Documents de travail

Medium term endogenous fluctuations in three-sector optimal growth models
Kazuo Nishimura
Florian Pelgrin
Alain Venditti
Following the recent contribution of Beaudry et al. [8], we exploit a three-sector optimal growth model without frictions to provide new insights regarding the emergence of endogenous medium-term fluctuations. Notably, our 3-sector model shows that matching the empirical evidence critically depends on agents' preferences, particularly the consumption of a bundle of (at least) two final goods. Endogenous fluctuations are therefore likely to occur through both relative inter-sector differences in capital intensity and intertemporal consumption allocations based on substitution effects between the two final consumed goods. We thoroughly characterize the economy's dynamics and establish the existence of clear conditions related to (Hopf) bifurcation values, as well as closely examining the theoretical periodicity of the corresponding limit cycles. Using a calibration of the US economy, our model is able to reproduce the observed peak range of spectral density at around 8 to 10 years of the cyclical component of gross domestic product, gross private investment, personal consumption expenditures, and of the corresponding price deflator series. Furthermore, such limit cycles are generated under very plausible technological parameters and estimates of the elasticities of intertemporal substitution.
Mots clés: three-sector optimal growth models; mid-term fluctuations; Hopf bifurcation; endogenous cycle; periodicity
Téléchargement Icône PDF wp_2022_-_nr_35.pdf (2.56 Mo)
Expectations, self-fulfilling prophecies and the business cycle
Frédéric Dufourt
Kazuo Nishimura
Alain Venditti

Macroeconomic models in which exogenous, self-fulfilling changes in expectations play a significant role in output fluctuations are often discarded on two claims: they require implausible calibrations of structural parameters and they are enable to account for several empirical features associated with demand shocks. We show that these claims are only valid to the extent that they are applied to one-sector models. In contrast, we prove that two-sector models allow the existence of self-fulfilling prophecies for a large set of empirically realistic values for all the structural parameters, and that a two-sector model submitted to sunspot shocks can account not only for all the standard stylized facts associated with demand shocks, but also for other dimensions of the business cycle that standard RBC-type models cannot explain.

Mots clés: indeterminacy, one and two-sector models, endogenous labor supply, income e ect, productive externalities, permanent and transitory shocks
Téléchargement Icône PDF wp_2022_-_nr_34.pdf (1.37 Mo)
Do people share opportunities?
Mohamed Belhaj
Frédéric Deroïan
Mathieu Faure

A set of agents is aware of the existence of an economic opportunity, and compete for the associated prize. We study incentives to communicate about the existence of this economic opportunity to uninformed agents when the winner of the prize shares it with others, through some exogenous sharing rule. Communicating about the opportunity has two conflicting effects: it increases competition, but it can also increase the likelihood of receiving a large share of the prize. We find that, for any sharing rule, there is a minimum equilibrium, which Pareto dominates all other equilibria. We also find that under bilaterally symmetric sharing, more sharing generates more communication. We then discuss these results along several extensions.

Mots clés: rival opportunity; sharing network; communication; investment
Téléchargement Icône PDF wp_2022_-_nr_33.pdf (815.76 Ko)
Mineral resources and the salience of ethnic identities
Nicolas Berman
Mathieu Couttenier
Victoire Girard

This paper shows how ethnic identities may become more salient due to natural resources extraction. We combine individual data on the strength of ethnic-relative to national-identities with geo-localized information on the contours of ethnic homelands and on the timing and location of mineral resources exploitation in 25 African countries, from 2005 to 2015. Our strategy takes advantage of several dimensions of exposure to resources exploitation: time, spatial proximity, and ethnic proximity. We find that the strength of an ethnic group identity increases when mineral resource exploitation in that group's historical homeland intensifies. We argue that this result is at least partly rooted in feelings of relative deprivation associated with the exploitation of the resources. We show that such exploitation has limited positive economic spillovers, especially for members of the indigenous ethnic group; and that the link between mineral resources and the salience of ethnic identities is reinforced among members of powerless ethnic groups, and groups with strong baseline identity feelings or living in poorer areas, or areas with a history of conflict. Put together, these finding suggest a new dimension of the natural resource curse: the fragmentation of identities, between ethnic groups and nations.

Mots clés: identity, ethnicity, natural resources
Téléchargement Icône PDF wp_2022_-_nr_32.pdf (1.89 Mo)
Measurement of Social Welfare and Inequality in Presence of Partially-ordered Variables
Mohammad Abu-Zaineh
Sameera Awawda
We address the question of the measurement of social welfare and inequalities in the context of partially-ordered health variables. We propose a general framework based on the assumption that the distribution of well-being states forms an m-dimensional Boolean lattice. To this end, the distribution of well-being states is constructed based on the prevalence of a finite number of illnesses where each state represents the number of illnesses an individual may suffer from. The implementation of the framework involves breaking down the Boolean lattice into a set of linear extensions where all health states become fully ordered. The linear extensions account for all possible ordering of the health states based on the depth of health problems (i.e., the severity of health conditions). Having constructed these linear extensions, we then proceed on ranking distributions in terms of welfare by applying appropriate dominance criteria and employ aggregate metrics to provide a numerical representation of the social welfare and inequality associated with each distribution. An illustrative application of the methodology is provided.
Mots clés: boolean lattice, Hammond dominance, ordinal inequality, partially-ordered variables, stochastic dominance, welfare function
Téléchargement Icône PDF wp_2022_-_nr_31.pdf (752.54 Ko)
Does Pay Inequality Affect Worker Effort? An Assessment of Existing Laboratory Designs
Marco Fongoni
This paper develops a theoretical framework to think about employees' effort choices, and applies this framework to assess the ability of existing laboratory designs to identify the effect of pay inequality on worker effort. The analysis shows that failure to control for a number of confounds-such as reciprocity towards the employer in multilateral gift-exchange games (vertical fairness), or the incentive to increase effort when feeling underpaid under piece rates (income targeting)-may lead to inaccurate interpretation of evidence of treatment effects. In light of these findings, the paper provides a set of recommendations on how to improve identification in the design of laboratory experiments in the future.
Mots clés: pay inequality; effort; laboratory experiments; reference dependence; fairness
Téléchargement Icône PDF wp_2022_-_nr_30.pdf (552.21 Ko)
Education Politics, Schooling Choice and Public School Quality: The Impact of Income Polarisation
Majda Benzidia
Michel Lubrano
Paolo Melindi-Ghidi

What is the role of income polarisation for explaining differentials in public funding of education? To answer this question, we provide a
new theoretical modelling for the income distribution that can directly monitor income polarisation. It leads to a new income polarisation
index where the middle class is represented by an interval. We implement this distribution in a political economy model with endogenous
fertility and public/private educational choices. We show that when households vote on public schooling expenditures, polarisation matters
for explaining disparities in public education funding across communities. Using micro-data covering two groups of school districts, we
find that both income polarisation and income inequality affect public school funding with opposite signs whether there exist a Tax Limitation Expenditure (TLE) or not.

Mots clés: education politics, schooling choice, income polarisation, probabilistic voting, Bayesian inference
Téléchargement Icône PDF wp_2022_-_nr_29.pdf (367.6 Ko)
Preference for Redistribution, Poverty Perception among Chinese Migrants
Zhou Xun
Michel Lubrano

We analyse preference for redistribution and the perceived role of “circumstances” and “effort” in China within the framework of the belief in a just world hypothesis (BJW) using the 2006 CGSS. As this very rich data base does not include Dalbert questionnaire on GBJW and PBJW, we have completed the CGSS by a survey led during the COVID episode in Shanghai and Nanjing. Thanks to this new survey, we could identify the components of PBJW and GBJW inside the traditional opinion variables about the causes of poverty and the desire for redistribution of the CGSS. Using a tri-variate ordered probit model for explaining opinions, we show how treating the decision to migrate as an endogenous variable modifies the usual results of the literature concerning migrants and the effects of the Hukou status. The correlations found validate the distinction between personal BJW and general BJW, a distinction that has important policy implications for the status of migrants.

Mots clés: preference for redistribution, inequality perceptions, belief in a just world, Hukou and migrant workers, conditional correlations, binary endogenous, GHK simulator, marginal effects
Téléchargement Icône PDF wp_2022_-_nr_28.pdf (412.48 Ko)
Bayesian inference for non-anonymous Growth Incidence Curves using Bernstein polynomials: an application to academic wage dynamics
Edwin Fourrier-Nicolai
Michel Lubrano
This paper examines the question of non-anonymous Growth Incidence Curves (na-GIC) from a Bayesian inferential point of view. Building on the notion of conditional quantiles of Barnett (1976), we show that removing the anonymity axiom leads to a non-parametric inference problem. From a Bayesian point of view, an approach using Bernstein polynomials provides a simple solution and immediate confidence intervals, tests and a way to compare two na-GIC. The paper illustrates the approach to the question of academic wage formation and tries to shed some light on wether academic recruitment leads to a super stars phenomenon, that is a large increase of top wages, or not. Equipped with Bayesian na-GIC's, we show that wages at Michigan State University experienced a top compression leading to a shrinking of the wage scale. We finally analyse gender and ethnic questions in order to detect if the implemented pro-active policies were efficient.
Mots clés: conditional quantiles, non-anonymous GIC, Bayesian inference, wage formation, gender policy, ethnic discrimination
Téléchargement Icône PDF wp_2022_-_nr_27.pdf (673.87 Ko)
Hours Inequality
Daniele Checchi
Cecilia García-Peñalosa
Lara Vivian
The vast literature on earnings inequality has so far largely ignored the role played by hours of work. This paper argues that in order to understand earnings dispersion we need to consider not only the dispersion of hourly wages but also inequality in hours worked as well as the correlation between the two. We use data for the US, the UK, France, and Germany over the period 1991-2016 to examine the evolution of inequality in hours worked and of the correlation between individual hours and wages, assessing their contribution to recent trends in earnings inequality. We find that, other than in the US, hours inequality is an important force, and that it has increased over the period under analysis. The elasticity of hours with respect to wages has also played a key role, notably in the two continental economies. This elasticity used to be negative, thus tending to reduce inequality as those with lower hourly wages worked longer hours, but has increased over the past decades, becoming nil or positive, and hence eroding an important equalizing force. The paper examines which are the potential factors behind the change in the elasticity, notably the role of trade and labour market institutions
Mots clés: earnings inequality, working hours, hours elasticity
Téléchargement Icône PDF wp_2022_-_nr_26.pdf (835.15 Ko)
Postponement, career development and fertility rebound
Johanna Etner
Natacha Raffin
Thomas Seegmuller
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.
Mots clés: fertility, postponement, reproductive health, overlapping generations
Téléchargement Icône PDF wp_2022_-_nr_25.pdf (785.66 Ko)
The Priced Survey Methodology
Avner Seror

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.

Mots clés: revealed preference, invisible assets, survey, priced survey
Téléchargement Icône PDF wp_2022_-_nr_24.pdf (579.27 Ko)
Rank Dependent Weighted Average Utility Models for Decision Making under Ignorance or Objective Ambiguity
Nicolas Gravel
Thierry Marchant

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.

Mots clés: ignorance, ambiguity, ranking sets, axioms, ranks, weights, utility
Téléchargement Icône PDF wp_2022_-_nr_23.pdf (557.04 Ko)
Sovereign Risk, Financial Fragility and Debt Maturity
Dallal Bendjellal

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.

Mots clés: debt crisis, sovereign default risk, financial fragility, maturity dynamics
Téléchargement Icône PDF wp_2022_-_nr_22.pdf (850.11 Ko)
Pollution versus Inequality: Tradeoffs for Fiscal Policy
Camille Hainnaux
Thomas Seegmuller

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.

Mots clés: externalities; heterogeneous agents; inequality; pollution; redistribution; taxation
Téléchargement Icône PDF wp_2022_-_nr_21.pdf (661.07 Ko)
Determinants of compliance with fiscal rules: misplaced efforts or hidden motivations?
Carolina Ulloa-Suárez

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.

Mots clés: fiscal rules, Latin America, Compliance
Téléchargement Icône PDF wp_2022_-_nr_20.pdf (535.29 Ko)
The multiple dimensions of selection into employment
Kenza Elass

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.

Mots clés: gender wage gap, sample selection, quantile selection model, wage inequality, quantiles, selection, glass ceilings, sticky floors
Téléchargement Icône PDF wp_2022_-_nr_19.pdf (1.86 Mo)
Mental health effects of COVID-19 lockdowns: a Twitter-based analysis
Sara Colella
Frédéric Dufourt
Vincent A. Hildebrand
Rémi Vivès

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.

Mots clés: COVID-19, lockdown, mental health, Twitter data, well-being
Téléchargement Icône PDF wp_2022_-_nr_18.pdf (2.31 Mo), Icône PDF wp_2022_-_nr_18_v2.pdf (3.68 Mo)
Filling the "decency gap"? Donors' reaction to the US policy on international family planning aid
Nathalie Ferrière

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.

Mots clés: Family planning, Foreign Aid, Mexico City Policy, Donor coordination
Téléchargement Icône PDF wp_2022_-_nr_17.pdf (473.39 Ko), Icône PDF wp_2022_-_nr_17_v2.pdf (510.17 Ko)
Production Networks and International Fiscal Spillovers
Michael B. Devereux
Karine Gente
Changhua Yu

This paper analyzes the impact of fiscal spending shocks in a dynamic, multi-country model with international production networks. We first derive a decomposition of the effects of a fiscal spending shock on the GDP of any country. This decomposition defines the response as the sum of a Direct, Income, and Price effect. The Direct Effect depends only on structural parameters and is independent of assumptions about monetary policy, wage setting, or capital mobility, while the Price Effect is zero in the aggregate across countries. We apply this decomposition to an analysis of fiscal spillovers in the Eurozone, using the production network structure from the World Input Output Database (WIOD). We find that fiscal spillovers from Germany and some other large Eurozone countries may be large, and within the range of empirical estimates. Without international production network linkages, spillovers would be only a third as large as predicted by the baseline model. Finally, we explore the diffusion of identified government spending shocks at the sectoral level, both within and across countries, using an empirical measure of the response, based on the theoretical decomposition. The empirical estimates are strongly consistent with the theoretical model.

Mots clés: production network, fiscal policy, spillovers, Eurozone, nominal rigidities
Téléchargement Icône PDF wp_2022_-_nr_16.pdf (1.15 Mo)
Emissions pricing instruments with intermittent renewables: second-best policy
Nandeeta Neerunjun

I analyze emissions pricing to support the integration of a renewable resource into an electricity mix composed of an emissions-intensive technology. I consider the intermittent nature of the resource such as wind energy and incremental externalities that become severe for high emissions levels. I show that an emissions tax is inefficient when consumers are on flat-rate electricity tariffs and cannot adapt their consumption to varying production. The tax is inefficient even with flexibility in the markets when consumers are on varying tariffs. The renewable resource induces variability in fossil-fueled electricity production and associated marginal damage that does not match a predetermined tax. I study an Emissions Trading Scheme that provides flexibility at the policy level. Emissions permits are traded at varying prices. Since the emissions cap must still be predetermined, I show that it leads to inefficient permits prices that do not match the marginal damages. I also find that the two emissions pricing instruments are not implemented equivalently since the tax differs from the prices of permits.

Mots clés: electricity, renewables, intermittency, emissions tax, Emissions Trading Scheme
Téléchargement Icône PDF wp_2022_-_nr_15.pdf (939.51 Ko)
Quantile Regression Analysis of Censored Data with Selection An Application to Willingness-to-Pay Data
Victor Champonnois
Olivier Chanel
Costin Protopopescu
Recurring statistical issues such as censoring, selection and heteroskedasticity often impact the analysis of observational data. We investigate the potential advantages of models based on quantile regression (QR) for addressing these issues, with a particular focus on willingness to pay-type data. We gather analytical arguments showing how QR can tackle these issues. We show by means of a Monte Carlo experiment how censored QR (CQR)-based methods perform compared to standard models. We empirically contrast four models on flood risk data. Our findings confirm that selection-censored models based on QR are useful for simultaneously tackling issues often present in observational data.
Mots clés: Censored Quantile Regression; Contingent Valuation; Flood; Monte Carlo Experiment; Quantile Regression; Selection Model; Willingness to Pay
Téléchargement Icône PDF wp_2022_-_nr_14.pdf (833.71 Ko)
Rational housing demand bubble
Lise Clain-Chamosset-Yvrard
Xavier Raurich
Thomas Seegmuller

We provide a unified framework with demand for housing over the life cycle and financial frictions to analyze the existence and macroeconomic effects of rational housing bubbles. We distinguish a housing price bubble, defined as the difference between the housing market price and its fundamental value, from a housing demand bubble, which corresponds to a situation where a pure speculative housing demand exists. In an overlapping generation exchange economy, we show that no housing price bubble occurs. However, a housing demand bubble may occur, generating a boom in housing prices and a drop in the interest rate, when households face a binding borrowing constraint. Multiplicity of steady states and endogenous fluctuations can occur when credit market imperfections are moderate. These fluctuations involve transitions between equilibria with and without a housing demand bubble that generate large fluctuations in housing prices consistent with observed patterns. We finally extend the basic framework to a production economy and we show that a housing demand bubble increases the housing price, housing price to income ratio and economic growth.

Mots clés: Bubble; Housing; Self-ful lling uctuations
Téléchargement Icône PDF wp_2022_-_nr_13.pdf (870.41 Ko)
Cross-Sector Interactions in Western Europe: Lessons From Trade Credit Data
Melina London

Large-scale analyses to map interactions between financial health at the sectoral level are still scarce. To fill the gap, in this paper, I map a network of predictive relationships across the financial health of several sectors. I provide a new advanced indicator to track propagation of financial distress across industries and countries on a monthly basis. I use defaults on trade credit as a measure of firms’ worsening financial conditions in a sector. To control for omitted-variable bias, I apply a high- dimensional VAR analysis, and isolate direct cross-sector causalities `a la Granger from common exposure to macroeconomic shocks or to third-sector shock. I show that monitoring some key sectors–among which construction, wholesale and retail, or the automotive sector–can improve the detection of financial distress in other sectors. Finally, I find that those financial predictive relationships correlates with the input-output structure in the considered economies. Such structure of financial interactions reflect the propagation of financial distress along the supply chain.

Mots clés: trade credit; network; cross-sector financial interdependencies
Téléchargement Icône PDF wp_2022_-_nr_12.pdf (1.1 Mo)
Under-Reporting of Firm Size Around Size-Dependent Regulation Thresholds: Evidence from France
Philippe Askenazy
Thomas Breda
Vladimir Pecheu

The existence of a peak at 49 employees in the firm size distribution in France, followed by a permanent decrease in the number of firms has been the starting point of political discourses and academic studies on the cost of size-dependent regulations at 50-employee. These features of the distribution are visible when firm size is declared by employers in fiscal data but not when it is reconstructed from individual-level social security data. This working paper explores these differences both from statistical and institutional viewpoints. It provides evidence showing that a large proportion of employers manipulate the firm size they declare in their fiscal documents. This manipulation generates the particular shape of the size distribution in the fiscal data. We discuss the rationale for such behavior: the key point is that the under-declaration in fiscal data is not subject to substantial sanctions and it can allow firms not to comply with the labor law. Event studies and comparisons of firms below and above the 50-employee threshold suggest that this threshold may only have limited effects on firm performance or growth potential. Consequently the welfare costs of the regulations at 50-employee might be smaller than what was found by some of the studies that assume a perfect compliance with the law.

Mots clés: regulations, firm size, firm dynamics, economic cost, non-compliance
Téléchargement Icône PDF wp_2022_-_nr_11.pdf (1.32 Mo)
Correcting the Reproduction Number for Time-Varying Tests: a Proposal and an Application to COVID-19 in France
Christelle Baunez
Michaël Degoulet
Stéphane Luchini
Matteo L. Pintus
Patrick A. Pintus
Miriam Teschl

We provide a novel way to correct the effective reproduction number for the time-varying amount of tests, using the acceleration index (Baunez et al., 2021) as a simple measure of viral spread dynamics. Not correcting results in the reproduction number being a biased estimate of viral acceleration and we provide a formal decomposition of the resulting bias, involving the useful notions of test and infectivity intensities. When applied to French data for the COVID-19 pandemic (May 13, 2020 - October 26, 2022), our decomposition shows that the reproduction number, when considered alone, characteristically underestimates the resurgence of the pandemic, compared to the acceleration index which accounts for the time-varying volume of tests. Because the acceleration index aggregates all relevant information and captures in real time the sizable time variation featured by viral circulation, it is a more parsimonious indicator to track the dynamics of an infectious disease outbreak in real time, compared to the equivalent alternative which would combine the reproduction number with the test and infectivity intensities.

Mots clés: COVID-19; reproduction number; testing; acceleration index; real-time analysis; France
Téléchargement Icône PDF wp_2022_-_nr_10.pdf (1.99 Mo), Icône PDF wp_2022_-_nr_10_v2.pdf (2.39 Mo)
The Academic Market and the Rise of Universities in Medieval and Early Modern Europe (1000-1800)
David de la Croix
Frédéric Docquier
Alice Fabre
Robert Stelter

We argue that market forces shaped the geographic distribution of upper-tail human capital across Europe during the Middle Ages, and contributed to bolstering universities at the dawn of the Humanistic and Scienti c Revolutions. We build a unique database of thousands of scholars from university sources covering all of Europe, construct an index of their ability, and map the academic market in the medieval and early modern periods. We show that scholars tended to concentrate in the best universities (agglomeration), that better scholars were more sensitive to the quality of the university (positive sorting) and migrated over greater distances (positive selection). Agglomeration, selection and sorting patterns testify to an integrated academic market, made possible by the use of a common language (Latin).

Mots clés: upper-tail human capital, universities, discrete choice model, scholars, sublications, agglomeration
Téléchargement Icône PDF wp_2022_-_nr_09.pdf (11.11 Mo)
The Inverted Leading Indicator Property and Redistribution Effect of the Interest Rate
Patrick A. Pintus
Yi Wen
Xiaochuan Xing

The interest rate at which US firms borrow funds has two features: (i) it moves in a countercyclical fashion and (ii) it is an inverted leading indicator of real economic activity: low interest rates today forecast future booms in GDP, consumption, investment, and employment. We show that a Kiyotaki-Moore model accounts for both properties when interest-rate movements are driven, in a significant way, by self-fulfilling belief shocks that redistribute income away from lenders and to borrowers during booms. The credit-based nature of such self-fulfilling equilibria is shown to be essential: the dynamic correlation between current loanable funds rate and future aggregate economic activity depends critically on the property that the interest rate is state-contingent. Bayesian estimation of our benchmark DSGE model on US data shows that the model driven by redistribution shocks results in a better fit to the data than both standard RBC models and Kiyotaki-Moore type models with unique equilibrium.

Mots clés: endogenous collateral constraints, state-contingent interest rate, redistribution shocks, multiple equilibria
Téléchargement Icône PDF wp_2022_-_nr_08.pdf (732.97 Ko)
Exit polls and voter turnout in the 2017 French elections
Alberto Grillo
Eva Raiber

Belgian and Swiss media regularly interfere during French elections by releasing exit polls before polling stations close. These foreign media profit from a law forbidding the same behavior by their French counterparts to receive large inflows of web visits from France. We exploit the unusual timing and degree of confidence with which exit polls were released in the second round of the 2017 presidential elections to investigate their effect on voter turnout. Our analysis is based on comparing turnout rates at different times on the election day, in the first and second round, and with respect to previous elections. We find a significant decrease in turnout of around 3 to 4 percentage points after the exit polls' publication which is suggestive of a causal effect, although similar trends were observed in previous elections. The effect is stronger in departments close to the Belgian border shortly after the release of the exit polls. We do not find clear evidence that either candidate benefited from the decrease in turnout, yet we cannot exclude the presence of a small underdog effect which reduced the winning margin by around 1 percentage point.

Mots clés: exit polls, voter turnout, underdog effect, bandwagon effect
Téléchargement Icône PDF wp_2022_-_nr_07.pdf (995.2 Ko)
Loss Aversion and Conspicuous Consumption in Networks
Yann Bramoullé
Christian Ghiglino

We introduce loss aversion into a model of conspicuous consumption in networks. Agents allocate their income between a standard good and a status good to maximize a Cobb-Douglas utility. Agents interact over a connected network and compare their status consumption to their neighbors' average consumption. Loss aversion has a profound impact. If loss aversion is large enough relative to income heterogeneity, a continuum of Nash equilibria appears and all agents consume the same quantity of status good. Otherwise, there is a unique Nash equilibrium and richest agents earn strict status gains while poorest agents earn strict status losses.

Mots clés: loss Aversion, conspicuous consumption, social networks
Téléchargement Icône PDF wp_2022_-_nr_06.pdf (645.36 Ko)
Residential segregation matters to racial income gaps: Evidence from South Africa
Florent Dubois
Christophe Muller

We contend that residential segregation should be an essential component of the analyses of socio-ethnic income gaps. Focusing on the contemporary White/African gap in South Africa, we complete Mincer wage equations with an Isolation index that reflects the level of segregation in the local area where individuals dwell. We decompose the income gap distribution into detailed composition and structure components. Segregation is found to be the main contributor of the structure effect, ahead of education and experience, and to make a sizable contribution to the composition effect. Moreover, segregation is found to be harmful at the bottom of the African income distribution, notably in relation to local informal job-search networks, while it is beneficial at the top of the White income distribution. Specific subpopulations are identified that suffer and benefit most from segregation, including for the former, little educated workers in agriculture and mining, often female, confined in their personal networks. Finally, minimum wage policies are found likely to attenuate most segregation’s noxious mechanisms, while a variety of policy lessons are drawn from the decomposition analysis by distinguishing not only compositional from structural effects, but also distinct group-specific social positions.

Mots clés: residential segregation, post-apartheid South Africa, distribution analysis, generalized decompositions
Téléchargement Icône PDF wp_2022_-_nr_05.pdf (554.09 Ko)
Poverty Measurement under Income and Price Dispersions
Christophe Muller

This chapter discusses facts, methods and empirical results that pertain to poverty measurement under income and price dispersions. The correlation of prices and living standards is examined, and its origins are considered, in terms of whether such origins are related to consumer preferences, economic interactions and market imperfections.

Then, the relationship of price dispersion and aggregate social indicators - including poverty measures - is analysed by combining stochastic hypotheses about prices and incomes with normative properties of social and poverty indicators.

Finally, empirical results about how dispersed heterogeneous price indices affect poverty measurement, anti-poverty targeting and poverty-alleviation price reforms are reviewed.

Mots clés: poverty, prices, living standards, price dispersion, poverty alleviation, price indices
Téléchargement Icône PDF wp_2022_-_nr_04.pdf (355.85 Ko)
Matching with Recall
Yann Bramoullé
Brian W. Rogers
Erdem Yenerdag

We study a two-period one-to-one dynamic matching environment in which agents meet randomly and decide whether to match early or defer. Crucially, agents can match with either partner in the second period. This "recall" captures situations where, e.g., a firm and worker can conduct additional interviews before contracting. Recall has a profound impact on incentives and on aggregate outcomes. We show that the likelihood to match early is nonmonotonic in type: early matches occur between the good-but-not-best agents. The option value provided by the first-period partner provides a force against unraveling, so that deferrals occur under small participation costs.

Mots clés: dynamic matching, unraveling, recall
Téléchargement Icône PDF wp_2022_-_nr_03.pdf (1.28 Mo)
Altruism Networks, Income Inequality, and Economic Relations
Yann Bramoullé
Rachel E Kranton

What patterns of economic relations arise when people are altruistic rather than strategically self-interested? This paper introduces an altruism network into a simple model of choice among partners for economic activity. With concave utility, agents effectively become inequality averse towards friends and family. Rich agents preferentially choose to work with poor friends despite productivity losses. Hence, network inequality-the divergence in incomes within sets of friends and family-is key to how altruism shapes economic relations and output. Skill homophily also plays a role; preferential contracts and productivity losses decline when rich agents have poor friends with requisite skills.

Téléchargement Icône PDF wp_2022_-_nr_02.pdf (591.96 Ko)
The (Market) Value of State Honors
Stéphane Benveniste
Renaud Coulomb
Marc Sangnier

State awards to civilians are a widespread social phenomenon across space and time. This paper quantifies the impact of State awards given to Directors on the stock value of their firms. We link a comprehensive dataset of recipients of the Légion d'honneurthe most prestigious official award in France-over the 1995-2019 period to Board positions in French listed firms. We document large abnormal returns in the stocks of recipients' firms at the date of the award, suggesting that awards signal valuable access to policy-makers. This interpretation is corroborated by the absence of any market reaction for recipients who were already identified before award receipt as being close to the Government.

Mots clés: Awards, State Honors, Symbolic Capital, Political Connections
Téléchargement Icône PDF wp_2022_-_nr_01.pdf (23.59 Mo)