What determines post-compulsory academic studies? Evidence from the longitudinal survey of young people in England

We show that educational attainments at the end of the compulsory schooling stage are powerful predictors for post-compulsory educational choices in England. In particular, the single academic success indicator of achieving the Government’s gold standard in GCSE is able to predict virtually all the observed incidences of post-compulsory studies for academic qualifications. Notwithstanding, Two-Stage Least Squares estimation which exploits variations in school starting age induced by school entry rules suggests that the least-squares effect of achieving the gold standard in GCSEs on studying for academic qualifications is due to ability bias or reverse causation.     

What determines outstanding corporate debt mix? Evidence from fractional multinomial logit estimation

This study employs the fractional multinomial logit setting proposed by Papke and Wooldridge (1996) to examine factors driving the choice among nonbank private (144A) debt, bank loans and public debt made by 988 nonfinancial firms during 1993–2007. We document that the majority of firm-level factors have persistent effects on corporate outstanding debt mix across economic conditions. We also highlight the importance of macroeconomic variables on firms’ borrowing decisions as predicted by Diamond (1991). Finally, we document a substitution effect among debt financing sources due to credit rating downgrades, which is inconsistent with Rauh and Sufi (2010).     

How does violence affect exporters? Evidence from political strikes in Bangladesh

Using novel daily data, we examine the impact of political violence on firm‐level export activity. Our data cover the universe of political strikes and export transactions in Bangladesh during 2010–2013 and allow us to examine the effects of these strikes at a highly granular level. We first show that multiday political strikes lower the likelihood that a firm will export by 6.30 percentage points. We then examine whether these disruptions result in adverse effects on export prices. Given that this violence creates greater risk of missed shipments, importers may respond by demanding lower prices as compensation. We provide the first evidence of such adverse price effects of political violence. Our results suggest that during July to December, 2013, when there was a multiday political strike every 5 days, the prices of time‐sensitive Bangladeshi products declined by 1.59%.     

What Drives Entrepreneurship in Digital Economy? Evidence from China

Using data collected in the 2017 China Household Finance Survey (CHFS), we study the impact of mobile payment on the likelihood of household entrepreneurship. In the empirical analysis, we use two-stage least squares (2SLS) regression to address the endogeneity of mobile payment. The study finds that mobile payment significantly increases the likelihood of household entrepreneurship. The mechanism could be that the mobile payment: 1) makes users more risk seeking; 2) enriches social networks; 3) provides an additional lending channel.     

What makes green persuasion effective? Evidence from a community-financed sanitation program in Indonesia

Understanding when and where face-to-face communication affects pro-environmental decisions is important for policymakers. We study a data set collected in a solicitation project intended to increase participation in a community-financed waste collection program in Indonesia. Two types of messages are developed and randomly assigned to 748 households. In addition, solicitors are randomly assigned to a control group or one of two treatment groups, and these groups are shuffled further midway through the project. These two orthogonal randomizations allow us to assess the impact of a combination of messages, solicitors and households. We find that the “help the children” message increases the probability of participation for households with a young child. Solicitor personality is associated with immediate participation but becomes nonsignificant after three months. Furthermore, a household is more likely to participate if a solicitor knows the respondent personally. These results suggest that, at least in the short term, important factors in encouraging behavioral changes include not only the contents of messages but also the type of sender of such messages. This paper highlights the possible impact of targeting and content-sender-receiver matching when persuasive communication is used as an environmental policy instrument.     

What determines households inflation expectations? Theory and evidence from a household survey

The purpose of the present paper is to study how households form inflation expectations using a novel survey dataset of Italian households. We extend the existing ‘inattentiveness’ literature by incorporating explicitly inflation targets and distinguishing between aggregate and disaggregate dynamics based on demographic groups. We also consider both the short- and long-run dynamics as households update their inflation expectations. While we find clear distinctions between the various demographic groups behavior, households tend to absorb professionals forecast. The short-run dynamics also indicate they not only overreact when updating their expectations but also adjust asymmetrically to any perceived momentum change of future inflation.     

Does government R&D stimulate or crowd out firm R&D spending? Evidence from Chinese manufacturing industries

We examine whether receiving a government R&D grant stimulates or crowds out a firm’s own R&D spending in Chinese manufacturing industries. Using a database that spans the population of large and medium size privately owned Chinese manufacturing firms for the period from 2007 to 2011, a matching estimator and a matching and difference in‐differences estimator, we find a large firm R&D promoting effect of government R&D: receiving a government R&D grant led to a 4 to 9‐million‐yuan increase in a firm’s own R&D expenditures. This is a significant effect since the average R&D expenditures ranged from 5 to 9 million yuan in the year before receiving the grant. To understand the mechanisms behind this effect, we compare the before‐ and after‐treatment performance and behaviour of the treated and the control firms. We find that the government R&D receiving firms became more profitable following their receipt of the grant. We also find that receiving a government R&D grant increases the likelihood of a firm continuing its R&D performance after receiving the initial grant.     

Is health care a necessity or a luxury? Evidence from urban China

This article uses a smooth transition regression (STR) model to research the income elasticity of the health care expenditure of China’s urban residents in the 1990–2013 period. The results demonstrate that if the real income of China’s urban residents that lags a period is taken as a transition variable, urban residents’ health expenditure follows an LSTR1 nonlinear two-regime model. Here, the income elasticity of health care expenditure of China’s urban residents is 1.4919 in 1990–2002 and 1.2216 in 2003–2013. Overall, the income elasticity of health care of China’s urban residents is greater than 1, indicating that health care is a luxury.     

Is Public Capital Productive in China? Evidence from a Panel of Chinese Provinces

In addition to the direct productivity effect, public capital also has an indirect effect on private capital stock and labor input. This paper offers an evaluation of both the direct and indirect effects of Chinese public capital by applying a trans-log aggregate production function including public capital stock to a panel of regional data from 1986–2009. Moreover, we calculate the impact of public capital on regional total factor productivity (TFP) performance by introducing a system GMM estimation. The results show that the output elasticity of Chinese public capital stock is significantly positive, but decreasing year on year, and public capital is found to be a substitute for labor but complementary to private capital input. Finally, public capital has a significant positive effect on regional TFP performance.     

What determines the productivity growth? Evidence from Chinese renewable energy firms by using Bayesian stochastic frontier approach

This paper examines the determinants of the total factor productivity (TFP) growth of Chinese renewable energy firms from 2011 to 2016, using a Bayesian stochastic frontier approach. Employing the “Bauer–Kumbhakar” decomposition method, the TFP growth is decomposed into the technology part and the market part. The empirical results reveal that the TFP improvement of Chinese renewable energy firms is mainly due to technical progress, followed by technical efficiency change. With regard to the market part, the misallocation of production factors has hindered the TFP growth. Our findings also indicate that only for large firms, the TFP growth can benefit from the scale economy effect. Compared with non‐state‐owned firms, state‐owned firms suffer much lower allocative efficiency.     

What matters in the finance–growth nexus of advanced economies? Evidence from OECD countries

Over the last decades, a large strand of finance and growth literature has provided ample evidence on the importance of financial deepening for economic development. Yet, recently, the focus of public debate has shifted towards the role of the financial system structure, an area in which empirical research remains relatively sparse and exploratory in nature. With this article, we aim to contribute to that debate by analysing the role the financial system structure plays in economic growth and risk. Focusing on stock markets and studying OECD economies over 1994–2013, we find that, ceteris paribus, financial systems with relatively larger stock markets facilitate economic growth and dampen economic risk. Our findings remain robust under application of instrumental variable and system generalized method of moments estimators, as well as when we use an alternative definition of stock market development, estimate median regressions, examine relatively high-frequency annual data, control for systemic banking crises or apply quadratic specifications. We find no such effect for private bond markets or private credit volume. Overall, our results suggest that financial system structure matters for the economic development of advanced economies and highlight the importance of a debate about the optimal structure of an economy’s financial system.     

Optimistic income expectations and meeting those expectations: What matters for well-being in a developing country?

This paper examines the impact of income expectations and the extent to which these expectations are met, on subjective well-being. For the Indonesian sample, expectations had asymmetric effects on well-being, with pessimistic expectations having a strong adverse effect compared with a weak positive effect of optimism. Optimism improves only females' and not males' well-being while pessimism has the reverse effect on both genders' well-being. Although unmet expectations reduced well-being for all subgroups, the mediating role of social capital to negate this was limited to some subgroups. Results point toward a gendered policy agenda and the rural–urban divide to improve well-being.     

Encouraging skill development: Evidence from public-private partnerships in education in Russia’s regions

How and when are governments able to encourage firms and schools to work together to develop workers’ skills? Upgrading the quality of human capital in the workforce is widely seen as a key challenge faced by countries looking to escape the “middle income trap.” Growing attention has been paid to public-private partnerships (PPP) between individual firms and schools as a powerful tool for meeting this challenge, but key facilitators of PPP thought crucial in existing studies – strong, independent employers’ associations and labor unions – are often missing in such settings. To explore the emergence of PPP in skill development in the developing world, we draw on recent reform experiences in Russia’s regions that have led to a surge in complex, costly forms of PPP despite weakly developed business associations and unions. We argue that variation in the administrative capacity of regional governments and their political accountability explains this surge. Strong administrative capacity reassures all parties that regional authorities can monitor their counterparties’ compliance with agreements, while political accountability creates incentives for authorities to do so. We test our argument using original data on the existence and content of firm-school partnerships across all Russia’s regions for 2013.     

Are children an incentive or a disincentive for migration? Evidence from Vietnam

This study analyzes the influence of children on household migration decisions using data on current internal movement in Vietnam a country that has experienced significant rural–urban migration in the recent years. Families with children usually have three migration choices: move together, stay together or send only one parent to work afar. Using an instrumental variable approach, we show that having an additional child reduces the probability of household migration by 0.0115, while it increases the likelihood of fathers’ migration by 0.0121. These effects suggest that households with more children may be less mobile but may have a greater economic need for migration.     

Should Welfare Administration be Centralized or Decentralized? Evidence from a Policy Experiment

The 2005 reform of the German welfare system introduced two competing organizational models for welfare administration. In most districts, a centralized organization was established where local welfare agencies are bound to central directives. At the same time, 69 districts were allowed to opt for a decentralized organization. We evaluate the relative success of both types in terms of integrating welfare recipients into employment. Compared to centralized organization, decentralized organization has a negative effect on employment chances of males. For women, no significant effect is found. These findings are robust to the inclusion of aspects of internal organization common to both types of agencies.     

Does formal financial development crowd in informal financing? Evidence from Chinese private enterprises

The relationship between formal and informal finance is uncertain. They serve as substitute for high-quality borrowers but are complement for low-quality borrowers. As formal financial institutions expand, they may concentrate on high-quality borrowers or diversify among borrowers of different qualities. Using unique survey data from Chinese private firms, we are allowed to investigate the relationship for a group of borrowers who were considered as low-quality. We find that formal financial development imposes a crowd-in effect for private firms’ informal financing, especially in East China. There is heterogeneity between East and West China. We document that the crowd-in effect is greater for private firms with bank access or of large size.     

What explains consumption in the very short-run? Evidence from checking account data

This paper investigates consumption behavior within an intertemporal optimization model of the representative household. Our dataset consists of deposits and withdrawals from individual household checking accounts that received paychecks by direct deposit. We construct samples of panel data for households with weekly, biweekly, and semi-monthly pay-periods and form two different measures of consumption for each sample. GMM estimates of structural parameters provide mixed evidence for habit formation or durability and limited support for the permanent income hypothesis. The results instead point to “rule of thumb” consumption under liquidity constraints, where the household consumes its current disposable income each pay-period with possible debt servicing. These findings are uniform with regard to estimation of sub-samples split according to age or household income.     

What drives the short-run costs of fiscal consolidation? Evidence from OECD countries

We investigate how the short-term effects of fiscal consolidation on output and employment vary with the state of the business cycle, monetary policy, public debt, the current account, and private credit. By examining the response of a large number of variables, we are also able to shed light on the transmission channels of fiscal policy. Our main finding is that short-term output multipliers are below unity, even in states in which multipliers are expected to be larger (eg when the output gap is negative or monetary policy tight). Key offsetting factors that reduce the size of multipliers and explain differences across states are the extent to which the external sector improves and monetary policy eases.     

What drives the reversal of the gender education gap? Evidence from Germany

We study the mechanisms that are associated with the gender education gap and its reversal in Germany. We focus on three outcomes, graduation from upper secondary school, any tertiary education and tertiary degree. Neither individual and family background nor labour market characteristics appear to be strongly associated with the gender education gap. There is some evidence that the gender gap in upper secondary education reflects the rising share of single parent households which impacts boys’ attainment more than girls’. The gender education gap in tertiary education is correlated with the development of class sizes and social norms.