Abstract: This paper exploits the discrete change in air pollutants induced by the installation of small-scale power plants throughout Mexico to measure the causal relationship between air pollution and infant mortality, and if this relationship varies by municipality’s socio-economic conditions. The estimated elasticity for changes in infant mortality due to respiratory diseases with respect to changes in air pollution concentration ranges from 0.58 and 0.84 (more than ten times higher than the OLS estimate). The effect is significantly lower in municipalities with a high presence of primary health facilities but does not vary significantly by average income and education levels.
Abstract: Macroeconomists have long been interested in understanding differences in hours worked across countries. Prescott (2004) shows that differences in labor income tax explain the majority of the difference in hours worked between the United States and European countries. In this paper we go one step further in quantifying the impact of labor income tax on differences in hours worked between the United States and European countries. First, we decompose hours worked by gender and marital status, and we find that females are responsible for more than half of the difference in hours worked. Within females, we find that married females are responsible for more than half of the difference in hours worked. Second, given these findings, we quantify the impact of differences in labor income tax in explaining differences in aggregate hours worked. The main contribution of this paper is that we do not restrict the analysis of differences in labor income tax to differences in the progressivity of the tax schedule, but we also incorporate differences in the treatment of secondary earners across countries. As a result, we find that differences in labor income tax explain two thirds of the difference in aggregate hours worked across countries, and we also find that differences in the treatment of secondary earner explain two thirds of the difference in hours worked between married and single females.
13-03. Mendes M., "Taxes, Education, Marriage, and Labor Supply"
Abstract: This paper analyzes the impact of income tax policy on household labor supply through two key life-cycle choices: education and marriage/divorce. To this end, I construct a quantitative life-cycle model to study the effects of changes in the degree of tax progressivity and in the unit of taxation on household labor supply.
The model is calibrated to match key statistics in the United States economy, and then I analyze the impact of several tax reforms on labor supply. I find that when the unit of taxation is changed from the family to the individual this reduces the tax burden on secondary earners, which increases women’s education and labor supply, but has a negligible effects on men. Further, I find that small reductions in the progressivity of the tax schedule increase college enrollment and labor supply. To drive these results, the marriage/divorce decision is important because it amplifies the effect of tax reforms on labor supply and education.
My experiments demonstrate that one underestimates the impact of income tax reforms on labor supply if life-cycle choices are ignored.
13-04. Rahul G., Seira E., and Teshima K., "Did Trade Crisis Affect Different Exporters Differently?"
Abstract: How did small exporters fare relative to large exporters during the 2008-09 crisis? Examining the performance of Mexican exporters reveals that crisis did not make smaller exporters more likely to exit, grow less, or expand their product line less. Workhorse models of trade, in response to an aggregate demand or credit shock, would predict the opposite. The same models, however, are consistent with the data before and after the crisis: within industry, (i) firm exit rate is decreasing in size; (ii) conditional on survival, export growth is largely decreasing in size, (iii) net product addition is increasing in size.
JEL Codes: F11, F15 Keywords: firm level trade, firm size, crisis, margins of trade adjustment.
13-05. Bajraj G., and Ülkü L., "Choosing two Finalists and the Winner"
Abstract: We study a class of boundedly rational choice functions, namely two-stage choosers, which operate as follows. The decision maker uses two criteria in two stages to make a choice. First she shortlists the top-2 alter- natives, i.e. two .nalists, according to one criterion. Next, she chooses the winner in this binary shortlist using the second criterion. The criteria are linear orders ranking the alternatives, and they may or may not be explicitly welfare-relevant. For example, they may re.ect the distinct preferences of a short-run- and a long-run-self. Alternatively the .rst criterion may be a list which the decision maker uses to browse alternatives, while the second gives her preferences. Using the concepts of choice reversers in a set, i.e., alter- natives whose removal from a set a¤ect choice, and hidden choice of a set, i.e., the alternative chosen when the choice is removed, we give four logically independent axioms on choice behavior which jointly characterize two-stage choosers.
Keywords: Boundedly Rational Choice, Choice Reversal, Shortlisting, Multiple Rationales, Limited Attention
13-06. Sharma T., and Ülkü L., "On Equal Cost Sharing in the Provision of an Excludable Public Good"
Abstract: We study the e¢ ciency and fairness properties of the equal cost sharing mechanism in the provision of a binary and excludable public good. According to the maximal welfare loss criterion, equal cost sharing is opti-mal within the class of strategyproof, individually rational and no-budget-de.cit mechanisms only when there are 2 agents. In general the equal cost sharing mechanism is no longer optimal in this class: we provide a class of mechanisms obtained by symmetric perturbations of equal cost sharing with strictly lower maximal welfare loss. We show that if one of two posible fairness conditions is additionally imposed, equal cost sharing mechanism regains optimality.
13-07. Gomberg A., Marhuenda F., and Ortuño-Ortin I., “Endogenous Party Platforms: “Stochastic” Membership"
Abstract: We analyze existence of divergent equilibria in a model of endogenous party platforms with stochastic membership. The parties proposals depend on their membership, while the membership depends both on the proposals of the parties and the unobserved idiosyncratic preferences of citizens over parties. It is shown that when citizens view the parties as similar, apart from their policy proposals (i.e., the party platform is a good predictor of individual membership decision), the divergent equilibria exist. We analyze the relationship between parties policy proposals and the unobserved idiosyncratic characteristics of parties and we obtain conclusions dierent from the ones provided in existing literature.
13-08. Alonso J., and Leal J., "The Elasticity of Informality to Taxes and Transfers”
Abstract: We study the impact on the size of the informal sector of a tax levied on formal workers, and transfers that may be distributed to both formal and informal workers alike. We build a search model that features an informal sector and we calibrate it to data from Mexico. We investigate whether changes in size and distribution of transfers between formal and informal workers have a significant impact on the size of the informal sector. We find that changes in the distribution, for a given size, create a range of variation of 19.35pp. Analogously, changes in size create a range of variation of 5.7pp, resulting in a total range of variation of 51.2pp. This implies that it is possible to substantially increase formalization by rising extra tax resources as long as they accrue to formal workers. We illustrate the validity of our approach simulating the introduction of Seguro Popular.
Keywords: Informal Sector, Search, Tax and Transfer Programs, Seguro Popular
JEL Codes: E24, E26, E62, J64, J65
13-09. Giri, R., Seira, E., and Teshima, K., "Exporters During the Trade the Collapse: The(Surprising) Resiliency of the Small Exporter"
Abstract: How did small exporters fare relative to large exporters during the 2008-09 crisis? Examining the performance of Mexican exporters reveals that crisis did not make smaller exporters more likely to exit, grow less, or expand their product line less. Workhorse models of trade, in response to an aggregate demand or credit shock, would predict the opposite. The same models, however, are consistent with the data before the crisis: within industry, (i) firm exit rate is decreasing in size; (ii) conditional on survival, export growth is largely decreasing in size; (iii) product line expansion is increasing in size. In the post-crisis period small exporters in industries classified as non-durable or financially less dependent, or those that were less dependent on maquiladora exports experienced a larger negative effect on product line expansion. But, their export growth and exit rate remained unaffected, as seen during the crisis.
Keywords: firm level trade, firm size, crisis, margins of trade adjustment
JEL Codes: F11, F15