20-01 Diego Aycinena, Alexander Elbittar, Andrei Gomberg, Lucas Rentschler. Rational inattention and timing of information provision.
Abstract:
We consider the issue of how timing of provision of additional information affects information-acquisition incentives. In environments with costly attention, a sufficiently confident agent may choose to act based on the prior, without incurring those costs. However, a promise of additional information in the future maybe used to encourage additional attentional effort. This may be viewed as a novel empirical implication of rational inattention. In a lab experiment designed to test this theoretical prediction, we show that promise of future “free” information induces subjects to acquire information which they would not be acquiring without such a promise.
20-02 Jaakko Meriläinen. Politician Quality, Fiscal Policy and Ideology
Does politician quality in a representative government matter for policy? I use administrativeregistry data on local politicians in Finland and exploit exogenous variation generated by closeelectoral races that shift the quality composition of local councils to show that (i) electing morehigh-income, incumbent, and competent politicians (defined as those who have a higher incomerelative to others with similar observable characteristics) improves fiscal sustainability outcomesbut does not decrease the size of the public sector, and (ii) symmetrically, electing moreuniversity-educated local councilors leads to an increase in public spending without any adverseeffects on fiscal sustainability. To reconcile these findings, I combine the micro-data on electoralcandidates with unique survey data on their policy positions. Politician qualities are differentiallyassociated with economic ideology, and these correlations tally with the policy effects.
20-03 Isa Kuosmanen, Jaakko Meriläinen. Labor Market Effects of Open Borders: Lessons from EU Enlargement
Abstract:
We exploit the expansion of the European Union as a natural experiment to study the labor market consequences of open borders. The eastern enlargement of the EU differentially exposed workers in different regions and occupations in Finland to foreign workforce. Using a triple-differences strategy and detailed individual-level administrative data, we provide robust evidence that the entry of new EU countries decreased the annual earnings of vulnerable workers persistently relative to less vulnerable workers in the construction sector. This decrease was about 1,700 euros per year, on average, which corresponds roughly to a month's salary. The vulnerable workers were not able to close the wage gap even ten years after the EU enlargement. Most estimates suggest that the workforce nearly doubled in size after the EU enlargement, which would imply an elasticity close to zero. We also find a small increase in unemployment. The effect on earnings is predominantly driven by workers below 30 years old, who became more likely to switch to other sectors of employment or establishments of work, and workers over 50 years old, who became more likely to retire.
20-04 Sirus Dehdari, Jaakko Meriläinen, Sven Oskarsson. Selective Abstention in Simultaneous Elections: Understanding the Turnout Gap
Abstract:
If two elections are held at the same day, why do some people choose to vote in one but to abstain in another? We argue that selective abstention is driven by same factors that determine voter turnout. Our empirical analysis focuses on Sweden where the turnout gap between local and national elections has been about 2-3%. Rich administrative registry data reveal that people from higher socio-economic backgrounds, immigrants, women, older individuals, and people who have been less geographically mobile are less likely to selectively abstain.
20-05 Leandro De Magalhães, Dominik Hangartner, Salomo Hirvonen, Jaakko Meriläinen, Nelson Ruiz, Janne Tukiainen. How Much Should We Trust Regression Discontinuity Design Estimates? Evidence from Experimental Benchmarks of the Incumbency Advantage
20-06 Emilio Gutiérrez, Jaakko Meriläinen, Adrián Rubli. Electoral Repercussions of a Pandemic: Evidence from the 2009 H1N1 Outbreak
Abstract:
In the aftermath of a large negative shock, such as an epidemic, retrospective voters evaluate the policy-makers' response and either punish or reward them in elections. A prominent concern during the on-going coronavirus pandemic has been whether politicians concerned about re-election have incentives to impose stringent mitigation measures that may carry high economic costs. On the other hand, voters might also react to the shock itself, no matter what the government does. To understand the effect of epidemic outbreaks on voting, we revisit the 2009 H1N1 outbreak in Mexico. Leveraging detailed administrative data and a difference-in-differences approach, we document a strong, negative relationship between the magnitude of the local epidemic outbreak and the governing party vote share in the 2009 congressional election. The electoral punishment depended on the magnitude of the peak of the epidemic curve but not on its timing, and it occurred independently of the remedial actions taken by the government. Furthermore, we find persistent effects in the 2012 election. Our results indicate that voters are acutely aware of epidemics, responding to them at the ballot box. The findings indirectly suggest that mitigation policies may be politically valuable even if they are costly for the economy.