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      Department of Economics Research

      Abstract Report 2021

The Effect of Land Size and Market Distortions on Bolivian Farmers

Access to more land may not lead to income gains for smaller farms in Bolivia. Restrictions on the use of land as collateral cause imperfections in credit and labor markets that lead to lower income as farms reach the institutional threshold for the land’s collateralization.

Sponsors: Oklahoma State University, Oklahoma Department of Human Services

PI/PDs: Lee C. Adkins, Bidisha Lahiri

Oklahoma Department of Human Services: Naneida Lazarte-Alcala

 

Unauthorized Immigration: the theoretical effects of a dual labor market

The effects on wages, employment, and output in an economy where unskilled labor is employed solely in labor intensive occupations are explored using a two-sector general equilibrium model.

Sponsor: Oklahoma State University

PI/PD: Lee C. Adkins

 

A Shrinkage Estimator for Endogenous Regressor Models and Weak Instruments. A shrinkage estimator is proposed that takes a convex combination of two-stage least squares and efficient 2-step GMM estimators. Shrinkage is controlled based on FEFF (see Andrews, 2018).

Sponsor: Oklahoma State University

PI/PD: Lee C. Adkins

 

Promoting Economic Literacy: Combining News Articles and Clicker Questions in a Large Introductory Microeconomics Course

The author of this article presents a brief introduction to the use of current events news articles in an introductory microeconomics course for business students. Popular press articles are integrated with small-group peer instruction, and student understanding is assessed using student response system, or clicker, questions. Examples of lesson learning objectives are presented, along with a discussion of how news articles and clicker questions are combined to promote student interest and engagement. Sample clicker questions are also provided.

Sponsor: Oklahoma State University

PI/PD: Laura J. Ahlstrom

 

Gender and Performance in Intermediate Microeconomics: Does the Format of the Principles of Microeconomics Course Matter?

This study analyzes the effect that completing an introductory microeconomics course online or face-to-face has on student performance in intermediate microeconomics, paying particular attention to the gender question in online education. We find no significant correlation between completing the principles course online and men’s intermediate microeconomics course grades. However, female students who complete principles of microeconomics online perform significantly better in intermediate microeconomics, though the marginal benefit diminishes the higher the principles grade. Additionally, the grades students of both genders receive in face-to-face principles of microeconomics courses have a significant, positive effect on their intermediate microeconomics performance.

Sponsor: Oklahoma State University

PI/PD: Laura J. Ahlstrom

 

Instructor Gender and Student Performance in Introductory Economics Courses: Is There a Role Model Effect?

Past research in economic education has revealed a gender gap in undergraduate economics. Studies also show that the quality of the instructor leads to better outcomes for students and that instructors can act as role models for students. Our study examines the role model effect in the context of the gender gap in achievement in introductory collegiate economics courses. Using an ordered regression, we find that female students perform significantly better in introductory economics courses when taught by female instructors while controlling for other variables.

Sponsor: Oklahoma State University

PI/PD: Laura J. Ahlstrom

 

Are Instructors Role Models Indirectly? Testing the Relationship between Instructor Gender, Course Performance and Undergraduate Economics Major Selection

Prior research has found student performance in introductory economics courses is positively correlated with choosing economics as a major. Although the association between instructor gender and students’ economics major selection is less evident, students may earn higher grades in courses taken with same-gender instructors. As a result, students’ economics major choice may be indirectly influenced by the gender of their introductory economics course instructors through the assignment of course grades. This study examines the relationship between instructor gender, students’ introductory economics course grades and economics major selection.

Sponsor: Oklahoma State University

PI/PD: Laura J. Ahlstrom

 

Grades as Reference Points: Impact on Performance and Motivation

This study examines how students’ grades on an initial exam affects their

future test performance. Students who achieve desirable grades on their first tests may not exert less effort on the next test compared to students who earn an initial test grade that is lower than their “goal grade”. We hypothesize that a student who receives a score of 72 (narrowly earning a C) on the first test may perform differently on their next test relative to a student who has received a score of 68 (narrowly missing a C) on the first exam.

Sponsor: Oklahoma State University

PI/PD: Laura J. Ahlstrom

 

Women in the Finance Major: Gender Disparities in Finance Course Completion and Degree Attainment

This study assesses the gender gap in undergraduate students’ finance course persistence, defined as taking an additional finance course after completing an initial course, as well as gender disparities in students’ finance degree selection. The research is guided by the following question: How do student, instructor, and structural (class) characteristics differentially affect gender persistence in taking finance courses and the propensity to earn a finance degree?

Sponsor: Oklahoma State University

PI/PD: Laura J. Ahlstrom

 

Quiet Restaurants near Political Power Centers: How Has the Anti-Corruption Campaign Changed a Consumer City?

China's 2012 Eight-point Regulation, imposed harsh austerity measures on the spending of government officials. The effect of the regulation remains an open question. Using data from a large online review platform for retail stores, we take a spatial difference-in-differences approach to investigate the impact of the regulation on restaurant consumer spending in Beijing. Establishment-level regressions document a substantial post-regulation decline in the consumer spending of the restaurants close to power centers. The impact is greater for the restaurants in government-designated hotels, for those in proximity to the power centers with higher political accountability, and on weekdays.

Sponsors: Oklahoma State University, Central University of Finance and Economics, Chinese Academy of Sciences, Massachusetts Institute of Technology

PI/PDs:  Rui Du

Central University of Finance and Economics: Weizeng Sun

Chinese Academy of Sciences: Jianghao Wang

Massachusetts Institute of Technology: Siqi Zheng

 

High-stakes Examinations and Educational Inequality: Evidence from Transitory Exposure to Air Pollution

This paper provides the first evidence of the educational inequality that arises from air quality degradation and a minimum-passing-score exam policy. Using unique data on a large-scale high-stakes college English test in China, we study the impact of random disturbances to cognitive performance on access to graduate education. Tracking repeat exam takers over multiple exams, a panel model with individual fixed effects documents significant adverse cognitive effects of transitory air pollution exposure. The adverse effects vary considerably by the severity of air pollution, exam section, student academic ability, and gender. We further show that the harmful cognitive effects reduce students’ chances of getting into graduate school.

Sponsors: Oklahoma State University, Tsinghua University, Central University of Finance and Economics, Beijing Jiaotong University

PI/PDs:  Rui Du

Tsinghua University: Hui Deng

Central University of Finance and Economics: Dongmei Guo, Weizeng Sun

 

Higher Education, College Location, and Migration

Using college enrollment data and nationally representative population census data, this paper examines the impact of college education and college location on later-life migration in China. We take advantage of the in- and out-of-province variation in college enrollment driven by China's massive higher education expansion to identify the effects. Our results show that an increase in either in- or out-of-province college enrollment leads to a higher probability of college attendance. Only out-of-province college expansion increases the likelihood of attending college out-of-province. Using a two-step instrument variable approach, we find a modest negative effect of college education per se and a positive effect of college location per se on later-life migration.

Sponsors: Oklahoma State University, Jinan University, Dickinson College

PI/PDs:  Rui Du

Jinan University: Shu Cai

Dickinson College: Xiaozhou Ding

 

The Network Effect of Air Pollution: Evidence from the Housing Market in China

This paper examines the housing market reaction to changes in the non-local housing investor attention due to the degraded air quality. Based on a sample of 39 prefectural-level cities in China, we document a strong positive effect of local air pollution on housing prices in other cities, which reflects investors’ propensity to make out-of-town purchases. A city’s out-of-town housing attention increases dramatically following heavily polluted days in the local area.

Sponsors: Oklahoma State University, Central University of Finance and Economics, Massachusetts Institute of Technology, Zhejiang University

PI/PDs: Rui Du

Central University of Finance and Economics: Weizeng Sun

Massachusetts Institute of Technology: Siqi Zheng

Zhejiang University: Zhaoyingzi Dong

 

International Travel Cost and Entrepreneurship Comovement

Despite the rapid advances in digital communication tools, information exchange and the transmission of tacit knowledge via in-person interactions are still of great importance to entrepreneurs and venture capitalists. Using new international non-stop flight routes as a natural experiment, this article examines whether a reduction in international travel cost increases the comovement of new firm formation in connected cities across different countries. Using panel data at the US-China city-pair level from 1990-2017, we demonstrate that a reduction in information frictions induced by geography has a substantial positive impact on business matches between entrepreneurs and investors of the two countries. The evidence confirms the importance of efficient transportation networks in facilitating information exchange and long-range business matches.

Sponsors: Oklahoma State University, Massachusetts Institute of Technology

PI/PDs: Rui Du

Massachusetts Institute of Technology: Wang Jin

 

Proximity, Knowledge Diffusion, and Technology Similarity: Evidence from the High-speed Rail in China

Using the high-speed rail (HSR) expansion in China as a natural experiment, this paper identifies the effect of travel cost reduction due to HSR connection between cities on technology similarity. We are able to identify similar effects using a wall-city instrumental variable approach based on the minimum cost spanning tree. The effect is stronger for cities that are farther away to each other in distance but closer to each other in technology space. Our findings highlight the role of travel cost in influencing regional knowledge diffusion and technology space integration.

Sponsors: Oklahoma State University, Southeast University

PI/PDs: Rui Du

Southeast University: Yingcheng Li

 

State Business Incentives, Firm Demographics, and Innovation

Technology-based, innovation-driven startups are central to regional productivity, economic development, and job creation in the United States. State and local governments offer numerous and varied programs, financial incentives, and tax breaks to promote innovation-driven entrepreneurship and attract high-growth startups. This paper examines how the dynamics in the state governmental provision of financial and tax incentives influence the age distribution of innovation-driven startups. We further investigate the distributional effects of the firm age distribution on innovation activities.

Sponsors: Oklahoma State University, Southeast University

PI/PDs: Rui Du

Southeast University: Yingcheng Li

 

College Location and Migration: Evidence from China’s Higher Education Expansion

Using college enrollment data and the 1% national sample-census population data, this paper examines the impact of college education expansion on individual decisions about education and mobility. Our findings suggest that college location impacts college graduates’ geographic mobility in an equally important way as college education does.

Sponsors: Oklahoma State University, Jinan University, Dickinson College

PI/PDs: Rui Du

Jinan University: Shu Cai

Dickinson College: Xiaozhou Ding

 

The effect of trade liberalization on marriage and fertility: Evidence from Indian Districts

We examine the medium-run (1991-2001) and long-run (1991-2011) impacts of the 1991 trade liberalization in India on marriage and fertility rates among young women aged 15-34 years. We exploit the fact that the countrywide tariff reductions varied across industries creating exogenous local labor market shocks based on the initial industrial composition of the district. We find that districts that were more exposed to tariff cuts witnessed a larger increase in the marriage rate, especially in urban areas. On average, the trade reform had no negative impact on the employment of young men and women.

Sponsor: Oklahoma State University

PI/PDs: Mehtabul Azam, Shruti Sengupta

 

Trade Liberalization and Human Capital Accumulation: Evidence from Indian Census

We use the 2011 Indian census data, and exploit the exogeneous nature of Indian trade liberalization and cohorts that attended school before and after the reforms to implement a Difference-in-Difference strategy to estimate the impact of trade-liberalization on human capital accumulation. We also construct a district-level panel data that covers 1981-2011, and use a Difference-in-Difference strategy to get an alternative estimate of the impact of Indian trade liberalization on human capital accumulation. We find that no evidence of trade-liberalization on attainment of different stages of schooling.

Sponsor: Oklahoma State University

PI/PD: Mehtabul Azam

 

Household Cooking Fuel Choice in India, 2004-2012: A Panel Multinomial Analysis

Using household level panel data, we examine factors driving the cooking fuel choice in urban and rural India, separately. We find that a clean-break with the use of traditional fuels is less likely in rural areas, but more probable in urban areas. The household characteristics (e.g. income, education) that are positively correlated with use of clean fuel also increases the probability of fuel stacking for rural households. We also find that access to paved road is an important determinant for rural household adopting clean fuel, and there exists evidence of social spillover effects in rural areas.

Sponsor: Oklahoma State University

PI/PDs: Mehtabul Azam, Ying-Min Kuo

 

Household Income Mobility in India, 1993-2011

Using longitudinal data, we examine income mobility among rural Indian households over 1993-2004 and 2004-2011. Absolute measures of mobility suggest higher income mobility during 2004-2011 compared to 1993-2004, and each social group witnessed higher income mobility over 2004-2011. Importantly, significant differentials in income mobility exist across the Hindu castes in both the time intervals. We also find that conditional on having similar rankings in base period national income distribution, urban households have higher probability to improve their rankings in national income distribution. We find similar patterns in social group differentials in mobility over 2004-2011 using the consumption expenditure as a measure of well-being.

Sponsor: Oklahoma State University

PI/PD: Mehtabul Azam

 

Does access to clean energy reduces women household burden?

Access to modern energy is one of the most basic requirements for development. In rural areas of developing countries, there are a large number of people who do not have access to LPG and depend on traditional biomass such as wood, crop, and dung for cooking. One of the reasons for low labor force participation is women’s time spent on domestic works. In this paper we look at the question whether access to clean energy reduces time spent in domestic work, and free up women for labor force.

Sponsor: Oklahoma State University

PI/PDs: Mehtabul Azam, Su Qinghe 

 

Trade Liberalization and its impact on Social Group Welfare Gap

We examine the causal impact of the 1991 Indian trade liberalization on the evolution of conditional welfare gaps across social groups. We hypothesize that the trade reforms would induce foreign competition and thus, reduce the inherent taste-based employer discrimination in the Indian labor market. While we find medium-run (transitional) effects of trade openness on caste-based labor market discrimination, the impact dies out in the long-run. This indicates the existence of discrimination against the marginalized groups in spite of increased competition.

Sponsor: Oklahoma State University

PI/PDs: Mehtabul Azam, Shruti Sengupta

 

Tax Increment Financing and Spatial Spillovers in Oklahoma City: Estimating the Localized Marginal Effects of Proximity to TIF Districts

Tax increment finance (TIF) is a critical component of local economic development policy. In contrast to previous research, we recognize the limitation of a linear spatial specification. Instead, we adopt a Gaussian-process regression specification to estimate the functional form that defines the relationship between a dependent variable and its functional arguments. Our findings suggest that much care should be taken when drawing TIF boundaries, recognizing that a small but potentially important subset of parcels could be relegated to the outside of the development zone and left without access to the public support that similar parcels inside the TIF are afforded. 

Sponsors: Oklahoma State University; Oklahoma City University

PI/PDs:  Mary N. Gade

Oklahoma City University: Russell Evans

 

A Localized Analysis of Property Tax Incidence Across Space and Time

This paper explores the hypothesis that the incidence of the property tax may vary across jurisdictions. We pool observations from 17 independent school districts in Oklahoma County, Oklahoma across 27 years (1982-2008) and investigate the responsiveness of the tax base to changes in the jurisdiction’s tax rate relative to the county average. Using a Finite Mixture Model approach that allows for estimation of distinct and heterogeneous components, we find evidence that the economic incidence varies across jurisdictions, across time within a jurisdiction, and across specific property tax levies within a jurisdiction.

Sponsors: Oklahoma State University, Oklahoma City University

PI/PDs:  Mary N. Gade

Oklahoma City University: Russell Evans

 

Child Marriage and the Role of Brides: Descriptive Evidence from Six West African Countries

Although almost universally banned, child (under the age of 18) remains a pervasive issue throughout the world. In this study, we quantify the importance of the child marriage problem, on which evidence remains surprisingly scarce. To do so, we use data we collected in Burkina Faso, Chad, Côte d’Ivoire, Mali, Mauritania, and Niger – six West African countries where child marriage rates are particularly high. This extensive dataset allows us to compare the characteristics of girls based on their age when they first married.

Sponsors: Oklahoma State University, Paris-Dauphine University, Paris School of Economics, The World Bank

PI/PDs: Harounan Kazianga

Paris-Dauphine University: Olivia Bertelli, Elise Huillery

Paris School of Economics: Bastien Michel

C4ED: Markus Olapade

The World Bank: Estelle Koussoubé, Léa Rouanet

 

Exposure to Agricultural Technologies and Adoption: The West Africa Agricultural Productivity Program in Ghana, Senegal and Mali

 We estimate the effects of increased exposure to agricultural technologies on farmers’ adoption and economic well-being in Ghana, Mali, and Senegal. The program, known as the West Africa Agricultural Productivity Program (WAAPP), aimed at improving agricultural productivity to enhance economic growth, food security and to reduce poverty and ran in two phases. We focus on the second phase of the program, which ran between 2012 and 2019. We use ex-ante matching at the village and household levels to select the estimation sample. We find that the treatment raised technology adoption by 0.32 percentage points and the adoption of improved seeds by 0.20 percentage points.

Sponsors: Oklahoma State University, University of Ouagadougou, Burkina Faso

PI/PDs: Harounan Kazianga

University of Ouagadougou, Burkina Faso: Anurag Deb

 

Pathways out of Extreme Poverty: Tackling Psychosocial and Capital Constraints with a Multi-faceted Social Protection Program in Niger

This analyzes a four-arm randomized evaluation of a multi-faceted economic inclusion intervention delivered by the Government of Niger to female beneficiaries of a national cash transfer program. All three treatment arms include a core package of group savings promotion, coaching, and entrepreneurship training, in addition to the regular cash transfers from the national program. The first variant also includes a lump-sum cash grant and is similar to a traditional graduation intervention (“capital” package). The second variant substitutes the cash grant with psychosocial interventions (“psychosocial” package). The third variant includes the cash grant and the psychosocial interventions (“full” package). The control group only receives the regular cash transfers from the national program.

PI/PDs: Harounan Kazianga

Sponsors: Oklahoma State University, Northwestern University, Catholic University of Louvain, Paris School of Economics, The World Bank

Northwestern University: Dean Karlan, Chris Udry

Catholic University of Louvain: William Parenté

Paris School of Economics: Kelsey Wright

The World Bank: Thomas Bossuroy, Patrick Premand, Julia Vaillant

 

Agricultural Transformation and Farmers' Expectations:  Experimental Evidence from Uganda This paper uses a randomized control trial to study Ugandan subsistence smallholders' decisions to adopt cash crops. A unique way of eliciting farmers price and yield expectations allows us to investigate the role of farmers' ex-ante beliefs about crop profitability on adoption decisions. We find that the provision of extension services increases oilseeds adoption by 15%, and farmers who under-estimate oilseeds price at baseline are the most likely to adopt the new crops. The results suggest that changes in expectations drive agricultural technology take-up.

Sponsors: Oklahoma State University, University di Milano--Bicocca, Centro Studi L.d'Agliano,

PI/PDs:  Harounan Kazianga

Universita di Milano--Bicocca, Centro Studi L.d'Agliano: Jacopo Bonan, Mariapia Mendola

 

The Effects of Old Age Pension Program on African Young Adults’ Labor Force Participation and Schooling

We examine the effects of South Africa’s Old Age Pension (OAP) program on labor force participation and schooling of African young adults aged 15-34 using a regression discontinuity design. The results suggest that OAP Program has a significant secondary effect on African young adults and could help address inter-generational poverty in South Africa.

Sponsors: Oklahoma State University, Ministry of Finance, Liberia

PI/PDs:  Harounan Kazianga

Ministry of Finance, Liberia: Mounir Siaplay

 

A Decade Later: The Long-Term Effects on Education and Young Adults Outcomes of School Infrastructure

We evaluate the long-term effect of a “girl-friendly” primary school program in Burkina Faso, using a regression discontinuity design. The intervention consisted in upgrading existing three-classroom schools to six-classroom schools in order to accommodate more grades.  After 6 years, the program increased enrollment by 15.4 percentage points and increased test scores by 0.29 standard deviations. Students in treatment schools progress farther through the grades, compared to students in non-selected schools. These upgraded schools are effective at getting children into school, at getting children start school on time and at keeping children in school longer.

Sponsors: Oklahoma Stata University, University Texas, Mathematics Policy Research

PI/PDs: Harounan Kazianga

University of Texas: Leigh Linden

Mathematics Policy Research: Nicholas Ingwersen, Arif Mamun, Ali Protik, Matt Sloan

 

Evidence from a Randomized Evaluation of the Household Welfare Impacts of Conditional and Unconditional Cash Transfers Given to Mothers or Fathers.

We conducted a randomized control trial in rural Burkina Faso to estimate the impact of alternative cash transfer delivery mechanisms on education, health, and household welfare outcomes. The two-year pilot program randomly distributed cash transfers that were either conditional or unconditional and were given to either mothers or fathers. Conditionality it was linked to older children enrolling in school who were attending regularly and younger children receiving preventive health check-ups. Compared to the control group, cash transfers improve children’s education and health and household socioeconomic conditions. For school enrollment and most health outcomes, conditional cash transfers outperform unconditional cash transfers.

Sponsors: Oklahoma Stata University, The University of Illinois at Urbana Champaign, The World Bank

PI/PDs: Harounan Kazianga

University of Illinois at UC: Richard Akresh

The World Bank: Damien de Walque

 

Uncertainty Shocks, Asymmetric Dynamics, and Inflation Targeting: A Nonlinear

Approach

This study investigates the impact of uncertainty shocks on macroeconomic activity in developed and emerging economies.  A Smooth Transition VAR model is employed to document the state-dependent dynamics of two distinct types of uncertainty shocks, financial market based and news-based.  When nonlinearity is allowed to play a role in our model, quantitatively very different asymmetric dynamics are observed.  Following inflation targeting, the responses tend to be smoother and less pronounced.  Our empirical results support the view that the link between uncertainty and macroeconomic activity is clear over both recessions and expansions.

Sponsors:  Oklahoma State University, Bank of Ozark, AR

PI/PDs:  J.B. Kim

Bank of Ozark: Kevin Larcher

 

Oil Price Shocks and Macroeconomic Dynamics: A Nonlinear Approach

We study the business cycle-dependent nonlinear effects of global oil price shocks on US aggregate economy.  For this purpose, we decompose the oil price changes into supply and demand shocks and assess the state-dependent dynamics of structural shocks on U.S. industrial production, employment, and inflation using a Smooth Transition VAR model.  We find evidence that declines in employment and industrial production conditional on recessions are shown to have quantitatively larger and more persistent.  Headline inflation is found to display substantially greater reactions during economic contractions. 

Sponsors: Oklahoma State University,  National Assembly Research Service

PI/PDs:  J.B. Kim

National Assembly Research Service: Inwook Hwang

 

FDI, Economic Growth and Convergence Clubs: A Nonlinear Approach

To study the relationship between FDI and growth with more homogeneous countries we employ an array of convergence tests designed to capture nonlinear transitional dynamics with 62 countries spanning the period of 1987-2016.  Our new empirical evidence therefore suggests that there is a potential maximum financial development threshold beyond which the positive effect of FDI on economic growth becomes negligible, suggesting that more finance is not necessarily better for the nexus in each convergence club.  The nonlinearity and homogeneity in the convergence club may actually reflect the kick in effect at the beginning and the vanishing effect in the end.

Sponsors:  Oklahoma State University, Millikin University

PI/PDs:  J.B. Kim

Millikin University: Michael Osei

 

Financial Development, Innovation, and Market Structure: Evidence from Industry Level Data

We study the nonlinear effects of financial development on innovation as well as the potential mechanism, using a unique Research Quotient database. Our findings can be summarized as follows. 1) Significant inverted-U effects of financial development on innovation. 2) The effects of both markets are sector-specific. Specifically, the nonlinear effect of the equity market works by influencing the high technology industries, while that of the credit market mainly affects the non-high technology industries. 3) We find that the nonlinear effect of financial development on market competition serves as a potential channel through which finance affects innovation nonlinearly.

Sponsor: Oklahoma State University

PI/PDs:  J.B. Kim

Wichita State University: Xiaoyang Zhu

 

Effect of India's De-monetization on its Exports

The Indian economy has a large segment of small businesses as well as a significant informal sector which were primarily cash based. The government’s surprise move to invalidate existing currencies overnight in an attempt to clear unaccounted cash flows affected the day to day operations for a large segment of domestic producers. We examine the impact of this policy on exports and imports with the expectation of the effect to be stronger in the short run than the long run as the economy adjust to the new system.

Sponsor: Oklahoma State University

PI/PDs: Bidisha Lahiri, Anurag Deb

 

Effect of Prenatal Care visits on Antenatal Outcomes: A survival model analysis

The number of weeks of pregnancy at which antenatal care was first received, the number times of antenatal care was received and whether antenatal care was received in the last three months of pregnancy are three important but similar indicators of antenatal care received during a given pregnancy. We examine the impact of each of these variables on several outcomes such as whether the delivery was at home or medical institution, the presence of skilled birth attendant during delivery, birth weight of the baby and use of postnatal care.

Sponsors: Oklahoma State University, University of Kalyani, India

PI/PDs: Bidisha Lahiri

University of Kalyani, India: Prasenjit Sarkhel

 

Entrepreneurial Effect of Income Program in India

We examine the impact of on an ambitious employment and income guarantee program for the poor in India on family entrepreneurial activities. We find that participation in this program affects family entrepreneurship both at the extensive and intensive margins, and the effect is heterogenous across the scale of the family business endeavor.

Sponsor: Oklahoma State University

PI/PDs: Bidisha Lahiri, Richard Daramola

 

Role of product life cycle in tempering international trade's impact on Indonesian Firms

Our paper empirically examines how the effect of international trade on Indonesian firms varies by the length of product life cycle and R&D activities of different industries. Our exploration is based on theoretical models that predict trade and outsourcing/FDI affect firms in developing countries differently compared to firms in developed countries like the USA.

Sponsors: Oklahoma State University, University of Texas at Arlington

PI/PDs: Bidisha Lahiri

University of Texas at Arlington: Mahmut Yasar

 

Low level equilibrium trap for women

Women are less likely to pursue a job if the cost of child-care exceeds the salary earned. While this might seem optimum in the short run, there are long run costs in terms of experience forfeited. Women who start at a lower wage job are more likely to get stuck in the equilibrium described above, while women who start at higher paid jobs circumvent the above situation. This widens the experience gap and in turn the income gap. This child-care-cost driven 2-equilibrium phenomenon should be expected to be weaker (more likely absent) for men.

Sponsor: Oklahoma State University

PI/PD: Bidisha Lahiri

 

The Multi-Headed Effects of Corruption on SMEs

We examine how informal payments to government officials reduce tax and fees payment, and number of inspections for small and medium sized firms, while at the same time relax credit constraints and make access to technology easier. While payment of bribes is also often considered necessary for the survival of firms, few studies have explored this. We take a unique empirical approach and find strong evidence of higher rate of firm deaths among firms that do not or cannot pay bribes.

Sponsor: Oklahoma State University

PI/PDs: Bidisha Lahiri, Haider Ali

 

Effect of ICT on Product Quality

Product quality, which is an important dimension of research in economics, is combined with the consideration of firm level access to information and communication technology. Using a recent econometric technique, we find that even for firms without market power, firms with ICT capabilities produce products with higher unit values, compared to otherwise similar firms within the same industries. This supports the hypothesis that ICT facilitates product quality. These results are robust to alternate specifications and estimation methods.

Sponsors: Oklahoma State University, Temple University

PI/PDs: Bidisha Lahiri, Ramesh Sharda

Temple University: Taha Havakhor

 

Household Debt and Meeting Fertility Intentions

This study examines how housing and non-housing debt impacts the probability that women meet their fertility intentions. Housing debt increases fertility for those planning to have children soon and decreases fertility for those not planning to. Housing debt also decreases the probability women have fewer children than they intended. Greater non-housing debt, on the other hand, reduces the probability of having children in the short-term, but only noticeably for non-married women. However, this reduction is not generally related to a higher probability that women have fewer total children over their lifetime than originally intended - unless those debts persist into their mid-thirties.

Sponsor: Oklahoma State University

PI/PDs: Michael Morris, Karina Shreffler

 

Neighborhood Violence, Family Stress and College Intentions

Student intentions regarding college attendance not only strongly predict earning a higher degree, but also has been found to differ by income and race. We suggest that exposure to neighborhood violence and family stress have negative impacts on college intentions. Using data collected from an in-depth interview of 206 largely minority (70%) 4th through 12th grade students, and their parents. In estimating indirect effects of neighborhood violence and family stress on college intentions, we find that neighborhood violence has a negative effect through school GPA. Family stress has a negative indirect effect through how much an adolescent enjoys school while parental involvement has a positive impact.

Sponsor: Oklahoma State University

PI/PDs: Michael Morris, Michael Criss

 

Improved IV Estimation of Vertical Property Tax Inequity

In this paper we propose a new IV estimator to be used in detecting vertical property tax inequity. We conduct Monte Carlo experiments to evaluate the bias of this estimator in comparison to traditional linear and log-linear regression based estimators. We find that the new estimator is more robust to bias across alternative average assessment ratios, even in the presences of errors-in-variables, than the IV estimator suggested by Clapp (1990) and frequently used for such purposes. Furthermore, the new instrument allows for an investigation into how strong the measurement error in sales prices relative to that in assessed values must be for the results to change from those of the traditional methods.

Sponsor: Oklahoma State University

PI/PDs: Michael Morris, Bill Dare

 

Increasing the Learning Effectiveness of Economics Education

This study develops, implements, and evaluates a new economics teaching pedagogy based on the U.S. Army’s systems approach to training model.  Using the approach, tasks are identified that compose the task domain for the Principles’ of Microeconomics course.  From the 130 identified tasks, 73 are used by Economics of Socials Issues classes for the evaluation phase.  Next each task is expanded to include task conditions, task standard, task performance steps, and task performance measures.  The developed document is called a teaching, learning, and evaluation outline (TLEO).  The same process identifies 53 tasks used in unit 3 of Money and Banking classes.  An experiment is used to assess the impact of using the TLEO documents to enhance learning.

Sponsor: State of Oklahoma

Pl/PD: William McLean

 

Estimating the Economic Effects of US State and Local Fiscal Policy: The Continued Quest for Robust Policy Recommendations

In this paper we attempt to address limitations of previous research to provide further guidance on US state and local fiscal policy making. We implement the synthetic control method (SCM) to create pairwise matches for states in subsequent regression analysis. Several economic indicators and principal component analysis are used to construct broader narratives of state economic performance and we provide updated evidence. We compare the results with those obtained from using neighbors as matches and from standard growth regressions. The SCM-based analysis produces a number of useful findings, some robust, though insufficient to provide universal policy recommendations.

Sponsor: Oklahoma State University

PIs/PDs: Dan Rickman, Hongbo Wang

 

Industry Aggregation and Assessment of State Economic Development from Motion Picture and Television Production Incentives

Studies of the economics of state fiscal incentives for the motion picture and television industry use differing levels of industry aggregation. This study unpacks aggregate sector multipliers for 48 states and shows how the use of aggregated measures for the motion picture and television industry may lead to inaccurate input-output multipliers and empirical estimates of the role of incentives in the location of the industry. We conclude that the Motion Picture and Video Production (North American Classification System Code 51211) most corresponds to incentivized activity in the industry. A hypothetical case study demonstrates practical alternatives to modifying regional input-output models to obtain more accurate economic impact multipliers.

Sponsor: Oklahoma State University

PIs/PDs: Dan Rickman, Hongbo Wang

 

Fiscal Implications of Interest Rate Normalization in the United States

We study the fiscal implications of interest rate normalization from the zero lower bound (ZLB) in the United States. At the ZLB, falling tax revenues and real bond prices increase government debt accumulation. During normalization, interest payments remain above the path without the ZLB, and government debt can increase further despite the recovery of output and tax revenues. Against the yardstick of ability to pay, interest rate normalization is unlikely to threaten federal debt sustainability at the current net federal debt level about 100% of GDP. If the government fails to reform Social Security and major healthcare programs, sovereign default risk can rise more quickly when debt reaches 150% of GDP.

Sponsors: Oklahoma State University, Federal Reserve Bank of Kansas City, Institute of Economics, Academia Sinica

PI/PDs: Wenyi Shen

Federal Reserve Bank of Kansas City: Huixin Bi

Institute of Economics, Academia Sinica: Shu-Chun Yang

 

Uncertain Policy Regime and Government Spending Effects

The literature generally suggests that money-financed government spending has much bigger multipliers than debt-financed spending. Most analyses, however, assume that policy regimes are fixed. Using a fully nonlinear New Keynesian model with endogenous policy regime uncertainty, we show that inflation-driven expectations about switching to the debt-financing regime reduce money-financed spending multipliers. When interacting with high government debt, policy regime uncertainty decreases money-financed multipliers below one. This conclusion holds at the zero lower bound and with a large spending increase. Also, policy regime uncertainty similarly decreases multipliers under active fiscal and passive monetary policies, in which seigniorage is implicitly used to finance government spending.

Sponsors: Oklahoma State University, Grinnell College, Institute of Economics, Academia Sinica

PI/PDs: Wenyi Shen

Grinnell College: Ruoyun Mao

Institute of Economics, Academia Sinica: Shu-Chun Yang

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