Will knowing diabetes affect labor income? Evidence from a natural experiment

This paper analyzes the impact of diabetes awareness on labor income using data from a natural experiment in China. We find that diabetes in general leads to a 16.3% decrease in annual income after people being diagnosed, and the adverse impact is heterogeneous across different populations.     

Are there pre-programme effects of active placement efforts? Evidence from a social experiment

This note estimates pre-programme effects of active placement programmes. Estimation is based on a social experiment conducted in three Swedish counties in 2004. I find that placement programmes could substantially increase transitions both to jobs and other exits before programme start.     

Are impatient farmers more risk-averse? Evidence from a lab-in-the-field experiment in rural Uganda

Based on data from a field-experiment in rural Uganda, we show that impatient farmers are more risk-averse than patient farmers. We relied on a simplified version of the Convex Time Budget (CTB) method to elicit farmers’ time preferences and on an independent method for eliciting their risk-preferences. We report two important findings. First, we show that our simplified CTB method applied to farmers from Uganda replicates the key findings of Andreoni and Sprenger’s lab experiments that involved student subjects. Second, we establish the existence of a negative correlation between risk tolerance and impatience, based on two independent measures.     

Are financial returns really predictable out-of-sample?: Evidence from a new bootstrap test

Testing the out-of-sample return predictability is of great interest among academics. A wide range of studies have shown the predictability of stock returns, but fail to test the statistical significance of economic gains from the predictability. In this paper, we develop a new statistical test for the directional accuracy of stock returns. Monte Carlo experiments reveal that our bootstrap-based tests have more correct size and better power than the existing tests. We use the forecast combinations and find that the stock return predictability is statistically significant in terms of reduction of mean squared predictive error relative to the benchmark of historical average forecasts. However, the results from our tests show that the predictability is not economically significant. We conclude that there will be still a long way to go for forecasting stock returns for market participants.     

How to hire helpers? Evidence from a field experiment

How to hire voluntary helpers? We shed new light on this question by reporting a field experiment in which we invited 2859 students to help at the ‘ESA Europe 2012’ conference. Invitation emails varied non-monetary and monetary incentives to convince subjects to offer help. Students could apply to help at the conference and, if so, also specify the working time they wanted to provide. Just asking subjects to volunteer or offering them a certificate turned out to be significantly more motivating than mentioning that the regular conference fee would be waived for helpers. By means of an online-survey experiment, we find that intrinsic motivation to help is likely to have been crowded out by mentioning the waived fee. Increasing monetary incentives by varying hourly wages of 1, 5, and 10 Euros shows positive effects on the number of applications and on the working time offered. However, when comparing these results with treatments without any monetary compensation, the number of applications could not be increased by offering money and may even be reduced.     

Are costs really sticky and biased? Evidence from manufacturing listed companies in China

Recent studies on cost behaviour have proved that cost increase caused by business expansion is larger than cost decrease caused by business downsizing. This cost stickiness behaviour contradicts the traditional theoretic assumption that cost level and business size change in a linear way. This article investigates the existence or non-existence of cost stickiness using a sample of China’s manufacturing listed companies during the period 2010–2014. First, our findings show that cost stickiness is a pervasive phenomenon and overestimated in the manufacturing industry. Second, we find that cost stickiness varies greatly across industries and in different regions. Finally, we find that cost stickiness is affected by the economic growth. Specifically, cost stickiness increases with the macroeconomic growth. Our results from China’s manufacturing listed companies provide evidence on asymmetric cost behaviour and contain important implications for both cost accounting research and financial accounting research.     

Are house prices in South Africa really nonstationary? Evidence from SPSM-based panel KSS test with a Fourier function

This study applies the sequential panel selection method (SPSM) to investigate the time-series properties of provincial house prices for entire, large, medium and small middle-segments of South Africa. Quarterly time-series data were collected from nine provinces in South Africa for different house-size categories over the period of 1978.Q1 to 2012.Q4. Whereas other panel-based unit-root tests are joint tests of a unit root for all members of a panel and are incapable of determining the mix of integrated of order zero (I(0)) series and integrated of order one (I(1)) series in a panel setting, the SPSM proposed by Chortareas and Kapetanios (2009) can clearly identify how many and which series in the panel are stationary processes by classifying a whole panel into a group of stationary and nonstationary series. The empirical results from several panel-based, as well as standard pure time-series, unit-root tests, indicate that house prices for the nine provinces studied here are either stationary or nonstationary. However, results from the SPSM using the panel version of the Kapetanios et al. (KSS, 2003) test with a Fourier function unequivocally indicate that house prices are stationary for the nine provinces under study. Our test results have important economic and policy implications for South Africa.     

Do entry barriers reduce productivity? Evidence from a natural experiment

I study how entry barriers affect productivity by exploiting the collapse of the US sugar cartel as a natural experiment. Using difference-in-difference estimations, I find the eradication of entry barriers caused a 35% increase in productivity within the treatment group.     

Is real GDP stationary? Evidence from a panel unit root test with cross-sectional dependence and historical data

We use historical data that cover more than one century on real GDP for industrial countries and employ the Pesaran panel unit root test that allows for cross-sectional dependence to test for a unit root on real GDP. At first, we find strong evidence against the unit root null. Our results seem to be robust to the chosen group of countries and, in most cases, the sample period. However, the sequential panel selection method reveals that the rejection of the unit root null is due to the stationarity of real GDP in a few countries only. Real GDP is less stationary mostly in fixed exchange rate regimes like the Gold Standard and the Bretton Woods system.     

Are real exchange rates nonlinear with a unit root? Evidence on PPP for Italy: a note

In this article, we apply the recently developed threshold autoregression model to examine both linearity and stationarity of Italy's real exchange rate vis-à-vis her six trading partner (G6) countries. Our main finding is that Italy's real exchange rate is a nonlinear process that is not characterized by a unit root process for five of six trading partner countries. This provides strong support for purchasing power parity.     

Labor or consumption taxes? An application with a dynamic general equilibrium model with heterogeneous agents

This study analyzes the effects of tax reform that shifts tax burden from labor to consumption. In this context, I also deal with the issue of progressivity. Even though this kind of tax policy change has recently gained popularity, its positive effects are debatable while the offsetting effect of a consumption tax on labor supply makes the net output change rather ambiguous. I examine these effects using a dynamic general equilibrium model with heterogeneous agents. The model is calibrated to fit certain characteristics of the Finnish economy. In addition to output and employment effects, I study the tax reform's effect on income and wealth distribution. First, I find that eliminating progressivity in labor taxation increases output via increase in capital accumulation that comes, however, in expense of slightly more inequality. Then, tax reform that replaces progressive labor taxes with a flat-rate consumption tax leads to a significant rise in capital accumulation, a negligible change in labor supply and gross labor income distribution, but a relatively considerable increase in wealth concentration.     

Are costs really sticky? Evidence from publicly listed companies in the UAE

This article measures the degree of adjustment between operating revenues and costs for publicly listed companies in the United Arab Emirates (UAE). Traditional cost models assume that variable costs change proportionally in response to an upward or downward fluctuation in demand. However, in recent years, such an assumption has been questioned by a variety of papers from the economics and accounting fields. Typically, cost stickiness is defined as costs decreasing by less than 1% when sales decrease by 1%, while reacting closer to the proportion of change when sales increase. This study, unlike the vast majority of the literature, did not find cost stickiness in the UAE after using panel data regression analysis. The main explanation is that UAE has mostly expatriate labour force that does not have the typical benefits of employment protection legislation (EPL) available in other national jurisdictions. EPL is a main reason that costs adjustments during decreasing sales is curbed due to the associated costs of firing employees.     

Does oil corrupt? Evidence from a natural experiment in West Africa

This paper explores the oil discovery announcements in Sao Tome and Principe (1997-1999) to assess the role of natural resources in determining corruption. For this purpose, we use a natural experiment framework which contrasts Sao Tome and Principe to Cape Verde, a control West African country sharing the same colonial past and important recent economic and political shocks. Our measurement is based on tailored household surveys we conducted in both island countries. The unique survey instrument was retrospective and used personal histories to elicit memories from the respondents. We analyze changes in perceived corruption across a wide range of public services and allocations. We find clearest increases on vote buying, education (namely in the allocation of scholarships) and customs, ranging from 31 to 40% of the subjective scale. We interpret these findings as symptoms of increased competition for core state resources.     

Do watching eyes affect charitable giving? Evidence from a field experiment

The presence of implicit observation cues, such as picture of eyes, has been shown to increase generosity in dictator games, and cooperative behavior in field settings. I combine these approaches, by testing if a picture of watching eyes affects unconditional giving in a natural environment, where the recipient is a charity organization. Taken together, this study reduces the influence of three potential confounding factors in previous experiments: (i) experimenter demand effects, (ii) that the facial cue reminds subjects of a human counterpart, and (iii) a social multiplier effect. Specifically, the paper reports results from an experiment, conducted in a Swedish supermarket chain, where customers face a naturally occurring decision problem. People who recycle cans and bottles have to choose whether to keep the recycled amount or donate it to a charity organization. By posting a picture of human eyes on recycling machines, I am able to test whether this causes an increase in donations to the charity. Based on a sample covering a 12-day period, 38 stores and 16775 individual choices, I find no general effect. However, when controlling for store and day fixed effects, and using a proxy for store attendance, the picture of eyes increased donated amount by 30 percent during days when relatively few other people visited the store. This result gives further support to the conclusion that subtle social cues can invoke reputation concerns in humans, although the relatively small effect suggests that previous estimates could be biased upward, or at least that the influence of observational cues is context dependent.     

Does the relationship between income and child health differ across income groups? Evidence from India

This study explores the relationship between child health and socioeconomic status (health-income gradient) using the Indian Human Development Survey-II (2011-12) for children up to 5 years of age. Unlike previous studies our empirical analysis allows the gradient to vary across different income intervals using linear and cubic spline regressions. We use objective measure of child health - height-for-age Z-scores and find that an increase in income, on an average leads to reduction in prevalence of stunting. We also find differential effect of income on health across the income distribution with no effect of income on child health for very poor households. Further we explore underlying factors explaining the gradient and find that maternal health, housing quality, sanitation, non-infectious environment, media exposure to women and a safe neighbourhood are transmission channels that affect child health and together they explain almost 40% of the overall income effect. One of the major implication of our findings is that any policy to increase income of poor households should be complemented with a health policy designed specifically towards children as poor households are less likely to allocate additional income to child health.     

Is cooperation instinctive? Evidence from the response times in a public goods game

We use data on response times from a public goods experiment to test the hypothesis that cooperation is instinctive, under the assumption that the longer the time of the decision, the less instinctive the choice. Results seem to support the hypothesis that cooperation is instinctive, while defection is ‘rational’. Moreover, as the experiment is designed also to assess the effects of the consumption of relational goods on cooperation, we are also able to state that some types of relational goods, like team working, produce additional cooperation, but make it less spontaneous. We also detect that females seem to behave less instinctively than males.     

Does preschool education attendance matter? Evidence from a natural experiment in Spain

The non-compulsory and non-free of charge character of preschool education level before 3 years old in Spain raises some doubts about the exogenous nature of this variable. This article provides new evidence about the impact of preschool years on educational outcomes by exploiting a peculiar Spanish database that supplies information on two classrooms at fourth grade in primary schools where students were randomly allocated into each group. Using an identification strategy that reproduces a natural experiment, we find that belonging to the group with more average years of preschool education significantly and positively impacts on fourth-grade students’ average outcomes. Particularly, an increase of one standard deviation in the difference in years of preschool attendance results in an increase of 0.16 (0.13) standard deviations in the group achievement for mathematics (reading). In view of the importance of preschool education and considering that preschool attendance before 3 years old is related with socio-economic variables, we conclude that extending free preschool education to the 2-year-old age group in Spain should be considered especially for students in families with less favourable backgrounds.     

Is high-speed rail heading towards a low-carbon industry? Evidence from a quasi-natural experiment in China

Existing studies have investigated the environmental dividends of substituting high-speed rail (HSR) for other energy-intensive vehicles from an engineering standpoint, but they have yet to explore the economic effects of HSR and the associated carbon emissions reduction benefits. To fill the research gap, we use panel data from 285 Chinese cities between 2004 and 2014, and employ a spatial difference-in-differences model to empirically examine the impact of HSR opening on industrial CO₂ emissions. After controlling for spillover effects from neighboring HSR cities, our results show that cities offering HSR services significantly reduce their own industrial CO₂ emissions. This finding is robust and is unaffected by outliers, control group selection, time trends, geography and expectation factors, or endogeneity. The mechanism test reveals that the structural transformation effect, technological innovation effect, and investment attractiveness effect are three intermediate influence channels. Further research finds that the emissions reduction benefit increases as the spatial and temporal intensities of HSR openings ascend the ladder, and HSR services have a spillover effect within a 300-kilometer radius. Moreover, the carbon benefit of China’s HSR far surpasses its carbon footprint, indicating that China’s HSR is green after accounting for economic emissions reductions that were often neglected in prior research. Based on these findings, we recommend that China accelerate HSR expansion in order to reduce carbon emissions in a scientific and responsible manner.     

Can sickness absence be affected by information meetings? Evidence from a social experiment

During the last decade several empirical studies have stressed the importance of norms and social interactions for explaining sickness-absence behavior. In this context, public discussions about the intentions of the insurance, and of the rights and duties of the receivers, may be important for reducing the sickness absence. In this article, we study whether information meetings about the Swedish sickness insurance affect the length of sickness-absence spells. The study is based on experimental data on individuals with weak labor market attachments. The displacement of when the call to the meeting was sent out was randomized. Comparing the survival functions of those called immediately with those whose calls were delayed (by about 30 days) makes it possible to study whether the length of sickness absence is affected by receiving the call earlier. The result suggests that the length is reduced by, on average, 20%. In the long term (12 months later), there is no effect of the information meeting. This suggests that attendance to the information meeting does not change individuals’ long-term behavior.