Research Seminars

This paper investigates how non-cognitive skills, e.g., memory, empathy, attention, imagination, and social skills – measured by personality characteristics – relate to the relative labour market performance of immigrants. Using the German Socio-Economic Panel (SOEP) and the Five-Factor Model of personality as a proxy for the non-cognitive skills, we show that these skills matter for the labour market integration of immigrants in the host country. We use two comparison benchmarks. Compared to an average native, immigrants’ non-cognitive skills, e.g., extroversion or emotional stability, can lead to 5–15 percentage points lower life-time employment probability disadvantage implying faster and better overall integration on average. Comparing immigrants and natives with the same type and level of non-cognitive skills suggests that returns of extroversion and openness to experience are higher among immigrants, leading to 3–5 percentage points lower lifetime employment probability disadvantage. These results are robust with respect to self-selection, non-random returns to the home country, stability of personality, and estimators. Our detailed analysis suggests that non-cognitive skills (especially extroversion) are substitutes for cognitive skills (e.g., formal education and training) among low educated immigrants, while there is no significant relative return of non-cognitive skills among highly educated immigrants.

Is in utero exposure to testosterone correlated with health and healthy lifestyle? Does religiosity have a non-linear effect on illness? We will discuss these research questions in close connection to our previous findings. In the past, using a large sample of individuals from the RMLS-HSE longitudinal survey, we observed clear links between a prenatal testosterone biomarker - measured 2D:4D digit ratios - and the levels of education obtained by men. Statistically significant positive associations of 2D:4D (lower prenatal T) with higher levels of education were found using difference generalized ordered logistic regressions. Moreover, using the same survey, we found that lower digit ratios (higher T) correlated with higher wages for women and for men. There was also some evidence of a potential non-linear, inverse U-effect of digit ratios on wages but this was sensitive to the choice of specification. These findings were consistent with earlier work on prenatal T and success in careers Coates et al. (2009) but inconsistent with the work of Gielen et al. (2016) who found differing effects for men and women. Besides, in our recent work Bryukhanov & Fedotenkov (2021), we documented a strong and causal relationship between religiosity and life satisfaction. Analogous identification strategies can be applied to health outcomes in causal and comparative context. (Paper 1, Paper 2, Paper 3)

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The study of how paternal absence due to circular migration affects the socio-emotional skills of children left behind is complicated by the potentially offsetting effects of fathers’ absences and remittances. To isolate the effect of a father’s absence, this paper focuses on remittance-receiving households and compares children whose fathers were at home with children whose fathers were still working abroad. Using data from a parent-child linked survey and experiment conducted in Fall 2019 in the Ternopil region of Ukraine, this paper finds evidence of the negative effect of a father’s current absence on children’s perseverance skills. Overall, this result suggests that circular migration is not necessarily a “triple-win” solution that benefits all involved parties. Indeed it can generate unintended consequences for the development of the socio-emotional skills of children left behind if not combined with complementary initiatives aimed at providing high-quality schooling in origin countries. (Paper)

It is well established that students taught by same-race teachers improve their performance on exams. However, little is known about whether the positive impact extends beyond test scores to student non-test academic outcomes, which are known to predict student long-term success. Using the random assignment of teachers within the Measures of Effective Teaching (MET) project, I show that same-race teachers not only improve the test scores of Black students, but also increase the effectiveness of communication as reported by Black students. I find evidence supporting one of three potential underlying mechanisms of the communication effect. Specifically, I find that neither i) higher general communication ability of Black teachers nor ii) more teacher attention directed towards same-race students can explain this effect. Rather, my results suggest that the effect is driven by more effective communication between Black teachers and Black students, which aligns with the literature on culturally relevant pedagogy. Overall, the findings suggest that training non-minority teachers in using culturally relevant pedagogy may improve the performance of disadvantaged minority students in the short term as a complement to diversification of the teacher labor force. (Paper)

This paper examines the macroeconomic effects of inflation targeting in 44 emerging market economies (EMEs) during 1970–2017. We estimate a dynamic panel data model, taking into account the endogeneity of the inflation targeting regime and controlling for a variety of factors affecting macroeconomic performance in EMEs. The main findings from our empirical investigation are as follows: First, inflation targeting is associated with lower average inflation, though its favorable effects, as compared to alternative monetary strategies, are negligible; second, we provide firm evidence against the proposition that inflation targeting lowers inflation volatility. Our results are robust with respect to various modifications in the estimation procedure and to the inclusion of additional control variables (Paper).

In response to the increasing fiscal burden imposed by public-pension systems, many countries have successfully encouraged older workers to delay retirement. These career extensions may significantly affect both the hiring and firing decisions of firms and the career progression of younger workers. To study these effects, we leverage reforms in the Netherlands in 2011 / 12 that gradually increased the eligibility age for public-pension benefits across birth cohorts. Using administrative linked employer-employee data, we first show that the reforms have significantly extended careers, doubling employment rates at ages that were directly affected by the reform. Next, we show that firms respond to the career extensions by delaying hiring, and hiring fewer workers overall. Co-workers experience slower earnings growth over the period of career extensions, which is mainly attributable to a reduction in hours worked rather than lower hourly wages, but their separation rates from the firm are not affected. We support these findings with a descriptive analysis of an earlier Dutch reform in 2006, which reduced the share of older workers taking up early retirement and reveals similar dynamics.

The findings from prior studies on the impact of low-stakes monitoring (monitoring unaccompanied by explicit incentives or punishments) on student achievement in developing countries are mixed. Moreover, as most of these initiatives were conducted on a small scale by non-governmental organizations, their findings may not be generalizable to large-scale government interventions. The current work investigates the educational impact of the Semaforo Escuela program – a large-scale monitoring system in Peru that conducts unannounced monthly school inspections, with the results reported to local education officials. I exploit the random variation in the selection of visited schools in the program’s first year to estimate the causal effects of low-stakes monitoring on student’s math and reading scores. Although I fail to find evidence that a monitoring visit enhances school-level student performance on average, I find that urban schools located at the bottom of the performance distribution or visited in the months preceding the exam date have a significant positive effect on reading test scores. (Paper)

We utilize a natural experiment, an education reform increasing compulsory schooling from five to eight years in Turkey, to obtain endogeneity-robust estimates of the effect of male education on the incidence of domestic violence against women. We find that husband’s education lowers the probability of physical, emotional and economic violence. Schooling lowers also the likelihood of an arranged marriage, and makes men less inclined to engage in various socially unacceptable behaviors. We show that these findings are very robust, and can be attributed to men’s education rather than to the education of their wives.

Health inequality has a significant genetic component and environments such as education can moderate the effects of genes. However, little is known about whether more years of education can effectively moderate the relationship between genetic conditions and severe contemporary diseases and medical conditions. I use UK Biobank data to investigate the relationship between education, genetic endowment, and four health conditions: heart attack, cancer, stroke, and type-2 diabetes. To avoid the potential endogeneity of education, I focus on the long-term health consequences of a 1972 increase in the school-leaving age (ROSLA). As a measure of genetic endowment, I use an index of genetic predispositions for obesity. Genetic predispositions are typically summarised by a weighted average of individual genetic markers, where weights are derived from analyses, performed on different populations, which correspond to select outcomes, such as obesity. This may skew the results of follow up studies of other outcomes, such as cancer. I introduce a two-step method that adjusts the available weights to new outcomes, and show that genetic predisposition for obesity increases the risks of the four diseases I study. The results based on my new method show that the additional year of schooling driven by the ROSLA reform diminished the importance of genetic predispositions for the risks of cancer and heart attack by 40%. The results offer new evidence on how environments moderate the inequalities in health that have been tilted from birth. (Paper)

The advent of prenatal sex diagnostic technology (PSDT) in India in the mid-eighties has made it easier for women to identify the sex of children before their birth, giving them an option to attain their desired sex composition of children without having to undergo repeated pregnancies. In this paper, we investigate the impact of this technology on mothers’ labour supply using a triple differences estimator. Our strategy combines supply-driven changes in ultrasound availability over time with plausibly exogenous family-level variation in the incentive to sex-select and son preference at the local level. We find that PSDT had a significant negative impact on mothers’ labour supply. We further investigate various underlying channels linking prenatal sex selection and mothers’ labour supply and identify two important channels: changes in fertility and increased investment in firstborn girls. (Paper)

Grade retention offers students a chance to catch up with unmastered material but also leads to less labor market experience by delaying graduation and labor market entry. This paper assesses this trade-off by using a test-based promotion cutoff in academic secondary school in the Netherlands. At the age of 28, I find no impact of retaining on final educational attainment, although retained students are later to graduate. Grade retention does lead to an annual earnings loss of about 3,100 euros (14%) at the same age. This loss is entirely due to the difference in experience created by the delayed later labor market entry, as starting earnings and earnings trajectories are not affected. Overall, there seems no benefit of grade retention for students around the cutoff.

In our work we have examined the impact of three different short time work schemes on employment during the first wave of the COVID-19 pandemic in Slovakia. We apply the difference in differences (DiD) technique comparing treated firms with its synthetic controls that simulate the pre-pandemic behaviour. The presentation covers steps in finding the best identification strategy subject to various data and methodological limitations.

Using administrative data on jobseekers registered by the public employment agency, we describe the implementation of the Youth Guarantee through the Slovak active labour market policy (ALMP). By adopting a novel, double-machine-learning-based, dynamic estimation technique, we generate evidence on the impact of various types of ALMP programmes provided in different periods of the unemployment spell. The spectrum of ALMP programmes ranges from classroom training through hiring incentives and subsidised employment in the private sector to public works organised at the municipality level. We identify the impact of participation in a particular ALMP programme or sequences of ALMP programmes on the absence from registered unemployment after three years. Our empirical approach allows painting a complex picture of the Slovak Youth Guarantee implementation, yielding evidence in line with international experiences generalised by ALMP impact-evaluation meta-analyses. We contribute to this literature, by generating affirmative evidence from a particular case study which is only allowed thanks to the advanced functionality of our estimator.  (Authors: Soňa Dulíková, Lukáš Lafférs, Miroslav Štefánik)

This experimental study examines the effect of organizational membership fees on the willingness of association members to make charitable contributions (donations) to their association. Theoretically, the design tests six scenarios where public and private benefit are more prominent to explore and whether the amount of publicness in an organization’s mission (mission orientation) influences the donation amount. Practically, nonprofit leaders need more information regarding the relationship between membership dues and giving behavior to gauge the optimal membership scenario for maximum revenue generation. Using an explanatory sequential mixed methods design, the study assesses individuals’ willingness to donate to associations under three dues scenarios (no dues, dues with benefits, and sliding scale dues) with varying levels of public and private benefits. Responses demonstrate a significant difference between both professional and community association donations as well as between treatment groups. Themes emerged regarding dues and dues structures, personal finances, and the autonomy of giving to other charities.

We study the causal effects of previous experience and language skills when newly arrived refugees in Sweden apply for job openings by means of a field experiment. Applications were sent from randomly assigned fictitious Syrian refugees with experience in jobs with low skill requirements and completed language training in Swedish to employers advertising low-skilled job vacancies. We find no evidence of sizeable effects from previous experience or completed language classes on the probability of receiving callback from employers. However, female applicants were more likely than males to receive a positive response. We conclude that previous experience and completed language training seem to provide at best a small positive signaling value when refugees apply for low-skilled jobs through formal channels.

This paper investigates whether and how media exposure affects health behaviours. We exploit the idiosyncratic switchover to digital television in Italy and the consequent shift in the supply of food-related contents shown on the TV. By using a unique data-set based on four sources of data, we first provide evidence that food-shows contents affected individual choices, based on patterns of cuisine related information and recipes on the web. Then, we find that digital transition increased the size and improved the macronutrient composition of households’ food baskets, leading to a reduction in BMI among more exposed individuals. These findings question the negative stereotypes often associated with TV and highlight its potential as brand-new health policy lever.

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We utilize a natural experiment, an education reform increasing compulsory schooling from five to eight years in Turkey, to obtain endogeneity-robust estimates of the effect of male education on the incidence of domestic violence against women. We find that husband’s education lowers the probability of physical, emotional and economic violence. Schooling lowers also the likelihood of an arranged marriage, and makes men less inclined to engage in various socially unacceptable behaviors. We show that these findings are very robust, and can be attributed to men’s education rather than to the education of their wives.

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This paper investigates credit cycles by means of an experiment based on a Kiyotaki & Moore (1997) model with heterogeneous expectations. The aim is to examine how a credit squeeze caused by high lender-level risk perceptions affects the real prices of a collateralised asset, with a special focus on the macroeconomic implications of rising price volatility in terms of total welfare and the number of bankruptcies that occur. To do that, a learning-to-forecast experiment (LtFE) is run where participants are asked to predict the future price of a collateralised asset and then rewarded based on the accuracy of their forecasts. The setting includes one lender and five borrowers in each of the twelve sessions split between six control groups (G1) and six treatment groups (G2). While in G1 the lender always satisfies borrowers’ loan demand (bankruptcies permitting), in G2 he/she is forced to close the entire credit market in case three or more bankruptcies occur in the previous round. Experimental results show that negative risk-driven supply shocks amplify the volatility of collateral prices. This surge in uncertainty worsens the agents’ ability to predict the future value of the collateralised asset and, as a consequence, the number of defaults increases and total welfare deteriorates.

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Experiments involving multiple public goods with contribution thresholds capture many features of charitable giving environments. We present results from a laboratory experiment that introduces endowment and preference differences into such a framework to explore the impact of donor heterogeneity on public good success and payoffs. We observe that donors tend to focus on the recipients preferred by the wealthiest contributors, ignoring other potential recipients. We refer to this collective focus on the preferred good of the wealthiest as the Gates Effect, showing that the public goods preferred by the wealthiest are more salient even in the absence of seed money, matching grants, misperception of payoffs. The Gates Effect can reduce inequality within donor groups that succeed in funding a public good; however, it also affects the philanthropic agenda, reducing the variety of public goods that receive funding."

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Abstract: Nudging has become an important policy instrument to improve tax collection. Nudges in the taxation context are mainly notifications sent to taxpayers on behalf of tax authorities. Despite their similarity, these interventions have differential impact across countries and regions. We synthesize the growing experimental literature in a meta-analytical framework and provide estimates of the average effects of different nudges on tax compliance. Compared to the average share of compliant taxpayers that receive no notifications in the control group (29.8%), i) a neutral notification increases the probability of compliance by 6.4%, ii) non-deterrence nudges, various notifications that do not contain threats, increase the probability compliance by 12.8%, and iii) deterrence nudges, notifications that contain threats of audit or punishment, increase the probability of compliance by 22.8%. Lastly, our findings suggest that the sample of studies under scrutiny may be susceptible to selective reporting of results, and highlight few study characteristics that can make nudging interventions more effective.

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We estimate how policies that facilitate inter-temporal shifting of corporate tax liability via tax carry-forwards increase responsiveness of corporate tax base to taxation. Using administrative 2010-2018 tax return data from Slovakia and bunching designs, we estimate corporate elasticity of taxable income (CETI) at kinks in the marginal rate schedule. Using reforms of tax carry-forwards, we estimate that shifting via carry-forwards can account for the entire CETI at kinks for top 13% companies with turnover above €500k and 21% of CETI for VAT non-registered companies. We provide corrected estimates of marginal excess burden net of intertemporal shifting.

Paper

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This article deals with the revealed value of volunteering. The revealed value approach is one way to determine the value of non-market goods or services. Most studies focused on the value of volunteering have built their research on the presumption that there is no way to reveal the value of volunteering, and therefore proxies must be used. This research uses a plausibility probe case study to explore and identify revealed information about the value of volunteering. The research was conducted using data over a seven-year period (2012–18) from ADRA, a large volunteer centre network in the Czech Republic that has 14 volunteer centres coordinating more than 2,500 volunteers in about 50 cities. I used the data about all the public funding of all the centres in this network between 2012 and 2018 in order to calculate the revealed value of volunteering from the perspective of various governmental institutions. I calculated the total value of volunteering, including financial grants, donations, and the value of volunteer hours. Interestingly, all three values were found within or slightly around the interval estimate of the value of volunteering.

Paper

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Abstract: It is a standard practice to explain future stock returns by factors such as size or value premium. But the history of systemic events that led to asset bubbles and the advances in the behavioral finance field emphasized the importance of another factor influencing stock returns -- sentiment. Focusing on the direct survey-based measures of sentiment, we collect 1311 estimates from 30 primary studies to conduct the first meta-analysis of the underlying relation shedding light to ambiguous outcomes of current empirical literature. Our results suggest that there is non-negligible and negative relationship between sentiment and stock returns. In majority of specifications researchers tend to report this effect much stronger than it actually is but we also found presence of positive publication bias driving the results to less negative or even positive area. We reveal that sentiment effect is significantly stronger when flowing from individual investors compared to large institutions or when affecting stock market in US compared to Europe. Further, the effect also depends on several data and model characteristics. Finally, we propose implied estimates that may help to enhance predictive power of stock market models, but also conducting stress tests of financial markets and assessing risks to financial stability. Our results might be applied to specific pairs of survey-based sentiment and return series, but in general, we quantified the average effect of one unit increase in sentiment on monthly returns to be -0.54pp.

Authors: Zuzana Gric (ČNB, MUNI),  Josef Bajzík (ČNB, IES FSV UK), Ondřej Badura (VŠB)

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Abstract: Can information provision reduce the risks associated with irregular migration? We address this question conducting a large-scale experiment with about 7,000 secondary school students in Guinea. Combining aggregate statistics and video-testimonies by migrants who settled in Europe, we study the effect of three information treatments: (i) about risks and costs of the journey; (ii) about economic outcomes in the destination country; and (iii) a treatment pooling (i) and (ii). We find that one month after the intervention, all three treatments affect beliefs about risks and economic conditions. However, 1.5 years after the intervention, only the first has a significant effect on migration outcomes: providing information about the risks and costs of the journey reduces international migration by 49%. The effect is driven by a decrease in migration without a visa (i.e., potentially risky and irregular). Furthermore, the reduction is bigger for students who at baseline underestimated the risks connected to international migration.

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This paper studies the effects that connectivity and centralisation have on the response of interbank networks to external shocks that generate phenomena of default contagion. We run numerical simulations of contagion processes on randomly generated networks, characterised by different degrees of density and centralisation. Our main findings show that the degree of robustness-yet-fragility of a network grows progressively with both its degree of density or centralisation, although at different paces. We also find that sparse and decentralised interbank networks are generally resilient to small shocks, contrary to what so far believed. The degree of robustness-yet-fragility of an interbank network determines its propensity to generate a too-many-to-fail problem. We argue that medium levels of density and high levels of centralisation prevent the emergence of a too-many-to-fail issue for small and medium shocks whilst drastically creating the problem in the case of large shocks. Finally, our results shed some light on the actual robustness-yet-fragility of the observed core-periphery national interbank networks, highlighting the existing risk of systemic crises.

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How do societies respond to epidemic crisis in both stated political preferences and revealed health-related behavior? To answer this question, we link overmortality during the 1918-influenza to the political support of compulsory vaccination and to real vaccination behavior before and after the 1918-flu. We rely on the 1922 popular vote in Grisons when Grisons’ voters have to decide about compulsory vaccination in their canton. We find that a 1% higher overmortality during the 1918-flu reduces the support of the compulsory vaccination bill by almost 3%. The results are robust to different specifications regarding the definition of flu-affectedness, the inclusion of regional fixed effects and socio-economic variables. Other popular votes, by contrast, do not correlate with overmortality neither before nor after 1918. We are now digitizing real vaccination behavior at the municipality level using smallpox vaccination reports from 1907 to 1933. We aim to show whether revealed health-related behavior differ from the political statement by investigating a potential shift in vaccination abstinence after 1918. We further aim to distinguish among two potential channels to explain the results – cognitive dissonance and mistrust into experts or the government. The results might improve our understanding how epidemics might shift a society towards ignorance and mistrust into experts. Parallels to the COVID-19 epidemic show that part of the population are still acting ignorant today as our ancestors have done so 100 years ago.

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Abstract: Experimental studies have modeled individual funding of social projects as contributions to a threshold public good. We examine contributors’ behavior when faced with multiple threshold public goods and the possibility of coordinating contributions via an intermediary. Employing the experimental design developed in Corazzini (2020), we vary both the size of a ‘destination rule’, which places restrictions on the intermediary’s use of a contributor’s funds, as well as the overhead cost of the intermediary, modeled as a sunk cost incurred by the intermediary whether or not any public good is successfully funded. In an online experiment with live interaction, we show that subjects behave in line with equilibrium predictions with regard to the size of the destination rule, only increasing their contributions when there is no threat of expropriation by the intermediary. However, we find that the positive effect of a high destination rule is undone in the presence of overhead costs for the intermediary. While this is in direct conflict with the theory that predicts no role of such costs, it is in line with the sunk-cost bias as well as the phenomenon of ‘overhead aversion’ that is commonly exhibited by donors when selecting charities.

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This study examines the unintended consequences of immigration enforcement policies on children’s human capital. Exploiting the temporal and geographic variation in the enactment of immigration enforcement policies, we find that English language proficiency of U.S.-born children with at least one undocumented parent is negatively affected by the introduction of immigration enforcement laws. We show that the reduction in children’s English proficiency are caused by changes in parental investment behavior. Increasing fear of being detected and deported leads undocumented parents to substitute children’s time in formal non-mandatory pre-school education with parental time spent at home. We find evidence that parental time investment is not as productive as time spent in pre-school. These developments lead ultimately to a reduction in children’s human capital. 

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We estimate the causal effect of the Colombian land restitution program on access to microcredit for agriculture. We use the timing of the restitution as the source of identification in an event study approach. Using administrative data from the program and all formal credit transactions, we show a significant increase in access to agricultural microcredit. The effects are stronger two years after the restitution when individuals acquire full property rights. Impacts are mainly driven by loans through the Agrarian Bank and supported by guarantees from the Agricultural Guarantee Fund, which are institutions specifically designed to promote investment in agriculture.