Project acronym CompSCHoice
Project A Comprehensive Approach to School Choice and Education
Researcher (PI) Caterina Calsamiglia Costa
Host Institution (HI) INSTITUTE OF POLITICAL ECONOMY AND GOVERNANCE
Call Details Starting Grant (StG), SH1, ERC-2014-STG
Summary School choice is one of the most hotly debated policies in education. Advocates argue that school choice allows equal access to high quality schooling for all. High-income families have always had more choice, either through residential choice or through enrolment in private schools. Therefore increased choice should also improve equity by allowing minority and low-income students to choose too. On the other hand, school choice critics suggest that school choice can increase sorting between schools based on their socio-economics status, suggesting high-income families benefit more from these policies.
Three different and disconnected literatures in economics provide different and often contradicting answers to these questions. We propose a unified theoretical framework that merges these three literatures and allows for a comprehensive analysis on school choice design and its impact on actual choice, outcomes and segregation in schools and neighborhoods. Unique and newly constructed data sets are used to address novel empirical challenges. The data constructed for Barcelona shall become one of the largest and most comprehensive data sets not only on school choice but also on public education worldwide.
Using the data set from Barcelona we 1) estimate families’ preferences and, for the first time, evaluate the efficiency of different mechanism through structural estimation of our model and counterfactual analysis. We then 2) evaluate the impact that peer effects have on parents' choice and on outcomes. Exploiting the occurrence of hurricane Katrina in New Orleans and the aid programs implemented we aim at 3) estimating the distribution of willingness to pay for quality schools for families with different socio-economics. And last we exploit a policy change in Catalunya in 2009 to 4) provide evidence on how increased flexibility of the school system to adapt for differential maturity levels affects individual short and medium-term outcomes.
Summary
School choice is one of the most hotly debated policies in education. Advocates argue that school choice allows equal access to high quality schooling for all. High-income families have always had more choice, either through residential choice or through enrolment in private schools. Therefore increased choice should also improve equity by allowing minority and low-income students to choose too. On the other hand, school choice critics suggest that school choice can increase sorting between schools based on their socio-economics status, suggesting high-income families benefit more from these policies.
Three different and disconnected literatures in economics provide different and often contradicting answers to these questions. We propose a unified theoretical framework that merges these three literatures and allows for a comprehensive analysis on school choice design and its impact on actual choice, outcomes and segregation in schools and neighborhoods. Unique and newly constructed data sets are used to address novel empirical challenges. The data constructed for Barcelona shall become one of the largest and most comprehensive data sets not only on school choice but also on public education worldwide.
Using the data set from Barcelona we 1) estimate families’ preferences and, for the first time, evaluate the efficiency of different mechanism through structural estimation of our model and counterfactual analysis. We then 2) evaluate the impact that peer effects have on parents' choice and on outcomes. Exploiting the occurrence of hurricane Katrina in New Orleans and the aid programs implemented we aim at 3) estimating the distribution of willingness to pay for quality schools for families with different socio-economics. And last we exploit a policy change in Catalunya in 2009 to 4) provide evidence on how increased flexibility of the school system to adapt for differential maturity levels affects individual short and medium-term outcomes.
Max ERC Funding
1 207 500 €
Duration
Start date: 2015-08-01, End date: 2020-07-31
Project acronym DYMOLAMO
Project Dynamic Modeling of Labor Market Mobility and Human Capital Accumulation
Researcher (PI) Joan LLULL CABRER
Host Institution (HI) FUNDACIÓ MARKETS, ORGANIZATIONS AND VOTES IN ECONOMICS
Call Details Starting Grant (StG), SH1, ERC-2018-STG
Summary In today’s globalized world, labor mobility is at the core of the political debate and a centerpiece for economic policy. The design of migration policies, such as selective, skill-biased, immigration policies, policies to encourage the integration of immigrants, or ones that facilitate geographical mobility to increase labor market opportunities of disadvantaged workers, requires a good understanding of a more fundamental issue: understanding the role of internal migration and immigration in shaping the career paths and human capital accumulation of workers. This project aims at providing a coherent analysis that allows us to understand the interactions between labor mobility and human capital accumulation, and their implications for economic policy design.
This project focuses on three main issues: labor mobility, labor market effects of immigration, and the interaction between the two. Our questions are: (a) What are the role of temporary and permanent contracts in shaping career paths and geographic mobility of workers? (b) Does the forgone human capital accumulation during a recession produce a lost generation? Is this alleviated by geographical mobility? (c) What is the role of geographical and occupational mobility in spreading or containing the effects of technological progress on wage inequality? (d) To what extent selective immigration policies maximize native workers’ prospects and wellbeing? (e) How can we increase degree of assimilation of immigrants?
To address these questions, we will develop dynamic equilibrium models that explicitly characterize human capital accumulation decisions of workers and how these decisions interact with migration. Our proposed models will introduce rich labor market structures and a variety of economic shocks. They will require the implementation of novel estimation methods, which we will also develop. The estimated models will be used to evaluate and design key economic policies for the labor market.
Summary
In today’s globalized world, labor mobility is at the core of the political debate and a centerpiece for economic policy. The design of migration policies, such as selective, skill-biased, immigration policies, policies to encourage the integration of immigrants, or ones that facilitate geographical mobility to increase labor market opportunities of disadvantaged workers, requires a good understanding of a more fundamental issue: understanding the role of internal migration and immigration in shaping the career paths and human capital accumulation of workers. This project aims at providing a coherent analysis that allows us to understand the interactions between labor mobility and human capital accumulation, and their implications for economic policy design.
This project focuses on three main issues: labor mobility, labor market effects of immigration, and the interaction between the two. Our questions are: (a) What are the role of temporary and permanent contracts in shaping career paths and geographic mobility of workers? (b) Does the forgone human capital accumulation during a recession produce a lost generation? Is this alleviated by geographical mobility? (c) What is the role of geographical and occupational mobility in spreading or containing the effects of technological progress on wage inequality? (d) To what extent selective immigration policies maximize native workers’ prospects and wellbeing? (e) How can we increase degree of assimilation of immigrants?
To address these questions, we will develop dynamic equilibrium models that explicitly characterize human capital accumulation decisions of workers and how these decisions interact with migration. Our proposed models will introduce rich labor market structures and a variety of economic shocks. They will require the implementation of novel estimation methods, which we will also develop. The estimated models will be used to evaluate and design key economic policies for the labor market.
Max ERC Funding
1 400 250 €
Duration
Start date: 2018-11-01, End date: 2023-10-31
Project acronym EXTREME
Project The Rise and Fall of Populism and Extremism
Researcher (PI) Maria PETROVA
Host Institution (HI) UNIVERSIDAD POMPEU FABRA
Call Details Starting Grant (StG), SH1, ERC-2018-STG
Summary In the recent years in advanced democracies there has been a wave of electoral successes of populist politicians supporting extreme messages. Is populism caused by negative economic shocks? If so, what are the mechanisms? What explains heterogeneity in responses to such shocks? In this project, I will test empirically if personal experiences, information environment, and their interaction with aggregate economic shocks shape people’s political decisions. The project consists of three parts.
First, I will study how personal employment histories, potentially affected by globalization and technological shocks, individual predispositions, and information environment influenced voting for Trump. I will use a unique database of more than 40 million resumes for the period 2010-2016, the largest available repository of resumes of job-seekers in the US, which was not previously used in academic research, and match it with zipcode-level economic and voting variables.
Second, I will study how negative social experiences during the formative years affect subsequent labor market outcomes, antisocial behavior, and the support of populist agenda. I will examine how corporal punishment in schools in UK affected subsequent educational attainment, employment, antisocial behavior, and voting for UKIP and Brexit. I will digitize archival records on regulations and practice of corporal punishment in different educational authorities in the UK during 1970-80s, combining it with contemporary outcomes.
Third, I will examine what makes people actively resist extremist regimes even when it is associated with high personal costs. I will study a historical example of resistance to Nazi regime in Germany during the WWII, which provides unique methodological opportunity to study determinants of resistance to extremism in a high stake environment. I will use a self-collected dataset on treason cases to measure resistance, combining it with data on bombing and exposure to foreign propaganda.
Summary
In the recent years in advanced democracies there has been a wave of electoral successes of populist politicians supporting extreme messages. Is populism caused by negative economic shocks? If so, what are the mechanisms? What explains heterogeneity in responses to such shocks? In this project, I will test empirically if personal experiences, information environment, and their interaction with aggregate economic shocks shape people’s political decisions. The project consists of three parts.
First, I will study how personal employment histories, potentially affected by globalization and technological shocks, individual predispositions, and information environment influenced voting for Trump. I will use a unique database of more than 40 million resumes for the period 2010-2016, the largest available repository of resumes of job-seekers in the US, which was not previously used in academic research, and match it with zipcode-level economic and voting variables.
Second, I will study how negative social experiences during the formative years affect subsequent labor market outcomes, antisocial behavior, and the support of populist agenda. I will examine how corporal punishment in schools in UK affected subsequent educational attainment, employment, antisocial behavior, and voting for UKIP and Brexit. I will digitize archival records on regulations and practice of corporal punishment in different educational authorities in the UK during 1970-80s, combining it with contemporary outcomes.
Third, I will examine what makes people actively resist extremist regimes even when it is associated with high personal costs. I will study a historical example of resistance to Nazi regime in Germany during the WWII, which provides unique methodological opportunity to study determinants of resistance to extremism in a high stake environment. I will use a self-collected dataset on treason cases to measure resistance, combining it with data on bombing and exposure to foreign propaganda.
Max ERC Funding
1 467 736 €
Duration
Start date: 2019-01-01, End date: 2023-12-31
Project acronym HISTROOTS
Project HISTORICAL ROOTS OF CONFLICT AND DEVELOPMENT: FROM PREHISTORY TO THE COLONIZATION EXPERIENCE
Researcher (PI) Marta Reynal Querol
Host Institution (HI) UNIVERSIDAD POMPEU FABRA
Call Details Consolidator Grant (CoG), SH1, ERC-2014-CoG
Summary I plan to study the effect of history on conflict and economic development with two historical microscopes.
Following the lead of the new institutional economics, part of the literature argues that institutions cause differences in productivity and factor endowments which, in turn, explain economic development. An alternative view assumes that human capital shapes institutional changes and, therefore, institutions are endogenous. In the first part of the project, which is the core of the research proposal, I will try to move one step further in this debate by taking an approach that uses administrative data on the first colonizers of Latin America. The data contain some personal characteristics on each of the settlers from 1492 to 1599 (town of origin in Spain, occupation, education, city of arrival in the Americas, etc). Using within-country analysis, since we have information on the precise destinations of the first “pobladores” (settlers), and the different institutional set-ups during the first years of colonization for different geographical areas in Latin America, I will reexamine the issue of institutions versus human capital in the explanation of economic development and conflict. The institutions in the initial times of colonization were not the same in all the regions of Latin America and, in many cases, represented an evolution of pre-Colombian institutions. The new data allows also the analysis of the interaction between human capital and institutions in the initial times. In addition the migrations and the evolution of institutions during the first century of colonization provide also some guidance for the research on the sources of institutional persistence.
In the second part I plan to go further back in time to understand how very old conflicts influence current conflict. I will construct a dataset with the location of old conflicts using archaeological evidence to analyze the dynamics of conflict by regions in the very long run.
Summary
I plan to study the effect of history on conflict and economic development with two historical microscopes.
Following the lead of the new institutional economics, part of the literature argues that institutions cause differences in productivity and factor endowments which, in turn, explain economic development. An alternative view assumes that human capital shapes institutional changes and, therefore, institutions are endogenous. In the first part of the project, which is the core of the research proposal, I will try to move one step further in this debate by taking an approach that uses administrative data on the first colonizers of Latin America. The data contain some personal characteristics on each of the settlers from 1492 to 1599 (town of origin in Spain, occupation, education, city of arrival in the Americas, etc). Using within-country analysis, since we have information on the precise destinations of the first “pobladores” (settlers), and the different institutional set-ups during the first years of colonization for different geographical areas in Latin America, I will reexamine the issue of institutions versus human capital in the explanation of economic development and conflict. The institutions in the initial times of colonization were not the same in all the regions of Latin America and, in many cases, represented an evolution of pre-Colombian institutions. The new data allows also the analysis of the interaction between human capital and institutions in the initial times. In addition the migrations and the evolution of institutions during the first century of colonization provide also some guidance for the research on the sources of institutional persistence.
In the second part I plan to go further back in time to understand how very old conflicts influence current conflict. I will construct a dataset with the location of old conflicts using archaeological evidence to analyze the dynamics of conflict by regions in the very long run.
Max ERC Funding
1 699 664 €
Duration
Start date: 2015-05-01, End date: 2020-04-30
Project acronym OPTNETSPACE
Project Optimal Transport Networks in Spatial Equilibrium
Researcher (PI) Edouard SCHAAL
Host Institution (HI) Centre de Recerca en Economia Internacional (CREI)
Call Details Starting Grant (StG), SH1, ERC-2018-STG
Summary Every year, the world economy invests a large amount of resources to improve or develop transport infrastructure. How should these investments be allocated to maximize social welfare? In this proposal, I propose to develop and apply new methods to study optimal transport networks in general-equilibrium models of international trade, urban economics and economic geography. The methodology will build on recent work (Fajgelbaum and Schaal, 2017), in which my coauthor and I studied the network design problem in a general neoclassical trade framework.
In the first project, I develop a new framework to analyze optimal infrastructure investment in an urban setting. The model features people commuting between residential areas and business districts as well as a choice over the mode of transportation. We plan to evaluate the framework to historical data about specific cities.
In the second project, I propose and implement an new algorithm to compute optimal transport networks in the presence of increasing returns to transport, a likely prominent feature of real-world networks. The algorithm applies a branch-and-bound method in a series of geometric programming relaxations of the problem.
In the third project, I study the dynamic evolution of actual transport networks using satellite data from the US, India and Mexico. In the spirit of Hsieh and Klenow (2007), I use the model to measure distortions in the placement of roads between rich and poor countries.
In the fourth project, I study the inefficiencies and welfare losses associated with political economy frictions among governments and planning agencies. I use the model to identify inefficiencies and relate them to measures of institutions and political outcomes.
In the final project, I propose a new explanation behind the Zipf’s law distribution of city sizes. I show that Zipf’s law may result from particular topological properties of optimal transport networks that allocate resources efficiently in space.
Summary
Every year, the world economy invests a large amount of resources to improve or develop transport infrastructure. How should these investments be allocated to maximize social welfare? In this proposal, I propose to develop and apply new methods to study optimal transport networks in general-equilibrium models of international trade, urban economics and economic geography. The methodology will build on recent work (Fajgelbaum and Schaal, 2017), in which my coauthor and I studied the network design problem in a general neoclassical trade framework.
In the first project, I develop a new framework to analyze optimal infrastructure investment in an urban setting. The model features people commuting between residential areas and business districts as well as a choice over the mode of transportation. We plan to evaluate the framework to historical data about specific cities.
In the second project, I propose and implement an new algorithm to compute optimal transport networks in the presence of increasing returns to transport, a likely prominent feature of real-world networks. The algorithm applies a branch-and-bound method in a series of geometric programming relaxations of the problem.
In the third project, I study the dynamic evolution of actual transport networks using satellite data from the US, India and Mexico. In the spirit of Hsieh and Klenow (2007), I use the model to measure distortions in the placement of roads between rich and poor countries.
In the fourth project, I study the inefficiencies and welfare losses associated with political economy frictions among governments and planning agencies. I use the model to identify inefficiencies and relate them to measures of institutions and political outcomes.
In the final project, I propose a new explanation behind the Zipf’s law distribution of city sizes. I show that Zipf’s law may result from particular topological properties of optimal transport networks that allocate resources efficiently in space.
Max ERC Funding
887 500 €
Duration
Start date: 2019-01-01, End date: 2023-12-31
Project acronym PERSISTDEBT
Project Debt and Persistence of Financial Shocks
Researcher (PI) Jose Luis Peydro Alcalde
Host Institution (HI) UNIVERSIDAD POMPEU FABRA
Call Details Consolidator Grant (CoG), SH1, ERC-2014-CoG
Summary In 2007 the US and Europe were overwhelmed by a banking crisis, which was followed by a severe economic recession. Historical studies show that financial crises are followed by periods of substantially stronger contraction of aggregate output and employment than non-financial recessions. Those studies also point out that the best predictor of financial crises is an ex-ante strong credit boom which, after the beginning of the crisis, followed by negative overall credit growth. Lastly, financial crises take a long time until recovering the pre-crisis levels.
Why are the effects of credit shocks so strong and persistent over time? Is this effect explained by costly household deleveraging? What is the effect of household debt on consumption, savings and employment? Are there any benefits of debt in crises? Do some effects of the financial crisis work through a reduction in credit supply to firms and projects with high innovative content and productivity (high overall return, but with high credit and liquidity risk for the lenders)? Or are the cleansing effects in financial crises concentrated on the less productive firms? Can macroprudential policies based on strict control of loan-to-value ratios stop the building up of excessive household debt?
We plan to construct several new datasets to study these issues by merging information from different sources. For some issues, like the analysis of the effect of household debt on consumption and employment, we can take advantage of a natural experiment of randomized allocation of debt among individuals derived from the use of lotteries to allocate the rights to buy housing in Spain. In comparison to the existing literature, we can exploit the exogenous variation generated by these lotteries and some other combination of data (including exhaustive credit data) to obtain causal evidence and quantification on the interaction between debt, systemic risk, crises, and the new macroprudential policy.
Summary
In 2007 the US and Europe were overwhelmed by a banking crisis, which was followed by a severe economic recession. Historical studies show that financial crises are followed by periods of substantially stronger contraction of aggregate output and employment than non-financial recessions. Those studies also point out that the best predictor of financial crises is an ex-ante strong credit boom which, after the beginning of the crisis, followed by negative overall credit growth. Lastly, financial crises take a long time until recovering the pre-crisis levels.
Why are the effects of credit shocks so strong and persistent over time? Is this effect explained by costly household deleveraging? What is the effect of household debt on consumption, savings and employment? Are there any benefits of debt in crises? Do some effects of the financial crisis work through a reduction in credit supply to firms and projects with high innovative content and productivity (high overall return, but with high credit and liquidity risk for the lenders)? Or are the cleansing effects in financial crises concentrated on the less productive firms? Can macroprudential policies based on strict control of loan-to-value ratios stop the building up of excessive household debt?
We plan to construct several new datasets to study these issues by merging information from different sources. For some issues, like the analysis of the effect of household debt on consumption and employment, we can take advantage of a natural experiment of randomized allocation of debt among individuals derived from the use of lotteries to allocate the rights to buy housing in Spain. In comparison to the existing literature, we can exploit the exogenous variation generated by these lotteries and some other combination of data (including exhaustive credit data) to obtain causal evidence and quantification on the interaction between debt, systemic risk, crises, and the new macroprudential policy.
Max ERC Funding
1 308 676 €
Duration
Start date: 2015-07-01, End date: 2020-06-30
Project acronym SocialMedia
Project Social Media, Political Participation, and Accountability
Researcher (PI) Ruben Enikolopov
Host Institution (HI) UNIVERSIDAD POMPEU FABRA
Call Details Starting Grant (StG), SH1, ERC-2014-STG
Summary The goal of the project is to examine how advances in information technologies affect public policies. In particular, it will empirically investigate the causal effect of social media on political participation. The first part of the project will examine the effect of social media penetration on participation in political protest activities, as well as the mechanisms that drive these effects, using a specific example of protests activities in Russia in 2011-2012. We will exploit idiosyncratic variation in the early penetration of social media across cities to identify causal effect of social media penetration on participation in protest activities. We will also exploit the effects of early penetration on the distribution of users across competing online social networks to examine the role of coordination as a specific mechanism behind the effect. The second part of the project will use content analysis of the messages in social media and detailed information on the network structure and its evolution over time to study (1) the effect of network structure on the diffusion of information and subsequent actions; (2) the effect of offline events on network formation. Exogenous shock in the form of unexpected wave of protest activities will be used to identify the effects of interest. Smaller parts of the project will use survey experiments and cross-country comparison of the content of traditional and social media to provide additional evidence on the mechanisms behind the effects of social media. The project will be mainly empirical, but it will rely heavily on the theoretical advances in the fields of political economy and network analysis.
Summary
The goal of the project is to examine how advances in information technologies affect public policies. In particular, it will empirically investigate the causal effect of social media on political participation. The first part of the project will examine the effect of social media penetration on participation in political protest activities, as well as the mechanisms that drive these effects, using a specific example of protests activities in Russia in 2011-2012. We will exploit idiosyncratic variation in the early penetration of social media across cities to identify causal effect of social media penetration on participation in protest activities. We will also exploit the effects of early penetration on the distribution of users across competing online social networks to examine the role of coordination as a specific mechanism behind the effect. The second part of the project will use content analysis of the messages in social media and detailed information on the network structure and its evolution over time to study (1) the effect of network structure on the diffusion of information and subsequent actions; (2) the effect of offline events on network formation. Exogenous shock in the form of unexpected wave of protest activities will be used to identify the effects of interest. Smaller parts of the project will use survey experiments and cross-country comparison of the content of traditional and social media to provide additional evidence on the mechanisms behind the effects of social media. The project will be mainly empirical, but it will rely heavily on the theoretical advances in the fields of political economy and network analysis.
Max ERC Funding
1 170 625 €
Duration
Start date: 2016-01-01, End date: 2020-12-31
