Microeconomics & International Trade Seminars

Fall 2017

Thursday 1:403:00 p.m.
499 Engineering II

September 28
Natalie Cox, Princeton/SIEPR
"Pricing and Selection in the Student Loan Market: Evidence from Borrower Refinancing Decisions"
Host: George Bulman
Advances in data-driven underwriting have both efficiency and equity implications. In the $1.3 trillion student loan market, private lenders offer a growing distribution of risk-based interest rates, while the federal loan program sets a uniform price. I measure changes in consumer surplus that occur as low-risk types refinance out of the government pool into the private market. I use a dataset from an online refinancer to estimate a structural model that relates borrowers’ repayment choices to interest rates. I estimate refinancing increases low-risk surplus by $1,302, and show substantial distortionary costs (32% of the average transfer) under a pooled, uniform interest rate. To maintain access to the current uniform rate, the government must subsidize high-risk borrowers $1,507 on average.

October 19
Karthik Muralidharan, UC San Diego
“Disrupting Education? Experimental Evidence on Technology-Aided Instruction in India"
Host: Jon Robinson
We present experimental evidence on the impact of a personalized technology-aided after-school instruction program on learning outcomes. Our setting is middle-school grades in urban India, where a lottery provided winning students with a voucher to cover program costs. We find that lottery winners scored 0.36σ higher in math and 0.22σ higher in Hindi relative to lottery losers after just 4.5-months of access to the program. IV estimates suggest that attending the program for 90 days would increase math and Hindi test scores by 0.59σ and 0.36σ respectively. We find similar absolute test score gains for all students, but the relative gain was much greater for academically-weaker students because their rate of learning in the control group was close to zero. We show that the program was able to effectively cater to the very wide variation in student learning levels within a single grade by precisely targeting instruction to the level of student preparation. The program was cost effective, both in terms of productivity per dollar and unit of time. Our results suggest that well-designed technology-aided instruction programs can sharply improve productivity in delivering education.

October 24
Gustavo Bobonis, Toronto
"Vulnerability and Clientelism"
Host: Justin Marion
Political clientelism is often deemed to undermine democratic accountability and representation. This study argues that economic vulnerability causes citizens to participate in clientelism. We test this hypothesis with a randomized control trial that reduced household vulnerability through a development intervention: constructing residential water cisterns in drought-prone areas of Northeast Brazil.  This exogenous reduction in vulnerability significantly decreased requests for private benefits from local politicians, especially by citizens likely to be involved in clientelist relationships. We also link program beneficiaries to granular voting outcomes, and show that this reduction in vulnerability decreased votes for incumbent mayors, who typically have more resources to engage in clientelism. Our evidence points to a persistent reduction in clientelism, given that findings are observed not only during an election campaign, but also a full year later.

October 26
Laura Giuliano, UC Merced
"Fairness and Frictions: The Impact of Unequal Raises on Quit Behavior"
Host: Justin Marion
We analyze how quits responded to arbitrary differences in own and peer wages at a large U.S. retailer. Regression-discontinuity (RD) estimates imply large causal effects of own wages on quits. However, this own-wage response could reflect comparisons either to market wages or to the wages of peers within the store. RD estimates based on peer wages show similarly large effects, and imply that the own-wage quit response mostly reflects peer comparisons. The peer-wage response cannot be explained by rational updating about own future wage growth, and it is driven by cases where the peers are paid more than the worker—suggesting that workers are concerned about fairness. After accounting for peer effects, quits appear fairly insensitive to wages—consistent with significant labor-market frictions.

November 9
Federico Echenique, Cal Tech
Host: Natalia Lazzati

November 16
Gordon Dahl, UC San Diego
Host: George Bulman

November 30
Ben Hansen, U of Oregon
Host: Jeremy West

December 7
Matthew Freedman, UC Irvine
Host: Justin Marion

Winter 2018

February 22
David Atkin
Host: Alan Spearot