Working papers

Abstract We use an overlapping generations setup with two reproductive periods to explore how fertility decisions may differ in response to economic incentives in early and late adulthood. In particular, we analyze the interplay between fertility choices-related to career opportunities-and wages, and investigate the role played by late fertility. We show that young adults only postpone parenthood above a certain wage threshold and that late fertility increases with investment in human capital. The long run trend is either to a low productivity equilibrium, involving high early fertility, no investment in human capital and relatively low income, or to a high productivity equilibrium, where households postpone parenthood to invest in their human capital, with higher late fertility and higher levels of income. A convergence to the latter state would explain the postponement of parenthood and the fertility rebound observed in Europe in recent decades.
Keywords Fertility, Postponement, Reproductive health, Overlapping generations
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Abstract In this paper, I introduce a novel methodology to conduct surveys. The priced survey methodology. Like standard surveys, priced surveys are easy to implement, and measure invisible assets such as feelings, happiness, knowledge, views, and attitudes on numerical scales. Unlike standard surveys, priced surveys allow to leverage decades of research on revealed preference and consumer demand in the analysis of invisible assets.
Keywords Revealed Preference, Invisible Assets, Survey, Priced Survey
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Abstract The paper provides an axiomatic characterization of a family of rank dependent weighted average utility criteria applicable to decisions under ignorance or objective ambiguity. A decision under ignorance is described by the finite set of its final consequences while a decision under objective ambiguity is described by a finite set of probability distributions over a set of final consequences. The criteria characterized are those that assign to every element in a set a weight that depends upon the rank of this element if it was available for sure (or non-ambiguously) and that compare sets on the basis of their weighted utility for some utility function. A specific subfamily of these criteria that requires the weights to be proportional to each other is also characterized.
Keywords Ignorance, Ambiguity, Ranking Sets, Axioms, Ranks, Weights, Utility
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Abstract This paper studies the transmission of a sovereign debt crisis in which a shift in default risk generates a recession and gives rise to a doom loop between sovereign distress and bank fragility with important amplification effects. The model is used to investigate the macroeconomic and welfare effects of altering debt maturity during the crisis. Short-term maturities alleviate the bankers' losses on long-term bonds and moderate the recession at the cost of higher levels of debt in the future. In contrast, long-term maturities are more effective to reduce the households' welfare losses as they lower default risk and distortionary taxes.
Keywords Debt Crisis, Sovereign Default Risk, Financial fragility, Maturity Dynamics
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Abstract In this paper, we investigate the impact of redistribution and polluting commodity taxation on inequality and pollution in a dynamic setting. We build a two-sector Ramsey model with a green and a polluting good. Households are heterogeneous, which allows for income inequality, and have a level of subsistence consumption for the polluting commodity, modeled by non-homothetic preferences. Increasing the tax rate has a mixed effect depend on the level of subsistence consumption. A low level allows to tackle both the pollution and inequality issues. Under a high level of it, pollution increases: if inequality can be reduced through redistribution, taxation does not allow to solve for environmental degradation. Looking at the stability properties of the economy, we find that the level of subsistence consumption and the externality matter. A high subsistence level of polluting consumption leads to instability or indeterminacy of the steady-state, while the environmental externality plays a stabilizing role in the economy. This leaves room for taxation and redistribution: increasing the tax rate and redistributing more towards workers play a key role in the occurrence of indeterminacy and instability.
Keywords Externalities, Heterogeneous agents, Inequality, Pollution, Redistribution, Taxation
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Abstract The effects of the COVID-19 pandemic led many governments to suspend their fiscal rules to gain additional fiscal space to mitigate the social and economic consequences of the health crisis. As a result, the return and subsequent compliance with fiscal rules have been compromised, and the opportunity to improve them and consider the new global macroeconomic conditions has emerged. Understanding what elements relate to increased compliance with the rules and what has worked and has not can shed light on upcoming reforms. This paper uses an empirical model to investigate Latin American countries' factors influencing numerical compliance with fiscal rules. We associate three groups of specific factors with a greater or lesser probability of compliance with the rule: the macroeconomic and political environment of the countries and the design features of the enforced rules. We find that only changes in the macroeconomic and political context are associated with higher levels of compliance. In contrast, the institutional design of the fiscal rules does not seem to play an essential role in the compliance outcome. This result suggests that adjustments in this direction are not decisive for rule compliance.
Keywords Compliance, Fiscal rules, Latin America
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Abstract A vast literature on gender wage gaps has examined the importance of selection into employment. However, most analyses have focused only on female labour force participation and gaps at the median. The Great Recession questions this approach both because of the major shift in male employment that it implied but also because women's decisions to participate seem to have been different along the distribution, particularly due to an "added worker effect". This paper uses the methodology proposed by Arellano and Bonhomme (2017) to estimate a quantile selection model over the period 2007-2018. Using a tax and benefit microsimulation model, I compute an instrument capturing the male selection induced by the crisis as well as female decisions: the potential out-of-work income. Since my instrument is crucially determined by the welfare state, I consider three countries with notably different benefit systems-the UK, France and Finland. My results imply different selection patterns across countries and a sizeable male selection in France and the UK. Correction for selection bias lowers the gender wage gap and, in most recent years, reveals an increasing shape of gender gap distribution with a substantial glass ceiling for the three countries.
Keywords Sticky floors, Glass ceilings, Selection, Quantiles, Wage inequality, Quantile selection model, Sample selection, Gender wage gap
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Abstract We use a distinctive methodology that leverages a fixed population of Twitter users located in France to gauge the mental health effects of repeated lockdown orders. To do so, we derive from our population a mental health indicator that measures the frequency of words expressing anger, anxiety and sadness. Our indicator did not reveal a statistically significant mental health response during the first lockdown, while the second lockdown triggered a sharp and persistent deterioration in all three emotions. Our estimates also show a more severe deterioration in mental health among women and younger users during the second lockdown. These results suggest that successive stay-at-home orders significantly worsen mental health across a large segment of the population. We also show that individuals who are closer to their social network were partially protected by this network during the first lockdown, but were no longer protected during the second, demonstrating the gravity of successive lockdowns for mental health.
Keywords Mental health, Twitter data, Well-being, Lockdown, COVID-19
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Abstract I study the impact of US allocation of family planning aid on other donors. Family planning provides representative insights into donor interactions. One donor, the US, dominates the sector but has changing policies on family planning due to domestic debates on abortion. Using the Mexico City Policy and exposure to this policy as an instrument, I find that other donors do not react to US policy changes in the short term, but two years later step in accordingly. This suggests that while some donors clearly intend to compensate for US policy, competition and herding behavior still operate; however, this may be mitigated in the short run.
Keywords Mexico City Policy, Donors coordination, Foreign aid, Family planning
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Abstract This paper analyses the impact of fiscal spending shocks in a dynamic, multi-country model with international production networks. The response of real gross domestic product to a fiscal spending shock can be decomposed into a direct effect, income effect and price effect. The direct effect depends only on input-output linkages, while the price effect is zero in the aggregate. We apply this decomposition to the Eurozone, and find that fiscal spillovers from Germany and the core Eurozone countries can be large, and within the range of empirical estimates. Without international production networks, spillovers would be significantly smaller. In an empirical application, using the decomposition, we find results strongly consistent with the model.
Keywords Nominal Rigidities, Eurozone, Spillovers, Fiscal policy, Production Network
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