Who can afford to discriminate against women?

Short answer: only firms that operate in a non-competitive environment can afford to discriminate (unfairly), a competitive market forces firms that are not profit-maximizing to leave the market.

To find convincing evidence for this is difficult, however, economists have come up with several strategies (e.g., the degree of competion in an industry, variation over time, et cetera).

My colleagues Mario Lackner and Christine Zulehner have a new working paper where they exploit a market where some firms have market power due to an institutionalized cartel: Universites that automatically qualify for the Bowl Championship Series (BCS) in collegiate football have greater market power than those which do not qualify automatically.

They show that a higher market share results in a greater wage difference between male and female head coaches. In addition, female coaches are being crowded out by men.

Only firms with market power can sustain the cost disadvantages resulting from discriminating against a certain type of employee.

some history of mortgage-covered bonds

Kirsten Wandschneider describes the history of mortgage-covered bonds by looking at "Landschaften", public non-profit institutions that issued covered bonds and formalized the mortgage market in Prussia. These bonds still serve as a template for todays financial intermediaries.

What is particularly striking is the success of these bonds as the market was dominated by borrowers who were a poor credit risk, aka "lemons", hence the title of the paper "Lending to Lemons". The landed gentry after the Seven Years War and the credit crisis of 1763 was heavily indebted and to overcome adverse selection, the risk of lending was spread over a larger area, the "Landschaften", automatically including all noble estates.

The historical example highlights successful financial innovation but also shows, which institutional features made covered bonds successful to this day.

big data and economic research

Liran Einav and Jonathan D. Levin highlight how "big data" could change economic research. Being a regular data cruncher myself, this is a welcome contribution as (applied micro-)economists have been skilled in the use of large data for quite some time.

Some highlights:

• "Government administrative data are almost certainly under-utilized, both by government agencies and, because of limited and restricted access, by researchers" [my emphasis!]--hear, hear!
  
• "Many government agencies are increasingly smart about using data analytics to improve their operations and services. However, most agencies almost surely lag behind"...
  

For all my students, this is good news---quantitative skills and analytical minds will be in demand, probably increasingly so, whether you'll be working in a private firm, in the public administration or as an academic.

boys and girls

Maybe parents treat their female and male children differently. Previous evidence indicates that parents spend more time with pre-teen sons than with pre-teen daughters, a difference that is caused by fathers spending more time with their sons.

Michael Baker and Kevin Milligan have new evidence that this extra time from fathers only emerges with age, and is not present when children are very young:

It is [pre-school] girls, not boys, who systematically, in three leading developed countries [i.e., Canada, the UK, and the US], receive more of these time inputs from their parents

But does this matter for academic achievement? They show that these differences in time are indeed important:

in each country the boy-girl difference in inputs can account for a non-trivial proportion of the boy-girl difference in preschool reading and math scores

We need more experiments

The assistence job seekers receive from Unemployment Offices to find jobs is perhaps not as good as we might hope. A Study by Bruno Crépon, Esther Duflo, Marc Gurgand, Roland Rathelot, and Philippe Zamora (QJE; working paper version here) assesses youth unemployment policy in France using a controlled experiment:

"Job counselling" – a key French policy that prepares some job seekers for the recruitment process, and connects them with potential employers – seems to only marginally improve graduate’s chances of employment. Moreover, the evidence suggests that what’s good for one graduate may be bad for another: the beneficiaries of intensive job counselling are more likely to find employment simply at the expense of other job seekers. (Job placement and displacement.)

We need more experiments.

Weights in Regressions

Solon et al. have a new paper on the use of weights in empirical analysis. Not only does the paper have a great title, but it addresses one of the more hairy issues in empirical work, when and how to use weights:

We discuss three distinct potential motives for weighting when estimating causal effects: (1) to achieve precise estimates by correcting for heteroskedasticity, (2) to achieve consistent estimates by correcting for endogenous sampling, and (3) to identify average partial effects in the presence of unmodeled heterogeneity of effects. In each case, we find that the motive sometimes does not apply in situations where practitioners often assume it does.

There is, of course, no foolproof recipe:

In situations in which you might be inclined to weight, it often is useful to report both weighted and unweighted estimates and to discuss what the contrast implies for the interpretation of the results. And, in many of the situations we have discussed, it is advisable to use robust standard error estimates.

politikberatung durch ökonomInnen--Caveat emptor!

Haucap und Mödl, "Zum Verhältnis von Spitzenforschung und Politikberatung":

"Ökonomen agieren mit ihrer Forschung also im Wesentlichen auf zwei Märkten: Zum einen auf dem Markt für wissenschaftliche Publikationen im engeren Sinne, also den Fachzeitschriften, und zum anderen auf dem Markt für wirtschaftspolitische Beratung."

Sie zeigen:
* "nur jeder fünfte Artikel eines Ökonomen, der an einer Institution in Deutschland, Österreich oder der Schweiz forscht, [hat] einen besonderen Bezug zu spezifischen Problemen der Wirtschaftspolitik oder Ökonomie im deutschsprachigen Raum"

* "es [sind] primär nicht die forschungsstärksten Ökonomen ..., die sich in der Politikberatung engagieren"