Documents de travail
When estimated from survey data alone, the distribution of high incomes in a population may be misrepresented, as surveys typically provide detailed coverage of the lower part of the income distribution, but offer limited information on top incomes. Tax data, in contrast, better capture top incomes, but lack contextual information. To combine these data sources, Pareto models are often used to represent the upper tail of the income distribution. In this paper, we propose a Bayesian approach for this purpose, building on extreme value theory. Our method integrates a Pareto II tail with a semi-parametric model for the central part of the income distribution, and it selects the income threshold separating them endogenously. We incorporate external tax data through an informative prior on the Pareto II coefficient to complement survey micro-data. We find that Bayesian inference can yield a wide range of threshold estimates, which are sensitive to how the central part of the distribution is modelled. Applying our methodology to the EU-SILC micro-data set for 2008 and 2018, we find that using tax-data information from WID introduces no changes to inequality estimates for Nordic countries or The Netherlands, which rely on administrative registers for income data. However, tax data significantly revise survey-based inequality estimates in new EU member states.
In this paper, we present a critical raw materials index (CRMI) that represents the price dynamics of the raw materials required for the low-carbon transition. Using a unique market and trade dataset covering 29 critical raw materials from 2012 to 2023, we construct a weekly trade weighted price index following a robust methodological framework. The relevance of our index is demonstrated through a validation process including a plausibility analysis and a comparability analysis. In addition, a sensitivity analysis provides empirical evidence of the robustness of our index to alternative data treatment, weighting factors and weighting schemes. Our framework offers policymakers a useful price benchmark to track the underlying metal market dynamics required by the growing clean energy sectors.
Endogenous uncertainty acts as an aggregate-demand amplification mechanism of supply shocks. Using U.S. data, we first stress that taking into account time-varying macroeconomic uncertainty leads to a significantly stronger recession and less inflationary pressures, in response to a TFP shock. In addition, we show empirically that households’ misperception increases during recessions. To rationalize these findings, we build a noisy-information New- Keynesian model where the precision of signals increases with economic activity. Pro-cyclical precision of information gives rise to an amplified precautionary saving behavior. A fullfledged model parametrized by using consumer-based forecast errors generates a demandlike recession of supply shock.
Low fertility rates, mortality outstripping the birth rate and population contraction characterize a new demographic transition (the so-called "fifth stage"). This paper seeks to evaluate how this phenomenon has impacted the Japanese economic structure and overall productivity. We test two key mechanisms that have been at play since the mid-2000s: i) a growing complementarity between goods and services consumption, and ii) the substitution of older workers engaged in routine tasks with technological capital. According to Autor and Dorn’s (2013) model, this should promote the concentration of low-skilled workers in the service sector, and aggravate productivity gaps between industry and services. Using stochastic frontier models and EU-KLEMS data, we compute industry-by-industry TFP growth frontiers in order to check if theoretical predictions match with Japanese reality.
In the literature on secular stagnation, demographic aging is widely blamed for lowering the IS curve of aggregate demand and therefore the natural interest rate. However, very little is said about the impact of workforce aging on long-term aggregate supply, or so-called potential GDP. To fill this gap, this study delves into the effects of workforce aging on two key components of the remarkably sluggish potential GDP growth of developed countries: hours worked and labour productivity. First, using a novel macro-accounting decomposition of EU-KLEMS data, we find that old-labour input has the highest contribution to growth, through both increased hours worked and shifts in labour composition in the EU, US and Japan. Second, we use panel stochastic frontier models highlighting that, however, old workers have an adverse effect on labour productivity growth frontier—though increasing technical efficiency, i.e., reducing the distance to this frontier.
A considerable body of work has shown that motherhood is accompanied by a reduction in labor market participation and hours of market work, while more recent ndings indicate that women who earn more than their husbands tend to subsequently take actions that reduce their market income. Both patterns of behaviour have been interpreted as women trying to conform to child-rearing norms and to the prescription that the husband should be the main breadwinner. In this paper we use panel data for US couples to re-examine women's behaviour when they become mothers and when they are the main breadwinner. We start by asking whether the arrival of a child a ects women who are the main breadwinner and those who are not in the same way, and then turn to how mothers and childless women react when they are the main breadwinner. Our results are consistent with the breadwinner norm only a ecting mothers, suggesting that the salience of gender norms may depend on the household's context, notably on whether or not children are present. Concerning the arrival of a child, we nd that although the labor supply of women who earn more than their husbands initially responds to motherhood less than that of secondary earners, the two groups converge after 10 years. Moreover, women in the former category exhibit a disproportionately large increase in the share of housework they perform after becoming mothers. The latter results suggest that the presence of children pushes women to seek to compensate breaking a norm by adhering to another one.
I consider an electoral competition model where each candidate is associated with an exogenous initial position from which she can deviate to maximize her vote share, a strategy known as flip-flopping. Citizens have an intrinsic preference for consistent candidates, and abstain due to alienation, i.e. when their utility from their preferred candidate falls below a common exogenous threshold (termed the alienation threshold). I show how the alienation threshold shapes candidates’ flip-flopping strategy. When the alienation threshold is high, i.e. when citizens are reluctant to vote, there is no flip-flopping at equilibrium. When the alienation threshold is low, candidates flip-flop toward the center of the policy space. Surprisingly, I find a positive correlation between flip-flopping and voter turnout at equilibrium, despite voters’ preference for consistent candidates. Finally, I explore alternative models in which candidates’ objective function differs from vote share. I show that electoral competition can lead to polarization when candidates maximize their number of votes.
In developing countries, many policy interventions aim to enhance female entrepreneurship by giving access to cash inflows targeting women. However, important investment decisions are usually made at the household level and may be influenced by local cultural norms about female labour force participation. Using a standard collective household model, this paper studies spouses’ joint investment decisions. We show that the individual optimal investment levels are not necessarily aligned between spouses, though costly utility transfers can realign spouses’ incentives. The required transfer is increasing in the stringency of the gender norm against female labour participation, making investment potentially too costly. We test these predictions using two different empirical settings and strategies. First, we exploit original data from a field experiment in India, which gave access to new investment opportunities to women through microcredit. We find that treated women belonging to castes that are relatively more favourable to women investing are more likely to engage in home agricultural production and less likely to engage in casual low-wage jobs. Yet, they seem to enjoy lower utility levels in some dimensions such as health and freedom. To the contrary, we do not find any change in the occupation or independence of women belonging to castes that traditionally impose strong restrictions on women’s behaviour, suggesting that investment is then too costly. Second, we exploit India’s accession to the GATT in 2005 as a natural experiment and use Indian household surveys to study the effect of the termination of quotas imposed on textile exports, a female-dominated activity, on women’s well-being. We find that in districts that are more suitable for cotton growing, a feminine-oriented occupation, removing the quotas increases specialization in garments and decreases health indicators for women belonging to castes that are relatively more in favour of women working. Those empirical findings are consistent with our model, showing that, in the presence of gender norms, female entrepreneurship entails intra-household transfers that impact female well-being and can eventually prevent investment.
Motivated by recent examples, this study proposes a dynamic multistage optimal control problem to explain the instability of International Fishery Agreements (IFAs). We model two heterogeneous countries that exploit shared fishery resources, and investigate the conditions that lead to a shift from cooperation to competition. We assume that countries differ in their time preferences, initially behave as if the coalition will last indefinitely, use fixed sharing rules during cooperation, and adopt Markovian strategies after withdrawal. Our findings reveal that, for any sharing rule, coalitions of heterogeneous players always break down in finite time. We use the dynamic Shapley Value to decompose the coalition’s aggregate worth over time, thereby eliminating the incentive to leave the agreement. Additionally, we show that a fishing moratorium policy accelerates the recovery of near-extinct fish stocks; however, fishing should resume under a cooperative regime once sustainable levels are achieved.
Public pension schemes serve as mechanisms for inter-temporal income smoothing and within-cohort redistribution. This paper examines the influence of income and lifespan inequalities on the structure of a democratically chosen tier-pension scheme. We use a probabilistic voting model where agents vote on the size and the degree of redistribution (i.e. the Beveridgean factor) of the pension scheme and can supplement it with voluntary contributions. Our analysis reveals that when all agents can supplement the public scheme with private contributions, their voting behavior depends solely on the share of total income redistributed through the pension system, referred to as the redistributive power of the pension. Income inequality positively correlates with the equilibrium redistributive power, while lifespan inequality exhibits the opposite effect, leading to a resource-time trade-off; particularly when both inequality measures are correlated. In scenarios where low earners are hand-to-mouth and unable to make voluntary contributions, the effects on pension size (through mandatory contributions) and degree of redistribution become disentangled. Income inequality diminishes pension size while augmenting redistribution, whereas lifespan inequality increases pension size while reducing redistribution. We provide empirical evidence from OECD countries supporting these theoretical findings and calibrate the model on French data to quantify the effects.
This paper provides a macroeconomic explanation for the United States suffering from a health disadvantage relative to other rich European countries despite spending much more on health care. We introduce health capital à la Grossman in the neoclassical growth model and assume that its rate of depreciation increases with labor supply. The steady-state share of GDP devoted to health expenditure increases with labor supply, but the relationship between the health capital stock and the number of hours worked is hump-shaped, meaning that there is a country-specific health-maximizing level. We calibrate the model to the United States and assess how much of this ‘American Health Puzzle’ can be explained by the greater number of hours American workers work. Higher labor supply in the US accounts for 2 to 3 percentage points in extra health expenditure as a share of GDP and between 10% and one-third of the American health disadvantage.
This paper examines an endogenous growth model that allows us to consider the dynamics and sustainability of debt, pollution, and growth. Debt evolves according to the financing adaptation and mitigation efforts and to the damages caused by pollution. Three types of features are important for our analysis: The technology through the negative effect of pollution on TFP; The fiscal policy; The initial level of pollution and debt with respect to capital. Indeed, if the initial level of pollution is too high, the economy is relegated to an endogenous tipping zone where pollution perpetually increases relatively to capital. If the effect of pollution on TFP is too strong, the economy cannot converge to a stable and sustainable long-run balanced growth path. If the income tax rates are high enough, we can converge to a stable balanced growth path with low pollution and high debt relative to capital. This sustainable equilibrium can even be characterized by higher growth and welfare. This last result underlines the role that tax policy can play in reconciling debt and environmental sustainability.
This paper assesses whether and how setting up a sovereign wealth fund has a buffer effect against currency crises. Using an innovative dynamic logit
panel model framework and a unique dataset covering 34 emerging countries over the period 1989–2019, we empirically show that sovereign wealth funds
reduce the occurrence of currency crises. This result is robust to different econometric specifications, alternative definitions of sovereign wealth funds, controlling for currency crisis risk factors, and income level sampling. Our findings have important implications for financial stability and for policymakers, who could further exploit the potential of sovereign wealth funds to better manage foreign exchange risks.
We use an overlapping generations model with physical and human capital, and 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 work experience and investment in both types of capital. We show that young adults postpone parenthood above a certain wage threshold and that late fertility increases with work experience. The long run trend is either to converge to a low productivity equilibrium, involving high early fertility, investment in physical capital and relatively low income, or to a high productivity equilibrium, where households postpone parenthood to invest in their human capital and work experience, with higher late fertility and higher levels of income. A convergence to the latter state would explain the postponement of parenthood and the mitigation or slight reversal of fertility decrease in some European countries in recent decades.
We analyze the impact of the COVID-19 outbreak on classroom peer relationships using a unique field dataset collected from 3rd and 4th-grade students in Turkey. Using data from both pre-pandemic and pandemic cohorts, we find significant changes in social interactions among the pandemic cohort after prolonged school closures. We observe varying effects contingent upon the nature of peer relationships. While friendship relationships deteriorated, some facets of academic support relationships among classmates display enhancement. However, this progress is exclusively observed among native students, as opposed to refugees. Additionally, we uncover significant improvements in inter-ethnicity and inter-gender relationships in classrooms after COVID-19.
Data on EU economies show no correlation between low-skilled immigration and the skill premium. We rationalise this evidence in a model where firms face search and screening costs. Low-skilled immigration diminishes the relative benefit of screening skilled workers, leading to a decline in their relative ability within the firm and an undetermined impact on the skill premium. On region-sector and firm level data from 2008 to 2013, we find that low-skilled immigration in Italian regions has reduced skill intensity without affecting the skill premium. Using proxies for workers’ ability and screening activity, we provide supporting evidence for the theorised mechanisms.
In this paper, we bring fresh evidence on the city size distribution from a ‘lab’ represented by the region of Bukhara observed in the 9th CE. At that time this region was homogeneous in all respects (technology, amenities, climate, culture, language, religion, etc.) and yet cities had different sizes. We rationalize the city size distribution of this economy in a simple general equilibrium spatial model of which we estimate the parameters using the method of moments. The estimated model predicts very well the 9th century city size distribution. Spatial centrality is the major determinant of city size. The silk road contributes to explain what centrality cannot. We find little evidence of persistence of the urban structure when comparing the 9th and the 21st century. We find instead that centroid of the region has moved towards the economic core of the Uzbek economy.
The strongest empirical regularity about the exchange rate pass-through is that it is incomplete. We provide a new theoretical explanation based on the unwillingness of some firms to price discriminate between markets. These firms set a single price to all destinations and adjust it when the exchange rate shock occurs. But the adjustment is not necessarily proportional since the change in the single price affects revenues in all markets. The single price strategy also implies a “pass-around” effect: The exchange rate shock has repercussions of price changes to all export markets. The analysis of price changes operated by French exporters in different markets after the EUR/CHF shock of 2015 provides evidence in favour of our theoretical explanation.
Across countries, women and men allocate time differently between market work, domestic services, and care work. In this paper, we document the gender division of work,
drawing on a new harmonized data set that provides us with high-quality time use data for 50 countries spanning the global income distribution. A striking feature of the data is the wide dispersion across countries at similar income levels. We use these data to motivate a macroeconomic model of household time use in which country-level allocations are shaped by wages and a set of “wedges” that resemble productivity, preferences, and disutilities. Taking the model to country-level observations, we find that a wedge related to the disutility of market work for women plays a crucial role in generating the observed dispersion of outcomes, particularly for middle-income countries. Variation in the division of non-market work is principally shaped by a wedge indicating greater disutility for men, which is especially large in some low- and middle-income countries.
Dynasties constitute a visible sign of intergenerational persistence and raise questions about the legitimacy of the ruling elite. This paper uses data on graduates of elite colleges to explore the influence of political and business dynasties in France. I link nominative data on 103,309 graduates of 12 French Grandes ´ Ecoles born between 1931 and 1975 to their professional careers as politicians with national-level mandates or as board members of French firms. Identifying lineage through surnames, I find that sons of political and business leaders were substantially more likely than their graduate peers to pursue elite careers themselves, revealing a social gradient in returns to elite education. Political dynasties were particularly sizeable, although progressively declining. These dynasties also affected the composition of the French elite: fewer dynastical board members were graduates of top colleges than their first-generation colleagues. Yet, they were propelled much younger into top business and political positions.
The Airplane Carbon Barter (ACB) mechanism is a sort of Personal Carbon Trading (PCT) system for allocating emissions allowances to French air travelers, combined with a barter mechanism at the shadow carbon price of €100 in the first year, and following the price growth trajectory defined in the Quinet II report for the following years. Based on the latest available data, each French citizen would have an emission allowance of 0.4 tons of carbon in the first year. The modus operandi is similar to a Covid-type app, with a QR code required at check-in by airlines to obtain a boarding pass. The personal carbon account is reserved for French nationals or residents of France. We estimate that the TCA could lead to a 6% reduction in total emissions in the first year, for a market exchange value of around €1.5 billion. The TCA is also a transfer mechanism that redistributes purchasing power essentially from the last decile to the first decile, which could increase its purchasing power by 0.5%. We also propose a variant of the ACB mechanism to make it consistent with the EU-ETS.
In this paper, we provide a simple framework to show the existence of stationary bubbles on dividend-yielding financial assets. These bubbles are compatible with a positive stationary fundamental value, rather than requiring its collapse in the long run. This result is obtained in an exchange overlapping generations economy with vintage financial assets that depreciate over time. New assets are introduced in each period, ensuring a constant aggregate supply of financial assets. Depreciation introduces a gap between the return of bubbles and the rate at which the dividends are discounted. Because the return of bubble can be lower or equal to the growth rate, we can have stationary equilibria with both a positive bubble and a positive fundamental value. Finally, our framework also allows us to discuss the role of the substitutability between financial assets on the level of bubbles and fundamental values.
This paper develops an overlapping generations model that links a public health system to a pay-as-you-go (PAYG) pension system. It relies on two assumptions. First, the health system directly finances curative health spending on the elderly. Second, public pensions partially depend on health status by introducing a component indexed to society's average level of old-age disability. Reducing the average disability rate in the economy then lowers pension benefits as the need to finance long-term care services also drops. We study the effects of introducing such a 'comprehensive' Social Security system on individual decisions, capital accumulation, and welfare. We first show that health investments can boost savings and capital accumulation under certain conditions. Second, if individuals are sufficiently concerned with their health when old, it is optimal to introduce a health-dependent pension system, as this will raise social welfare compared to a system where pensions are not tied to the society's average level of old-age disability. Our analysis thus highlights an important policy recommendation: making PAYG pension schemes partially health-dependent can be beneficial to society.
We present an overview of selected contributions of the Journal of Mathematical Economics' authors in the last half century. We start with the classical optimal growth theory within a benchmark multisector model and outline the successive developments in the analysis of this model, including the turnpike theory. Different refinements of the benchmark are considered along the way. We after survey the abundant literature on endogenous fluctuations in two-sector models. We conclude with two strong trends in the recent growth literature: green growth and infinite-dimensional growth models.
This paper derives closed-form solutions for a strategic, simultaneous harvesting in a predator-prey system. Using a parametric constraint, it establishes the existence and uniqueness of a linear feedback-Nash equilibrium involving two specialized fleets and allow for continuous time results for a class of payoffs that have constant elasticity of the marginal utility. Theses results contribute to the scarce literature on analytically tractable predator-prey models with endogenous harvesting. A discussion based on industry size effects is provided to highlight the role played by biological versus strategic interactions in the multi-species context.
The assessment of binary classifier performance traditionally centers on discriminative ability using metrics, such as accuracy. However, these metrics often disregard the model’s inherent uncertainty, especially when dealing with sensitive decision-making domains, such as finance or healthcare. Given that model-predicted scores are commonly seen as event probabilities, calibration is crucial for accurate interpretation. In our study, we analyze the sensitivity of various calibration measures to score distortions and introduce a refined metric, the Local Calibration Score. Comparing recalibration methods, we advocate for local regressions, emphasizing their dual role as effective recalibration tools and facilitators of smoother visualizations. We apply these findings in a real-world scenario using Random Forest classifier and regressor to predict credit default while simultaneously measuring calibration during performance optimization.
Can forced sterilization programs targeting men lead to male-perpetrated violence? This paper investigates the impact of a government-mandated male sterilization program introduced in India on the rise of violence. Launched in April 1976, the program predominantly targeted men and saw heterogeneous implementation across India over 10 months. Using various household surveys and newly digitized historical data sources, we study whether the program triggered unintended effects on violence, measured by crime rates. Using a difference-indifferences strategy by exploiting geographical variation in coercion intensity, we find that an increase in exposure to the program led to an increase in violent crime rates of 7% for the average district, which persisted over time. Violent crimes against women primarily drive the increase in crime rates, as rapes are increasing by 22% for the average district. We find that the program was ineffective in reducing fertility, so we hypothesize that a forced sterilization program targeting men may increase violence against women through two main channels: the program inducing trauma and impacting perceptions of masculinity. In line with those channels, we see that districts with high coercion intensity correlate with more harmful gender norms: higher levels and acceptance of Intimate Partner Violence, lower bargaining power of women and lower contraception adoption.
This paper investigates the dynamic effects of weather shocks on monthly agricultural production in Peru, using a Local Projection framework. An adverse weather shock, measured by an excess of heat or rain, always generates a delayed negative downturn in agricultural production, but its magnitude and duration depend on several factors, such as the type of crop concerned or the timing at which it occurs. On average, a weather shock –a temperature shock– can cause a monthly decline of 5% in agricultural production for up to four consecutive months. The response is time-dependent: shocks occurring during the growing season exhibit a much larger response. At the macroeconomic level, weather shocks are recessionary and entail a decline in inflation, agricultural production, exports, exchange rate and GDP.
This paper shows how to recover behavioral biases from revealed preference ranking implied by choices. The approach formalizes and unifies well-known behavioral models, including salience thinking, inattention, and logarithmic perception, thereby accounting for many well-documented choice puzzles. I show that this approach provides a way to filter out choice data from behavioral biases explaining rationality breaches before fitting parametric utility models. The approach is applied to workhorse data sets of the literature on choice under risk and scanner consumer choices.