Risk Aversion at the Country Level
In this paper we provide estimates of the coefficient of relative risk aversion for 80 countries using data on self-reports of personal well-being from the Gallup World Poll. For most countries we cannot reject the null hypothesis that the coefficient of relative risk aversion equals 1. We conclude that our result supports the use of the log utility function in numerical simulations.
Tax competition and tax harmonization with evasion
We examine a two-jurisdiction tax competition environment where local governments can only imperfectly monitor where agents pay taxes and risk-averse individuals my choose to cross borders to pay lower taxes in a neighboring location. ; In the game between local authorities, when communities differ in size, in equilibrium the smaller community sets lower taxes and attracts agents from the larger jurisdiction. With identical communities, tax rates must be equal. Whenever the smaller community benefits from tax harmonization, the larger one will also. ; If the high-tax community chooses a ...
Immigration at the extremes of the skill distribution
According to economists, in the 1980s and 1990s, immigration of low-skilled workers may have increased the labor supply of highly skilled women, and immigration of highly skilled workers may have increased the rate of innovation in the United States.
Give me your skilled.
Clustered Housing Cycles
Using a panel of U.S. city-level building permits data, we estimate a Markov-switching model of housing cycles that allows for idiosyncratic departures from a national housing cycle. These departures occur for clusters of cities that experience simultaneous housing contractions. We find that cities do not form housing regions in the traditional geographic sense. Instead, similarities in factors affecting the demand for housing (such as average winter temperature and the unemployment rate) appear to be more important determinants of cyclical comovements than similarities in factors affecting ...
Patterns of interstate migration in the United States from the survey of income and program participation
The authors describe the Survey of Income and Program Participation (SIPP) as a data source for migration studies. The SIPP is a panel dataset that provides information on income, employment outcomes, and participation in government programs. Survey participants are interviewed for up to four years even if they move to a new household or that household migrates within the United States. This unique longitudinal design gives the survey a strong advantage over traditional data sources. The authors illustrate differences in the propensity for interstate migration among different demographic ...
The earned income tax credit at work
Racial profiling or racist policing? bounds tests in aggregate data
State-wide reports on police traffic stops and searches summarize very large populations, making them potentially powerful tools for identifying racial bias, particularly when statistics on search outcomes are included. But when the reported statistics conflate searches involving different levels of police discretion, standard tests for racial bias are not applicable. This paper develops a model of police search decisions that allows for non-discretionary searches and derives tests for racial bias in data that mixes different search types. Our tests reject unbiased policing as an explanation ...
The effect of neighborhood contagion on mortgage selection
In this paper we conduct an empirical investigation of how neighborhood mortgage adoption contagion affects mortgage product choice, with an emphasis on Hispanic borrowers. We use loan-level mortgage data for metropolitan areas in California and Florida during 2004 and 2005, the peak years of the subprime mortgage boom. We identify an important and statistically significant effect of contagion on consumer choice of hybrid mortgage products that were popular during this period, especially for Hispanic borrowers.
Regional aggregation in forecasting: an application to the Federal Reserve's Eighth District
Hernndez-Murillo and Owyang (2006) showed that accounting for spatial correlations in regional data can improve forecasts of national employment. This paper considers whether the predictive advantage of disaggregate models remains when forecasting subnational data. The authors conduct horse races among several forecasting models in which the objective is to forecast regional- or state-level employment. For some models, the objective is to forecast using the sum of further disaggregated employment (i.e., forecasts of metropolitan statistical area (MSA)-level data are summed to yield ...