Doing Well by Doing Good? Community Development Venture Capital

This paper examines the investments and performance of community development venture capital (CDVC). We find substantial differences between CDVCs and traditional VCs: CDVC investments are far more likely to be in nonmetropolitan regions and in regions with little prior venture activity. CDVC investments are likely to be in earlier stage investments and in industries outside the venture capital mainstream that have lower probabilities of successful exit. Even after controlling for this unattractive transaction mixture, the probability of a CDVC investment being successfully exited is lower. One benefit of CDVCs may be their effect in bringing traditional VCs to underserved regions—controlling for the presence of traditional VC investments, each additional CDVC investment results in an additional 0.06 new traditional VC firms in a region.     

The Localized Geography of Foreign Aid: A New Dataset and Application to Violent Armed Conflict

Existing foreign aid databases – the OECD’s CRS data and now AidData – are project-based. And yet nearly all empirical analyses using these data aggregate to the country-year level, thereby losing project-specific information. In this paper, we introduce new data on the geographic location of aid projects that have been committed to many African countries between 1989 and 2008. The data enable an examination of project-level information in a wider variety of systematic research contexts. To demonstrate the utility of the new data, we discuss how geographically disaggregated foreign aid and armed conflict data are needed to capture the theoretical mechanisms in the aid-conflict literature. We then map the disaggregated aid and conflict data in Sierra Leone, Angola, and Mozambique as specific examples of how these data could help disentangle competing causal mechanisms linking aid to conflict onset and dynamics. The research provides an important new perspective on the connections between aid and conflict. More generally, it is a crucial first step in geo-referencing and comparing foreign aid projects to various localized development outcomes.     

Measuring the Impact of Child Care Subsidies on the Incomes of Mothers Returning to Work

The cost of child care is one of the greatest financial barriers faced by mothers returning to work. In recognition of this cost, the federal government provides child care subsidies to assist families to meet the cost of child care.
This paper models the use of child care services and the provision of child care subsidies to determine how effective the Australian government child care support programs are in reducing the financial barriers that make returning to work difficult for many mothers. Both childcare assistance and the newer childcare cash rebate are modelled. The impact of these assistance measures is examined for couples and sole parents on different incomes with one or two children in child care.
It was found that child care subsidies are highly progressive and make a substantial contribution to vertical equity by offsetting child care costs related to employment. They also contribute to horizontal equity, by providing greater assistance in meeting child care costs for families with more than one child in care, in recognition of their greater need. Sole parents derived the greatest benefit from child care subsidies, particularly those on low incomes working full-time and with two children in care.     

Exchange Market for Complex Goods: Theory and Experiments

The modern economy includes a variety of markets, and the Internet has opened opportunities for efficient on-line trading. Researchers have developed algorithms for various auctions, which have become a popular means of on-line sales. They have also designed algorithms for exchange markets, which support fast-paced trading of standardized goods. On the other hand, they have done little work on exchanges for complex nonstandard goods, such as used cars. We propose a formal model for trading complex goods, and present an exchange system that allows traders to describe desirable purchases and sales by multiple attributes; for example, a car buyer can specify a model, options, color, and other properties of a desirable vehicle. Furthermore, a trader can enter complex constraints on the acceptable items; for instance, a buyer can specify a set of desirable vehicles and their features. The system supports markets with up to 260,000 orders, and generates hundreds of trades per second.     

Endogenous firm heterogeneity and the dynamics of trade liberalization

In this paper, we build a dynamic model with endogenous firm-level productivity that involves ex ante identical firms behaving differently in equilibrium. Heterogeneity arises in equilibrium as firms choose different dates to adopt a new technology. We investigate the effects of international trade on technological diffusion and show that trade has a generally positive impact on the equilibrium rate of adoption (and hence on firm-level productivity). In addition, the model can replicate the stylized fact that exporters are larger and more productive than non-exporters. Finally, we show how our model can be used to interpret the emerging empirical evidence on the firm-level productivity effects of CUSFTA.     

Pay now or pay later? The economics within the private equity partnership

The economics of partnerships have been of enduring interest to economists, yet it is not clear what profit sharing within a private partnership should look like. We examine over 700 private equity partnerships and show that the allocation of fund economics to individual partners varies drastically, even among the most senior partners, and appears divorced from past success as an investor, being instead related to status as a founder. A smaller share of carried interest and ownership—and inequality in fund economics more generally—is associated with departures of senior partners which, in turn is negatively related to the funds’ ability to raise additional capital.