The Lasting Well-Being Effects of Early Adulthood Macroeconomic Crises

This paper studies the effects of macroeconomic crises experienced in early adulthood on subjective well-being (SWB) later in life. Using repeated cross-sectional survey data of over 100,000 individuals from 38 countries around the world combined with historical data on macroeconomic circumstances, I find that having experienced a macroeconomic crisis at ages 18–25 is detrimental to SWB. This result is in line with earlier literature that focuses on other individual-level outcomes. However, the analysis presented in this paper reveals that outcomes related to individual’s earnings, employment status, family life, and religion cannot fully explain the lasting effect of macroeconomic crises on well-being. Results on heterogeneous responses show that the negative effect is largest for females and for individuals with low educational attainment.     

Impact of unemployment on happiness in the United States

This study considers the level of demonstrated happiness and unhappiness, the latter measured by the conditional probability of committing suicide within groups that are facing a higher unemployment rate and those that are not. Using individual-level US data from 1989 to 2004, our findings indicate that individuals have lower rates of suicide or are ‘happy’ when they live in a state that has lower unemployment rate.     

The 2008/09 Economic Crisis: The Impact on Psychological Well-Being in the USA

The 2008/09 economic crisis has been the worst crisis of capitalism since the Great Depression. The causes and implications of the so-called “Great Recession” have been widely documented, but the effects of the crisis on psychological well-being have only received limited attention. Using state-level data, this paper aims to assess empirically the impact of the 2008/09 crisis on several indicators of mental health in the USA. The results indicate that unemployment and income levels have a significant and detrimental impact on mental health. This implies that social protection systems—and in particular labor market programs—play a paramount role in reducing the adverse impact of the crisis on mental health.     

The Impact of Social Segregation on the Labor Market Outcomes of Low-Skilled Workers*

We study the impact of network homophily on labor market outcomes in a search-and-matching model with two job search channels: the formal market and social contacts. There are two worker types: low-skilled and high-skilled workers. The homophily level determines whether the referral networks of the two types are mixed or segregated from each other. We show that there exists an intermediate homophily level that minimizes the unemployment rate and maximizes the wages of low-skilled workers. Complete integration does not maximize the welfare of low-skilled workers, unless it improves their productivity. We argue that our model can explain the empirical findings on the labor market effects of the Moving-to-Opportunity experiment and the integration of immigrants.     

The Impact of Social Comparisons on Reciprocity*

In this paper, we investigate how social comparison information about referent others (i.e., learning what similar others do, and how they are treated) affects reciprocal relationships. Using three‐person gift‐exchange games, we study how employees’ reciprocity towards an employer is affected by pay comparison information (what co‐workers earn) and effort comparison information (how co‐workers perform). We find strong evidence of the effects of effort comparison: employees are more willing to reciprocate by choosing high effort in response to a high wage if they observe others doing so. In our setting, we find somewhat weaker evidence of the effects of pay comparison.     

The randomness of rational expectations: a perspective on Sargent's early incentives *

This paper searches for the story Thomas Sargent is likely to have told when he was trying to use rational expectations economics in the late-1960s and early 1970s. An argument will be made for his interest in achieving what he would regard as conceptual integrity of the determinism in neoclassical economic theory and the randomness in econometrics. This involves providing a narrative of how he came to the idea of rational expectations and what he had to relinquish to be able to put his initial interpretation of the concept to use.     

环境质量对居民幸福感的影响——从追求健康水平的消费动机出发

采用世代交叠模型(OLG)分析框架,研究了环境质量对居民幸福感的影响机制,即追求健康水平的消费动机,并利用CGSS2010年住户调查数据进行实证分析。结果显示:无论居民是否关注环境问题,环境污染越严重,家庭消费支出越高;环境污染越严重,关注环境问题的居民的幸福感越低;环境污染是否严重不会改变不关注环境问题的居民的幸福感;居民的环保意识不会影响其环保意愿,但会影响其环保支出意愿,不关注环境问题的家庭有"搭便车"倾向;不同区域、不同污染类型的环境问题对居民幸福感的影响存在差异;收入差距会改变人们的环保行为。     

The Impact of Traded Goods Prices on the New Zealand Economy*

Recent empirical work in Australia and New Zealand reveals a diversity of estimates of the dynamic response to changes in traded goods prices. Similarly, there is conflicting evidence as to whether relative purchasing power parity is a characteristic of models estimated from data. In this paper it is argued that a reduced form approach to empirical modelling is appropriate for New Zealand's particular circumstances. The resulting model is simulated in a novel way, with results that argue against the use of a simple traded/non-traded goods distinction in the analysis of foreign price impacts on New Zealand. Purchasing power parity is, however, consistent with the results.     

The Impact of Chinese Exports on Global Import Prices*

This paper evaluates the evidence bearing on the question of whether China's buoyant export growth has led to significant changes in the import prices, and thus inflation performance, of its trading partners. This evidence suggests that the impact of Chinese exports on global import prices has been, while non‐ negligible, fairly modest. We identify a statistically significant effect of US imports from China on US import prices, but given the size of this effect and the relatively low share of imports in US GDP, the ultimate impact on US consumer prices has likely been quite small. Moreover, imports from China had little apparent effect on US producer prices. Finally, using a multi‐country database of trade transactions, we estimate that, since 1993, Chinese exports lowered annual import inflation in a large set of economies by 0.25 percentage point or less on average.     

The Well-Being Cost of Inflation Inequalities

In terms of well-being, how costly is inflation? To answer this question, empirical evaluations have typically studied average inflation rates at the national level, thus disregarding the role of inflation inequalities within a country. In this article, we relax the assumptions that heterogeneous consumers face homogeneous inflation rates, and study the correlation between price changes and self-reported satisfaction with living standards. We use newly available data from France and adopt two approaches. First, we focus on individually perceived inflation and use the internationally harmonized Opinion Price Index as a proxy for experienced inflation. Variations in perceived inflation help predict well-being differences among consumers, even when controlling for relevant sociodemographic factors, personality traits, and common method variance. We estimate their marginal impact to be higher than equivalent variations in nominal income. Second, we compare groups of consumers over time and find that changes in the price of a good disproportionately affect the relative well-being of those who consume it. The study shows that the well-being cost of the inflation crisis would be underestimated if looking at aggregate figures only.     

Going Through Hell: Increased Work Effort in the Aftermath of Terrorism in Norway*

I analyze how sickness‐absence behavior in Norwegian municipalities was affected by exposure to the terrorist attack in Norway in 2011. The main finding is that in municipalities from which a resident was killed in the attack, sickness absence declined by 4 percent compared with municipalities without victims. The effect is precise, stable, and persistent. The results do not seem to be driven by changing labor market composition. The effect is found also in neighboring municipalities and is larger for people close to the age of the victims.     

The information content of market-based measures for the long-term inflation expectations of professionals: evidence from a midas analysis

Long-term inflation expectations taken from the Survey of Professional Forecasters are a major source of information for monetary policy. Unfortunately, they are published only on a quarterly basis. This article investigates the daily information content of market-based measures, such as inflation-linked swaps and breakeven inflation rates, for the next survey outcome. Using a mixed data sampling approach, we find that professionals account for the daily dynamics of market-based measures when they submit their long-term inflation expectations. We propose a daily indicator of professionals’ inflation expectations that outperforms alternative indicators that ignore the high-frequency dynamics of market-based measures. To illustrate the usefulness of the new indicator, we provide new evidence on the (re-)anchoring of U.S. inflation expectations.     

通货膨胀对武广高铁客流的影响

武广高铁作为世界上一次建成里程最长、运营速度最快的高速铁路,伴随着客流的增长已经多次调整了列车运行图。但是,期间中国经济在2010年第四季度开始出现明显的通货膨胀,人们对接下来一年的预期通货膨胀也在加重。武广高铁是否会出现列车虚糜,高铁客流是否会因通胀下降,成为人们担心的问题之一。本研究首先分析了通体货膨胀引起的财富和社会福利在穷人和富人之间的重新分配的问题,接下来由此展开,从预期通胀、票价形成机制和管理权限、服务的目标客户群、收入水平的增长幅度、国家宏观调控等多角度展开敏感性分析,结果表明,通货膨胀对武广高铁的客流虽有影响,但影响不大。     

The Impact of Incomes Policy on Aggregate Wage Determination in Australia*

A model of aggregate wage determination for Australia is developed and used to examine the effects of incomes policies on the level of real wages. A theoretical model of wage determination which includes several channels of incomes policy effects is specified and estimated using aggregate data. The results provide strong evidence to support the view that during periods of certain incomes policies there have been important changes in behaviour in the Australian labour market. In particular, during the period of the Prices and Incomes Accord it is estimated that equilibrium real wages were over 5 per cent below what would have been expected from previous experience.     

The Impact of Productivity Growth on the Costs of Production in Australian Manufacturing Industries*

The primary objective of this study is to examine the impact of technological progress on costs of production in 34 Australian manufacturing industries. An analytical model incorporating the notion of factor-augmenting technological change was developed and applied to each industry. The results indicated that in most of the industries technological progress during the period 1954–55 to 1981–82 had been biased towards augmenting labour and thereby reducing the cost of labour per unit of production. The implication of the analysis is that there is a nexus between incomes policy and the rate and bias of factor-augmenting technological change.     

The Economic Impact of the Proposed National Superannuation Scheme for Australia*

Employing a framework commonly used in the analysis of Government tax-transfer programmes, an attempt is made to assess the proposed National Superannuation Scheme for Australia. It is argued that the scheme would almost totally relieve poverty amongst pensioners, as well as being likely to reduce income inequality in a more general sense and compensate for fundamental failures in the capital market. However, the scheme does not compensate for a major failure in the insurance market which, if it did, would provide a justification for one important aspect of the scheme, namely earnings related benefits.     

The Role of Central Bank Transparency for Guiding Private Sector Forecasts*

Central banks have become remarkably more transparent over the last few decades. In this paper, we study the effects of this evolution, focusing on whether enhanced central bank transparency lowers dispersion among professional forecasters of key economic variables. We use a large set of proxies for central‐bank transparency in 12 advanced economies. We find evidence for a sizeable effect (e.g., by announcing a quantified inflation objective, or by publishing inflation and output forecasts). However, there are decreasing marginal effects to increases in transparency, and the disagreement among the expectations of the general public is not affected. This suggests that there are possible limits to transparency.     

Islamist terrorism and the status of women

We investigate the effect of Islamist terrorist activity on women's legal position in society, using data for 171 countries between 1970 and 2016. To identify causal effects, we exploit the prevalence of Islamist terrorism in neighboring countries as an exogenous source of variation, arguing that regional terrorism affects local terrorism through contagion effects. We show that increased activity by Islamist terrorist groups is linked to lower legal status of women. By contrast, we find that neither Islam per se nor other types of terrorism have comparable effects. This reinforces the notion that Islamist terrorism is singularly interested and effective in weakening women's rights. Our results are consistent with a rational-economic model of terrorism, where Islamist terrorists purposefully use violence to maximize political utility, while governments make concessions that constrain the role of women because the costs of compliance are lower than the harm from continued Islamist terrorism.     

The Impact of Immigration on a Depressed Labour Market: The South Australian Experience*

This paper examines the impact of immigration on the relatively depressed labour market in South Australia during the 1976-81 inter-censal period. The findings indicate that recently arrived immigrants have experienced exceedingly high unemployment rates. However, this is consistent with the view that immigration generates additional job opportunities for Australian residents (except in the manufacturing industry and trades occupations), and that immigrants experience high unemployment rates specifically because they have been unable to compete a 'fair share' of jobs away from residents already entrenched in the labour market.     

Achievement Bias in the Evolution of Preferences

Currently, economists' models of the evolutionary selection of utility function parameters are generally based on two assumptions. First, it is assumed that utility parameters must serve Darwinian fitness, in the sense that individuals who maximize utility are also maximizing their biological survivability. Second, it is assumed that utility parameters accurately reflect well-being, in the sense that individuals who maximize utility also maximize their happiness. However, there is a large literature in anthropology, biology, and psychology suggesting that these two assumptions may not be warranted. Focusing on utility and happiness, the paper uses models of cultural selection to show that there is no guarantee that our evolved preference must be the preferences that maximize our happiness. Instead, there are plausible mechanisms of cultural selection that will allow immiserating preferences to persist in steady state equilibrium. These mechanisms are generally related to the concept of social achievement: those who achieve more in society will have a greater influence on the utility parameters of the next generation, and this influence is independent of the achievers' well-being. Thus, a preference is more likely to survive if it satisfies some mix of achievement goals and happiness goals, rather than just happiness goals alone. This revised version was published online in July 2006 with corrections to the Cover Date.