Priority-driven behaviors under the Boston mechanism

We study school choice markets where the non-strategy-proof Boston mechanism is used to assign students to schools. Inspired by previous field and experimental evidence, we analyze a type of behavior called priority-driven: students have a common ranking over the schools and then give a bonus in their submitted preferences to those schools for which they have high priority. We first prove that under this behavior, there is a unique stable and efficient matching, which is the outcome of the Boston mechanism. Second, we show that the three most prominent mechanisms on school choice (Boston, deferred acceptance, and top trading cycles) coincide when students’ submitted preferences are priority-driven. Finally, we run some computational simulations to show that the assumption of priority-driven preferences can be relaxed by introducing an idiosyncratic preference component, and our qualitative results carry over to a more general model of preferences.     

Learning by fund-raising

From experience, fund-raisers become more efficient solicitors. This paper offers a full characterization of the optimal solicitation strategy when there are learning economies. The characterization is recursive, and does not require equilibrium computations. Our main results are that (1) the fund-raiser may now solicit a “ net free-rider”—a donor whose contribution falls below the marginal solicitation cost; (2) the number of solicitations is non-monotonic in the learning rate; and (3) a solicitation technology with high overhead but low marginal costs is likely to be optimal if income distribution in the population is relatively homogenous. The complementary case with a decreasing returns to scale technology is also considered.     

Economic freedom and public,non-market institutions: evidence from criminal prosecution

Economic freedom, which measures the protection of property and freedom to contract, is generally argued to capture the quality of a state’s institutions regarding market activity. As to be expected, numerous studies have found that economic freedom is associated with good economic outcomes. Additionally, much effort in public economics has worked to identify the features of quality non-market public institutions. No effort has been made to connect institutions that influence market activity and institutions that govern non-market activities. We take a first step. We employ a linear programming method for measuring relative efficiencies known as Data Envelopment Analysis. We apply this technique to information on the use of inputs to the production of the prosecution of crime across the thousands of local prosecutor offices in the U.S. We then compare state-level measurements of prosecution productivity with data on state-level economic freedom from the Economic Freedom of North America index. We show that there is a positive and statistically significant relationship between the two. Those states that develop institutions respecting economic freedom also tend to be the states that develop efficient publicly-provided services. The results are extended to complementary economic freedom measurements.     

Local fiscal policy after a bailout: austerity or soft budget constraints?

Do higher-level governments enforce austerity after bailing out indebted subnational governments or are bailouts a free lunch for the recipients? Analyzing this question empirically is difficult because bailouts are not granted randomly. This paper suggests a method to evaluate the fiscal consequences of subnational bailouts that does not rely on institutional details to obtain quasi-exogenous variation. The main idea is to combine matching and difference-in-differences designs. In a second step, I apply this method to study how bailouts affect the fiscal policy of recipient municipalities in the German federal state of Hesse. Combining disaggregated budget data with data on bailout payments over more than a decade, I find that municipalities consolidate their budgets after they receive a bailout from the state government. While this finding is specific to the German federal context, the proposed methodology can be used, due to its flexibility, to study the fiscal consequences of bailouts in various other settings.     

Why Unions in the United States will Die: American Labor Organizations in the Age of Trump

This essay analyzes the effects of Donald Trump’s election as President on organized labor in the United States and, more specifically, on the demographic of workers responsible for his electoral college victory. The argument is that culture rather than economics explains Trump’s success in capturing key industrial states. His support depended on white middle-aged male voters without college degrees, the same cohort that makes up the backbone of unions in the United States. The likelihood is that Trump’s policies will further immiserate the American working class rather than reinvigorate it. In three key areas, Trump’s presidency will result in lower union membership density and higher inequality of wealth. The cultural orientation of Trump’s supporters outweighed politics, policy, and competence in selecting a national leader.     

Organizing College Athletes Utilizing the Civil Rights Unionism Model

In January 2014, Northwestern University (NU) football players filed a certification election petition with the National Labor Relations Board’s (NLRB) Chicago regional office. After the NLRB ruled that they were employees having the legal right to unionize, the football players voted at the end of April 2014 with NU immediately appealing the regional director’s ruling after the balloting. In mid-August 2015, the Washington D.C. NLRB declined jurisdiction in this case, ending the football players’ unionization attempt. Because of the NLRB’s appellate ruling, however, unionization of college athletes remains a distinct possibility. Since a majority of U.S. collegiate basketball and football players are black, this paper argues that the model of unionism that should be adopted in any unionization attempt of these college athletes is civil rights unionism which represents a continuation of the historic, collective struggle of Black athletes to obtain their rights on athletic fields and in classrooms.     

Regional energy efficiency and its determinants in China during 2001–2010: a slacks-based measure and spatial econometric analysis

Carbon dioxide (CO₂) emissions are largely driven by fossil fuels. To reduce CO₂ emissions in China, it is important to determine influential factors of energy efficiency. This paper introduces a slacks-based measure window analysis approach to evaluate regional dynamic energy efficiency during 2001–2010, and then explores energy efficiency determinants by considering spatial effects, which is conducted based on spatial econometric models. The empirical results show that there exist evident spatial correlations between regional energy efficiencies in China. We find that, there exist evident disparities in cumulative effects of energy efficiency among the eastern, central and western areas. Interestingly, significant energy efficiency spatial spillovers can be clearly found between regions within the western area and across the eastern and western areas. It is found that, energy structure, energy price, railway transportation development and R&D stock are significant at national level. However, energy structure and railway transportation development are insignificant in the central and western areas, while energy price and R&D stock are insignificant in the eastern and central areas, respectively. Industrial structure and urbanization level are found to be insignificant at national level, but industrial structure is significant in the eastern and western areas, and urbanization level is significant in the central and western areas. Surprisingly, industrial structure and urbanization level are found to have positive impacts on energy efficiency in the western area. In addition to regional disparities and local conditions, policies making should take efficiency spatial spillovers into consideration. Several interesting policy implications are achieved.     

A superlative index number formula for the Hicks-Moorsteen productivity index

The Malmquist and Hicks-Moorsteen productivity indexes are the two most widely used theoretical indexes for measuring productivity growth. Since these productivity indexes are defined by unknown distance functions, it is necessary to estimate the distance functions to compute them in principle. On the other hand, the Törnqvist productivity index is an empirical index number formula that is directly computable from the prices and quantities of the inputs and outputs alone. Caves et al. (1982) imply that the Malmquist index coincides with the Törnqvist index under profit maximizing behaviour and constant returns to scale technology. The purpose of the present paper is to point out that the Hicks-Moorsteen productivity index coincides with the Törnqvist productivity index under the same condition. We emphasize that the condition of constant returns to scale is indispensable for deriving the equivalence between the two indexes. Moreover, even when this condition is relaxed to the α returns to scale, the equivalence between the Hicks-Moorsteen and Törnqvist productivity indexes is shown to hold true.