology: Theory
Avner Seror

In this paper, I introduce a novel methodology to conduct surveys. The priced survey methodology (PSM). Like standard surveys, priced surveys are easy to implement, and measure social preferences on numerical scales. The PSM's design draws inspiration from consumption choice experiments, as respondents fill out the same survey several times under different choice sets. I extend Afriat's theorem and show that the Generalized Axiom of Revealed Preferences is necessary and sufficient for the existence of a concave, continuous, and single-peaked utility function rationalizing answers to the PSM. I apply the PSM to a sample of online participants and show that most respondents are rational when answering the PSM. I estimate respondents' single-peaked utility functions and draw several implications on their social preferences.

Keywords: Decision Theory, revealed preference, Social Preferences, Behavioral Economics, survey
Download PDF icon wp_2023_-_nr_30.pdf (782.3 KB)
A dynamic theory of the Balassa-Samuelson effect: Why has the Japanese economy stagnated for over 30 years?
Kazuo Nishimura
Harutaka Takahashi
Alain Venditti

The Balassa-Samuelson effect ("BS effect") has attracted attention as a theory to explain the stagnation of the Japanese economy over the past 30 years. In particular, it has been used to explain the long-term depreciation of the real effective exchange rate since 1995. Furthermore, macroeconomic data show that the BS effect explains well Japan's long-term economic stagnation. However, the BS effect was originally derived theoretically for small open economies, not for large economies like Japan. In other words, the BS effect cannot be theoretically applied to large economies. This is a serious problem in applying the BS effect empirically. In this paper, we embed Balassa-Samuelson's original argument into the optimal growth theory framework. That is, we set up an optimal growth problem for large countries. It is then shown that there exists a stable optimal steady state and that the BS effect is more directly valid in that optimal steady state. In other words, as a long-run property, the BS effect is applicable to large as well as small countries, although, contrary to the small open economy case, it does not depend on the capital shares of the two sectors.

Keywords: Two-sector optimal growth models, optimal steady state, capital intensity, Balassa-Samuelson effect
Download PDF icon wp_2023_-_nr_29.pdf (522.36 KB)
On the (de)stabilization role of protectionism: Theory and evidence
Nastasia Henry
Alain Venditti

To what extent protectionism affects growth and (de)stabilizes the economies? Since 2018, some countries have resorted to protectionist measures as the United States. Although the impacts of protectionism on growth have been widely explored without reaching a consensus, few has been said on its impacts on macroeconomic stability. The present paper attempts to gauge more precisely its implications using a Barro-type (1990) endogenous growth model with public debt and credit constraint where tariffs are a proxy of protectionism. Our main result is to show that when the debt level is high, and the share of foreign goods in total consumption is large enough, increasing tariffs may have a dramatic destabilizing effect generating some expectation coordination failure between multiple equilibria and the possible existence of large self-fulfilling fluctuations. We also exhibit some trade-off between tariffs and growth as tariffs are beneficial only to the low growth equilibrium which may only appear in the globally indeterminate case. We also propose some numerical illustrations confirming the destabilizing impact of tariffs in the case of the US economy. We finally propose an Event Study analysis to confront our results. While our effects appear short lasting, two quarters, we show that the implementation of protectionism destabilizes the US economy in the short run.

Keywords: public debt, tariffs, small open economy, credit constraint, global and local indeterminacy
Download PDF icon wp_2023_-_nr_28.pdf (906.29 KB)
Expectations, beliefs and the business cycle: theoretical analysis
Frédéric Dufourt
Kazuo Nishimura
Alain Venditti

When can exogenous changes in beliefs generate endogenous fluctuations in rational expectation models? We analyze this question in the canonical one-sector and two-sector models of the business cycle with increasing returns to scale. A key feature of our analysis is that we express the uniqueness/multiplicity condition of equilibirum paths in terms of restrictions on five critical and economically interpretable parameters: the Frisch elasticities of the labor supply curve with respect to the real wage and to the marginal utility of wealth, the intertemporal elasticity of substitution in consumption, the elasticity of substitution between capital and labor, and the degree of increasing returns to scale. We obtain two clear-cut conclusions: belief-driven fluctuations cannot exist in the one-sector version of the model for empirically consistent values for these five parameters. By contrast, belief-driven fluctuations are a robust property of the twosector version of the model-with differentiated consumption and investment goods-, as they now emerge for a wide range of parameter values consistent with available empirical estimates. The key ingredients explaining these different outcomes are factor reallocation between sectors and the implied variations in the relative price of investment, affecting the expected return on capital accumulation.

Keywords: belief-driven business cycles, endogenous fluctuations, expectations, income effect
Download PDF icon wp_2023_-_nr_27.pdf (4.8 MB)
Speed of Convergence in a Malthusian World: Weak or Strong Homeostasis?
Arnaud Deseau

The Malthusian trap is a well recognized source of stagnation in per capita income prior to industrialization. However, previous studies have found mixed evidence about its exact strength. This article contributes to this ongoing debate, by estimating the speed of convergence for a wide range of economies and a large part of the Malthusian era. I build a simple Malthusian growth model and derive the speed of convergence to the steady state. A calibration exercise for the English Malthusian economy reveals a relatively weak Malthusian trap, or weak homeostasis, with a half-life of 112 years. I then use β-convergence regressions and historical panel data on per capita income and population to empirically estimate the speed of convergence for a large set of countries. I find consistent evidence of weak homeostasis, with the mode of half-lives around 120 years. The weak homeostasis pattern is stable from the 11th to the 18th century. However, I highlight significant differences in the strength of the Malthusian trap, with some economies converging significantly faster or slower than others.

Keywords: Convergence, Homeostasis, Malthusian trap, Preventive checks, marriage, fertility, Malthusian model, Beta-convergence
Download PDF icon wp_2023_-_nr_26.pdf (646.69 KB)
Better together? A mediation analysis of general practitioners' performance in multi-professional group practice
Anna Zaytseva
Pierre Verger
Bruno Ventelou

Ob jectives: To analyse how general practitioners (GPs) respond to insucient GP supply in their practice area in terms of quantity and quality of care, and how this response can be mediated by enrolment in integrated primary care teams (multi-professional group practices (MGP)).
Methods: We used three representative cross-sectional surveys (2019-2020) of 1,209 French GPs. Using structural equations, we assumed that low GP density inuences GPs' work-related stress (mediator 1) as well as their use of e-health tools (mediator 2) and ultimately quantity and quality of care. Quantity (respectively quality) of care were approximated by demand absorption capacities (respectively frequencies of vaccine recommendations). We estimated an additional specication where enrolment in an MGP was a mediator between GP density and the two mediators dened above.
Results: GP density was signicantly and positively associated with work-related stress, which was consecutively associated with deteriorated demand absorption capacity. Higher use of e-health tools was associated with greater involvement in vaccine recommendations. Lastly, GPs in MGP tend to use more e-health tools than those practicing outside MGP, with a favourable eect on quality of care.
Discussion: This study demonstrates that a lower level of work-related stress is the key mediator in handling patients' requests. Correcting for the self-selection into MGP, we amend some unstable results contained in the literature: there is no signicant mediation eect of enrolment in integrated primary care teams on the quantity of care, but rather an eect on the quality of care. Although probably disappointing for the quantity of care provided, our results pinpoint a novel added value of enrolment in an integrated practice as a response to decreasing GP density.

Keywords: general practitioners, medically underserved area, integrated care, France
Download PDF icon wp_2023_-_nr_25.pdf (674.83 KB)
The dynamics of fertility under environmental concerns
Paolo Melindi-Ghidi
Thomas Seegmuller

This paper contributes to the literature interested in the new factors that may determine fertility behaviors. Many studies underlay that environmental concerns have a direct effect on households' fertility decisions. We present a dynamic model that explicitly examines this interplay, considering whether the number of children and environmental concerns may be complementary or substitutable. Interesting results occur when environmental concerns and the number of children are substitutable. At a stable steady state, a stronger effect of environmental concerns on household's preferences reduces the number of children, as also stressed by a recent literature. The dynamics can be described by an inversely Ushaped relationship between fertility and environmental indicators reflecting the impact of economic production, such as the carbon intensity, as we illustrate using data on US States. The dynamics also explain that regions with lower carbon intensity are those with lower fertility.

Keywords: fertility, Environmental concerns, Quantity-quality trade-off, Transitional dynamics
Download PDF icon wp_2023_-_nr_24.pdf (850.73 KB)
Framing Cognitive Machines: A Sociotechnical Taxonomy
Pedro H. Albuquerque
Sophie Albuquerque

Aims: we propose a sociotechnical taxonomy for the analysis of socioeconomic disruptions caused by technological innovations. Methodology: a transdisciplinary principled approach is used to build the taxonomy through categorization and characterization of technologies using concepts and definitions originating from cybernetics, occupational science, and economics. The sociotechnical taxonomy is then used, with the help of logical propositions, to connect the characteristics of different categories of technologies to their socioeconomic effects, for example their externalities. Results: we offer concrete illustrations of concepts and uses, and an Industry 5.0 case study as an application of the taxonomy. We suggest that the taxonomy can inform the analysis of opportunities and risks related to technological disruptions, specially of those that result from the rise of cognitive machines.

Keywords: sociotechnical taxonomy, technological disruptions, technological innovations, automatic, autonomous, physical technology, cognitive technology, skill-enhancing, skill-replacing, externalities, Industry 5.0, cognitive machines, artificial intelligence, occupational science
Download PDF icon wp_2023_-_nr_23.pdf (402.7 KB)
Institutional Stock-Bond Portfolios Rebalancing and Financial Stability
Jean-Baptiste Hasse
Christelle Lecourt
Souhila Siagh

In this paper, we examine rebalancing strategies for long-term institutional investors. Specifically, we test the difference in risk-adjusted performances between stock-bond portfolios based on buy-and-hold, periodic and threshold rebalancing strategies. Using the Norwegian Sovereign Wealth Fund (SWF) as a benchmark and an econometric approach based on a bootstrap test of Sharpe ratios difference, we show that the optimal rebalancing differs across economic and financial cycles. Furthermore, we find that the optimal strategy is periodic rebalancing except during recessions and crises when the buy-and-hold approach is best, thus calling into question the hypothesis of the countercyclical behavior of SWFs. Our results are robust to alternative performance measures, asset allocations, investment horizons, rebalancing rule, nonnormal and non-iid returns, transaction costs and time sampling. Finally, our findings promote the consideration of macroprudential rules to improve the Santiago Principles and a specific monitoring framework targeted at SWFs.

Keywords: Portfolio Rebalancing, Financial Stability, Bootstrap Test, Institutional Investors
Download PDF icon wp_2023_-_nr_22.pdf (644.98 KB)
Regional Trade Policy Uncertainty
Céline Poilly
Fabien Tripier

Higher uncertainty about trade policy has recessionary effects in U.S. states. First, this paper builds a novel empirical measure of regional trade policy uncertainty, based on the volatility of national import tariffs at the sectoral level and the sectoral composition of imports in U.S. states. We show that a state which is more exposed to an unanticipated increase in tariff volatility suffers from a larger drop in real output and employment, relative to the average U.S. state. We then build a regional open-economy model and we argue that the transmission channels of uncertainty shocks, in particular the precautionary-pricing channel, are magnified in regions that feature the highest import share and a strongest export intensity. Furthermore, we show that an expansionary monetary policy may amplify the regional divergence since it worsens the recession in the most-exposed region to trade policy uncertainty.

Keywords: uncertainty shocks, regional effects, precautionary pricing, monetary policy
Download PDF icon wp_2023_-_nr_21.pdf (925.5 KB)
Bayesian correction for missing rich using a Pareto II tail with unknown threshold: Combining EU-SILC and WID data
Mathias Silva
Michel Lubrano

Survey data are known for under-reporting rich households while providing large information on contextual variables. Tax data provide a better representation of top incomes at the expense of lacking any contextual variables. So the literature has developed several methods to combine the two sources of information. For Pareto imputation, the question is how to chose the Pareto model for the right tail of the income distribution. The Pareto I model has the advantage of simplicity. But Jenkins (2017) promoted the use of the Pareto II for its nicer properties, reviewing three different approaches to correct for missing top incomes. In this paper, we propose a Bayesian approach to combine tax and survey data, using a Pareto II tail. We build on the extreme value literature to develop a compound model where the lower part of the income distribution is approximated with a Bernstein polynomial truncated density estimate while the upper part is represented by a Pareto II. This provides a way to estimate the threshold where to start the Pareto II. Then WID tax data are used to build up a prior information for the Pareto coefficient in the form of a gamma prior density to be combined with the likelihood function. We apply the methodology to the EU-SILC data set to decompose the Gini index. We finally analyse the impact of top income correction on the Growth Incidence Curve between 2008 and 2018 for a group of 23 European countries.

Keywords: Bayesian inference, Pareto II, profile likelihood, Bernstein density estimation, top income correction, EU-SILC
Download PDF icon wp_2023_-_nr_20.pdf (3.18 MB)
Elite-led revolutions
Raouf Boucekkine
Rodolphe Desbordes
Paolo Melindi-Ghidi

Revolutions are often perceived as the key event triggering the fall of an autocratic regime. They are believed to be driven by the people with the purpose of establishing a democratic regime for the people. However, the historical record does not agree with this picture: revolutions are rare, elite-driven, and often non-democratising. We first develop a new set of stylised facts summarising and deepening the latter features. Second, to explain these facts, we develop a theory of elite-driven non-democratising institutional changes triggered by popular uprisings. Our model includes four key ingredients: (i) a minority/majority split in the population; (ii) the persistence of fiscal particularism post-revolution; (iii) the presence of windfall resources; (iv) a distinction between labour income and resource windfalls as well as endogeneity of the labour supply. We show that revolutions are initiated by the elite and only when fractionalisation is moderate. Resource windfalls and labour market repression can also play a role in triggering this 'alliance' between the majority and the elite. If a revolution happens, redistribution in the subsequent regime still favours the elite, although the masses are better off.

Keywords: dominant minorities, elite-led revolutions, social structures, particularism, resources
Download PDF icon wp_2023_-_nr_19.pdf (495.67 KB)
Like Father, Like Child: Intergenerational Mobility in the French Grandes Écoles throughout the 20 th Century
Stéphane Benveniste

While the educational expansion of the 20 th century promoted social mobility overall, the top of the social hierarchy may have remained privileged. This paper examines the evolution of intergenerational mobility in admissions to the French elite colleges-the Grandes Écoles (GE)-over more than a century. Admission to these institutions is subject to partially anonymous competitive examinations, and their degrees are the ticket to top positions in the public and private sectors. In the growing literature measuring intergenerational mobility through surnames, I design a novel method and apply it to a self-collected dataset on all 285,286 graduates from ten of the most prestigious Grandes Écoles between 1886 and 2015. Principally, I find that children of male GE graduates were highly over-represented in the top colleges throughout the 20 th century. Importantly, unlike previous studies exploiting fathers' socio-professional categories, I find a stable low level of intergenerational mobility for all cohorts born since 1916: chances of GE admission for children of GE graduates were approximately 80 times higher than for the rest of the population.

Keywords: intergenerational mobility, higher education, elites, Grandes Ecoles, historical economics
Download PDF icon wp_2023_-_nr_18.pdf (5.23 MB)
Public Goods in Networks: Comparative Statics Results
Sebastian Bervoets
Kohmei Makihara

We consider public goods games played on a potentially non-symmetric network and provide comparative statics results on individual and aggregate contributions, as well as on the effect of transfers between players. We show that, contrary to the case of the complete and symmetric network, a positive shock on a player can have adverse consequences. First, it could actually decrease this player's contribution, unless the interaction matrix is a P-matrix. Second, a positive shock on a contributing player increases aggregate contributions, but a positive shock on a non-contributing player will decrease aggregate contributions, even if the player who benefited from the positive shock increases his own contribution. In each case we provide simple conditions to determine whether a positive shock will have positive or negative consequences on contributions, by looking at the unconstrained solution of an alternative, associated game. The sign of the coordinates of this solution determines the effect of a shock. With this in hand, we further show that the aggregate neutrality result of Andreoni [1990] regarding transfers between players generally does not hold on non-symmetric networks and provide conditions for it to hold. Finally, as an application of previous results, we consider introducing agents that follow Kantian moral principles and show that, depending on their position in the network, the presence of Kantian agents can, counter-intuitively, lead to a decrease in aggregate contributions.

Keywords: public Goods, Network, comparative Statics, kantian players
Download PDF icon wp_2023_-_nr_17.pdf (1.37 MB)
Femicide Rates in Mexican Cities along the US-Mexico Border
Pedro H. Albuquerque
Prasad R. Vemala

Mexican cities along the US-Mexico border, especially Cd. Juarez became notorious due to high femicide rates supposedly associated with maquiladora industries and the NAFTA. Nonetheless, statistical evaluation of data from 1990 to 2012 shows that their rates are consistent with other Mexican cities’ rates and tend to fall with increased employment opportunities in maquiladoras. Femicide rates in Cd. Juarez are in most years like rates in Cd. Chihuahua and Ensenada and, as a share of overall homicide rates, are lower than in most cities evaluated. These results challenge conventional wisdom and most of the literature on the subject.

Keywords: maquiladoras, crime, gender violence, violence against women, homicide, femicide, border, Mexico, Juarez
Download PDF icon wp_2023_-_nr_16.pdf (566.27 KB)
The Matching Function: A Unified Look into the Black Box
Georgios Angelis
Yann Bramoullé
In this paper, we use tools from network theory to trace the properties of the matching function to the structure of granular connections between applicants and firms. We link seemingly disparate parts of the literature and recover existing functional forms as special cases. Our overarching message is that structure counts. For rich structures, captured by non-random networks, the matching function depends on whole sets rather than just the sizes of the two sides of the market. For less rich-random network-structures it depends on the sizes of the two sides and a few structural parameters. Structures characterized by greater asymmetries reduce the matching function's efficacy, while denser structures can have ambiguous effects on it. For the special case of the Erdös-Rényi network, we show that the way the network varies with the sizes of the two sides of the market determines if the matching function exhibits constant returns to scale, or even if it is of a specific functional form, such as CES.
Download PDF icon wp_2023_-_nr_15.pdf (1.61 MB)
Technological Innovations and Obsolescence: Leveling the Playing Field for Remanufacturing
Pedro H. Albuquerque
Kiara S. Winans
In a linear economy, manufacturing is less costly and more profitable than remanufacturing because of reduced private costs of utilization and production. However, manufacturing also involves higher resource extraction and waste as externalized costs than remanufacturing. We use a vintage capital framework to assess technological innovations in remanufacturing and their potential benefits to society and human occupations. Our study shows that replacing manufacturing with remanufacturing technologies creates positive static and dynamic circular economy externalities. These externalities can be quantified to assess improvements in social outcomes. A smartphone remanufacturing innovation case study is presented as an illustration of the article's main ideas. Future research should investigate additional specific cases to develop a comprehensive methodology for assessing the impact of remanufacturing innovations on social outcomes. This will provide valuable insights into the broader implications of remanufacturing practices.
Keywords: manufacturing, externalities, occupational meaning, circular economy, sustainability, national accounting systems
Download PDF icon wp_2023_-_nr_14.pdf (225.17 KB)
Social Implications of Technological Disruptions: A Transdisciplinary Cybernetics Science and Occupational Science Perspective
Pedro H. Albuquerque
Sophie Albuquerque
In this article we argue that the disruptive social implications of skill-replacing technological innovations are determined neither by human characteristics, such as "low skills" or "low cognition," nor by task characteristics, such as "routine," as it is typically assumed in the predominant economics and management science literature, but by the cybernetic characteristics of the innovations. We also propose that the negative effects of technological disruptions on human well-being cannot be fully understood without the use of a transdisciplinary approach involving cybernetics science and occupational science, and that it is urgent that policymakers look beyond their narrow effects on productivity and on the labor force, and consider instead the complexity of the interactions between cybernetic technologies and meaningful human occupations. We offer as an example the case of the fast adoption of online food delivery services and of remote work technologies during the COVID-19 pandemic. Ethical implications are derived from the arguments.
Keywords: technological disruptions, technological innovations, cybernetics science, occupational science, labor and nonlabor occupations
Download PDF icon wp_2023_-_nr_13.pdf (199.54 KB)
The Increasing Impact of Spain on the Equity Markets of Brazil, Chile and Mexico
Andres Rivas
Rahul Verma
Antonio Rodriguez
Pedro H. Albuquerque
The article examines stock index price responses in Brazil, Chile and Mexico to those in the US, Spain and four European countries during three sub-periods surrounding the neoliberal reforms of the 1990s: 1988 to 1994, 1995 to 1998, and 1999 to 2004, using VAR modeling. It finds that equity markets became more interconnected as countries opened to international trade and capital flows, and that there was an increasing impact of Spain on Latin American equity markets. Stronger economic linkages (more trade and foreign direct investment) between Spain and these countries, specially in Brazil, seem to explain increased equity markets interconnectedness.
Keywords: Emerging markets, Latin America, Spain, Stock markets interdependence, VAR modeling
Download PDF icon wp_2023_-_nr_12.pdf (507.13 KB)
Parametric models of income distributions integrating misreporting and non-response mechanisms
Mathias Silva

Several representativeness issues affect the available data sources in studying populations' income distributions. High-income under-reporting and non-response issues have been evidenced to be particularly significant in the literature, due to their consequence in underestimating income growth and inequality. This paper bridges several past parametric modelling attempts to account for high-income data issues in making parametric inference on income distributions at the population level. A unified parametric framework integrating parametric income distribution models and popular data replacing and reweighting corrections is developped. To exploit this framework for empirical analysis, an Approximate Bayesian Computation approach is developped. This approach updates prior beliefs on the population income distribution and the high-income data issues pressumably affecting the available data by attempting to reproduce the observed income distribution under simulations from the parametric model. Applications on simulated and EU-SILC data illustrate the performance of the approach in studying population-level mean incomes and inequality from data potentially affected by these high-income issues.

Keywords: 'Missing rich', GB2, Bayesian inference
Download PDF icon wp_2023_-_nr_11.pdf (1.83 MB), PDF icon wp_2023_-_nr_11v2.pdf (2.17 MB)
Parametric estimation of income distributions using grouped data: an Approximate Bayesian Computation approach
Mathias Silva

Recent empirical analysis of income distributions are often limited by the exclusive availability of data in a grouped format. This data format is made particularly restrictive by a lack of information on the underlying grouping mechanism and sampling variability of the grouped-data statistics it contains. These restrictions often result in the unavailability of an analytical parametric likelihood function exploiting all information available in the grouped data. Building on recent methods for inference on parametric income distributions for this type of data, this paper explores a new Approximate Bayesian Computation (ABC) approach. ABC overcomes the restrictions posed by grouped data for Bayesian inference through a non-parametric approximation of the likelihood function exploiting simulated data from the income distribution model. Empirical applications of the proposed ABC method in both simulated and World Bank's PovCalNet data illustrate the performance and suitability of the method for the typical formats of grouped data on incomes.

Keywords: Grouped data, Bayesian inference, Generalized Lorenz curve, GB2
Download PDF icon wp_2023_-_nr_10.pdf (621.14 KB)
Variational rationality: Finding the inequations of motion of a person seeking to meet his needs.
Antoine Soubeyran

As physics provides the equations of motion of a body, this paper formulates, for the first time, at the conceptual and mathematical levels, the inequations of motion of an individual seeking to meet his needs and quasi needs in an adaptive (not myopic) way. Successful (failed) dynamics perform a succession of moves, which are, at once, satisficing and worthwhile (free from too many sacrifices), or not. They approach or reach desires (fall in traps). They balance the desired speed of approach to a desired end (a distal promotion goal) with the size of the required immediate sacrifices to go fast (a proximal prevention goal). Therefore, each period, need/quasi need satisfaction success requires enough self control to be able to make, in the long run, sufficient progress in need/quasi need satisfaction without enduring, in the short run, too big sacrifices. A simple example (lose or gain weight) shows that the size of successful moves must be not too small and not too long. A second paper will solve this problem, using variational principles and inexact optimizing algorithms in mathematics. This strong multidisciplinary perspective refers to a recent mathematical model to psychology: the variational rationality theory of human life stay and change dynamics.

Keywords: need satisfaction, speed of progress, sacrifices, dynamical system, variational rationality
Download PDF icon wp_2023_-_nr_09.pdf (1.25 MB)
ENSO Climate Patterns on Global Economic Conditions
Gilles Dufrénot
William Ginn
Marc Pourroy

We investigate the role of ENSO climate patterns on global economic conditions. The estimated model is based on a rich and novel monthly dataset for 20 economies, capturing 80.2% of global output (based on 2021 IMF data) over the period 1999:01 to 2022:03. The empirical evidence from an estimated global vector autoregression with local projections (GFAVLP) model links an El Niño (EN) shock with higher output and inflation, corresponding with lower global economic policy uncertainty (GEPU). While a shock to the world oil and food price is inflationary, a food price shock leads to elevated GEPU, more so during a LN shock. A main finding is that an increase of the food price can be a source of global vulnerability. The findings indicate that the weather shock impact on global economic conditions is dependent on the climate state. Our result undermines existing studies connecting climate change and economic damage via statistical approach.

Keywords: Weather; Oil and Food Prices; Global Macroeconometric Modeling; and Economic Policy Uncertainty
Download PDF icon wp_2023_-_nr_08.pdf (6.39 MB)
Variational rationality. Self regulation success as a succession of worthwhile moves that make sufficient progress
Antoine Soubeyran

This paper provides a general and formalized theory of self-regulation success and failures as an application of the recent Variational rationality approach of stay and change human dynamics (Soubeyran, 2009, 2010, 2021.a,b,c,d). For concreteness purposes, it starts with an example in psychology: how to gain or to loose weight ? It ends with a general, conceptual, dynamical and computable formulation of self-regulation and goal pursuit in the context of variational principles and adaptive optimizing algorithms in mathematics.

Keywords: variational rationality, self regulation, variational principles, adaptive optimizing algorithms
Download PDF icon wp_2023_-_nr_07.pdf (1.32 MB)
Does ICT access and usage reduce growth inefficiency in Sub-Saharan Africa?
Désiré Avom
Gilles Dufrénot
Sylvie Eyeffa
This paper investigates whether or not the access to and use of ICT can help African countries reduce their growth inefficiencies. Inefficiency is measured, on the one hand, by the gap between a country's growth rate and its own frontier, and on the other hand by the relative position of each country compared to the best achievers. We find that if countries were doing a better job of controlling corruption and improving citizen participation in politics, they would achieve higher growth efficiency performance by using ICT. When countries are compared with each other, considering the growth "frontier" as countries in the sample, then growth differentials are explained primarily by non-ICT factors of growth (human capital, schooling rates, capital growth rates, etc.). The role of ICT factors is secondary. But they contribute to growth to a greater extent for the best achievers (compared to the lowest and middle achievers) because they are better endowed with ICT factors than the others.
Keywords: ICT, African countries, growth inefficiency, frontier, quantiles
Download PDF icon wp_2023_-_nr_06.pdf (1.02 MB)
The tragedy of the (anti-)commons: The case of prey-predator fisheries
Guillaume Bataille
Hubert Stahn
Agnes Tomini
We examine the efficiency and environmental consequences of assigning species-specific common-property rights, considering a Lotka-Volterra model in which fisheries are specialized in the harvesting of a single species. We show that the fragmentation of the ecosystem implies the tragedy of the anticommons even when fisheries compete for the resource. Indeed, contrasting the private exploitation equilibrium with the socially optimal solution, we demonstrate that the predator stock is too high while the prey stock is too low under private property rights. A puzzling result is that the "abundant" species is actually underused because of insufficient economic incentives; however, the scarce and high-priced species does not necessarily suffer from overexploitation. Biological interactions are consequently the main driver of stock depletion. Finally, we investigate how to simultaneously solve both the tragedy of the commons and that of the anticommons and analyze the economic costs of regulating only the tragedy of the commons.
Keywords: exclusive property rights, common-pool resource, anticommons, fisheries, prey-predator relationship, optimal control
Download PDF icon wp_2023_-_nr_05.pdf (516.75 KB)
Identity conflict, ethnocentrism and social cohesion
Matteo Sestito
This paper uses a novel dataset on ethnic warfare to shed light on how conflict affects social identification and cohesion. A large body of anecdotal studies suggests that ethnic identities become more salient at times of conflict. Using data from eighteen sub-Saharan countries, I provide econometric evidence for such a claim. The effect of ethnic conflict on various measures of social cohesion is also investigated, uncovering a positive relationship between the two. The finding is understood as a result of the ethnocentric dynamics generated by conflict: as ethnic warfare increases ethnic identification, in-group cooperation follows suit. This parochial interpretation is further strengthened by the use of remote violence and the conditionality of conflict-induced pro-social behaviour on low levels of ethnic polarisation.
Keywords: ethnic conflict, social cohesion, identity, Africa
Download PDF icon wp_2023_-_nr_04.pdf (3.7 MB)
When are wages cut? The roles of incomplete contracts and employee involvement
Marco Fongoni
Daniel Schaefer
Carl Singleton

We develop a model of incomplete employment contracts such that employees have some discretion over effort, which depends on their work morale. Nominal wage cuts have a strong negative effect on morale, while employee involvement in workplace decision-making tends to increase morale. We derive predictions on how these two mechanisms affect the decisions of firms to cut nominal wages. Using matched employer-employee and manager survey data from Great Britain, we find support for our model: nominal wage cuts are only half as likely when managers think that employees have some discretion over how they perform their work, but this reduced likelihood recovers partially when employees are involved in the decision-making process at their workplace.

Keywords: wage rigidity; reciprocity; workplace relations; employer-employee data
Download PDF icon wp_2023_-_nr_03.pdf (547.41 KB)
Turning worries into cognitive performance: Results from an online experiment during Covid
Timothée Demont
Daniela Horta Sáenz
Eva Raiber
Worrisome topics, such as climate change, economic crises, or the Covid-19 pandemic, are increasingly present and pervasive due to digital media and social networks. Do such worries affect cognitive performance? The effect of a distressing topic might be very different depending on whether people have the scope and means to cope with the consequences. It can also differ by how performance is rewarded, for instance, if is there a goal that people can focus on. In an online experiment during the Covid-19 pandemic, we test how the cognitive performance of university students responds to topics discussing (i) current mental health issues related to social restrictions or (ii) future labor market uncertainties linked to the economic contraction. Moreover, we study how the response is affected by a performance goal by conditioning payout on reaching a minimum level. We find that the labor market topic increases cognitive performance when performance is motivated by a goal. Conversely, there is no such effect after the mental health topic. We even find a weak negative effect among those mentally vulnerable when payout is not based on reaching a goal. The positive effect is driven by students with larger financial and social resources, pointing at an inequality-widening mechanism.
Keywords: cognitive performance, financial worries, COVID-19, financial incentives, anxiety, coping behaviors
Download PDF icon wp_2023_-_nr_02.pdf (2.38 MB)
How can technology significantly contribute to climate change mitigation?
Claire Alestra
Gilbert Cette
Valérie Chouard
Rémy Lecat
This paper highlights how technology can contribute to reaching the COP21 goals of net zero CO 2 emissions and global warming below 2°C at the end of the century. It uses the ACCL model, particularly adapted to quantify the consequences of energy price shocks and technology improvements on CO 2 emissions, temperature changes, climate damage and GDP. Our simulations show that without climate policies, i.e. a 'business as usual' scenario, the warming may be +4 to +5°C in 2100, with considerable climate damage. We also find that an acceleration in 'usual technical progress'-not targeted at reducing greenhouse gas intensity-makes global warming and climate damage worse than the 'business as usual' scenario. According to our estimates, the world does not achieve climate goals in 2100 without technological changes to avoid CO 2 emissions. To hit such climatic targets, intervening only through the relative price of different energy types, e.g. via a carbon tax, requires challenging hypotheses of international coordination and price increase for polluting energies. We assess a multi-lever climate strategy, associating diverse price and technology measures. This mix combines energy efficiency gains, carbon sequestration, and a decrease of 3% per year in the relative price of non-carbon-emitting electricity with a 1 to 1.5% annual rise in the relative price of our four polluting energy sources. None of these components alone is sufficient to reach climate objectives. Our last and most important finding is that our composite scenario achieves the climate goals.
Keywords: climate, global warming, Technology, Environmental policy, growth, long-term projections, Uncertainties, Renewable energy
Download PDF icon wp_2023_-_nr_01.pdf (567.61 KB)