ERC FUNDED PROJECTS

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.

1 207 500 €

Start date: 2015-08-01, End date: 2020-07-31

From pension reforms to UI extensions, the optimal tax and program design literature is often ill-equipped to provide clear guidance in policy debates on the reform of social insurance and tax-and-benefit systems. The reason is that this literature is mostly focused on static settings, while these programs are inherently dynamic: they specify a schedule of tax and benefits that is time or state dependent and they affect individuals’ decisions throughout their lifetime. DYNAMICSS will offer a simple and general approach to the analysis of optimal dynamic policies that connects to the data. The key idea of DYNAMICSS is to extend the sufficient statistics (SS) approach to dynamic settings and characterize the full time profile, rather than the average generosity, of social insurance and transfer policies. By expressing optimal policy as a function of a limited set of statistics, the SS approach has the advantage of making clear the trade-offs implied in optimal tax or benefit formulae and of tightly integrating the theory and the empirics of optimal policy analysis, to offer robust policy guidance. DYNAMICSS will use unique administrative data and cutting-edge econometric techniques to exploit compelling variations in policy profiles and offer significant contributions to the empirical analysis of dynamic behavioural responses to policies. A central contribution will be to create a unique measure of consumption expenditures based on leveraging complete administrative information on income, transfers and wealth to offer ground-breaking evidence of the effect of social insurance on consumption dynamics. Part I will use and extend the SS framework to analyse the optimal time profile of UI benefits. Part II will develop this approach for analysing the optimal design of retirement pension systems. Part III will address optimal family policies with a focus on understanding the different dynamics of men and women in the labour market, and exploring the role of cultural norm

1 049 855 €

Start date: 2016-03-01, End date: 2021-02-28

Information technology revolutions transform the production and exchange of ideas and drive profound institutional and cultural change. History provides unique settings to document the causal impact of changes in information technology and institutions, and the best evidence on their long-run effects. The objective of the research is to document the impact of revolutionary transformations in information technology and institutions using evidence from the European Renaissance. Printing was the new information technology of the Renaissance and is arguably the best parallel to the internet. Print media transmitted ideas that led to significant institutional change. But no quantitative research systematically documents the impact of these innovations. The research will innovate by constructing ground-breaking micro-data on media markets, human capital, and institutions; developing cutting edge estimators for high-dimensional data to measure ideas in the media; and using historical sources of exogenous variation to identify cause and effect. The research has three strands. The first will document the impact of competition on idea diffusion and institutional change during the Protestant Reformation. The research will construct firm-level data on all known books in German-speaking Europe 1450-1600, use high-dimensional estimators to measure ideas in print, and identify exogenous variation in competition from archival data. The second strand will document the origins of persistent differences in human capital accumulation by constructing new data on city laws that set up the first experiments in public education and on virtually all German university students 1400-1550, and by using local shocks to support causal inference. The third strand will document the impact of organizations supporting knowledge diffusion that were complementary to printing by constructing data on all European scholarly societies and journals and using historical shocks to identify their impact.

1 275 044 €

Start date: 2015-05-01, End date: 2020-10-31

The typical 20th-century firm was capital-intensive and competed on cost efficiency. The 21st-century firm is different. Competitive success increasingly depends on product quality, which in turn hinges on intangible assets such as brand strength, innovation, and corporate culture. Unlike tangible investment such as buying a factory, the fruits of intangible investment may take several years to appear. A manager pressured to maximise short-term earnings may fail to invest, jeopardising the long-term future of his firm. This project will study the determinants and consequences of long-term investment through three linked components. Financial Markets. The traditional view is that financial markets dissuade investment by forcing firms to cater to short-term shareholders. I will study two channels through which markets promote investment. First, traders gather information about a firm’s past investments and incorporate it into stock prices by trading - rewarding the manager for good investment. Second, traders can gather information about a firm’s future investment opportunities - informing the manager about his future investment decisions. I aim to analyse what determines the efficiency of both channels. Incentives. Most research on incentives focuses on either the level of pay, or the sensitivity of pay to performance, but it is the horizon of incentives that is key to promoting investment. I will theoretically analyse the optimal incentive horizon, and empirically demonstrate how it affects long-term decisions. Moving beyond managers, I will study how to incentivise teachers to focus on their pupils’ long-run development rather than “teaching-to-the-test.” Effects of Investment. A key to inducing long-run investment is to demonstrate its benefits, but this is difficult due to data availability. I aim to gather data on a firm’s corporate social responsibility – its investment in its stakeholders – and link it to firm value.

899 105 €

Start date: 2015-04-01, End date: 2018-03-31