viewpoint climate impacts on agriculture searching for keys under the streetlight abstract this paper provides a critical assessment of the literature estimating the consequences of climate impacts in agriculture and the food system this literature focuses overwhelmingly on the impact of elevated co2 concentrations in the atmosphere higher temperatures and changing precipitation on staple crop yields while critically important for food security we argue that researchers have gravitated to measuring impacts under the streetlight where data and models are plentiful we argue that prior work has largely neglected the vast majority of potential economic impacts of climate change on agriculture a broader view must extend the impacts analysis to inputs beyond land including the consequences of climate change for labor productivity as well as for purchased intermediate inputs largely overlooked is the impact of climate change on the rate of total factor productivity growth and the potential for more rapid depreciation of the underlying knowledge capital underpinning this key driver of agricultural output growth this broader view must also focus more attention on non staple crops which while less important from a caloric point of view are critically important in redressing current micronutrient deficiencies in many diets around the world the paper closes with numerical simulations that demonstrate the extent to which limited input and output coverage of climate impacts can lead to considerable underestimation of the consequences for food security and economic welfare of particular significance is the finding that humans in the humid tropics are likely more vulnerable to heat stress than are many of the well adapted crops such as rice by omitting the impact of heat stress on humans most studies of climate impacts greatly understate the welfare losses in the world s poorest economies

on the role of small models in macrodynamics abstract this paper focuses on the role of small models in macrodynamics it discusses the insights that i believe these models offer and the extent to which they can address some of the complex issues such as heterogeneity and interactions among agents that are receiving increasing attention in the literature i comment on what i view to be the most productive role for numerical simulations and finally offer some brief comments in defense of the state of modern macroeconomic theory in light of the criticism it has received as a result of the recent financial crisis

a defense of the fomc we defend the forecasting performance of the fomc from the recent criticism of christina and david romer our argument is that the fomc forecasts a worst case scenario that it uses to design decisions that will work well enough are robust despite possible misspecification of its model because these fomc forecasts are not predictions of what the fomc expects to occur under its model it is inappropriate to compare their performance in a horse race against other forecasts our interpretation of the fomc as a robust policymaker can explain all thefindings of the romers and rationalises differences between fomc forecasts and forecasts published in the greenbook by the staff of the federal reserve system

the response of worker effort to piece rates we measure the elasticity of worker effort with respect to changes in the piece rate using panel data collected from the payroll records of a british columbia tree planting firm our data contain information on daily worker productivity and the piece rate received over a five month period using a structural model to control for the endogeneity of the piece rate we estimate this elasticity to be approximately 2 14 we also calculate a nonstructural lower bound to this elasticity equal to 0 77 structural estimation also allows us to perform policy experiments and to compare firm profits under alternative compensation systems our results suggest that profits would increase by at least 17 percent were the firm to implement the optimal static contract as predicted by principal agent theory this increase in profits would be due to capturing worker rents after the revelation of private information over ability yet only a negligible proportion of these rents could be captured while inducing workers to reveal ability truthfully suggesting that dynamic considerations were important in determining the firm s actual choice of contract

clearing the air the effects of gasoline content regulation on air quality this paper examines the effects of u s gasoline content regulations on groundlevel ozone pollution these regulations are costly and have been shown to fragment gasoline markets and raise prices paid by consumers we provide the first comprehensive empirical estimates of the regulations air quality benefits we exploit the fact that gasoline regulations vary by time and place of introduction using both difference in difference and regression discontinuity designs we show that federal regulations targeting the emissions of volatile organic compounds vocs one of the two main precursors to ozone do not substantially improve air quality this outcome is driven by the response of refiners to the regulation minimizing the cost of abatement involves removing a type of voc from gasoline that is not an important determinant of ozone pollution in california however we show that precisely targeted regulations requiring the removal of vocs particularly prone to forming ozone caused a significant improvement in air quality

environment health and human capital in this review we discuss three major contributions economists have made to our understanding of the relationship between the environment and individual well being first in explicitly recognizing how optimizing behavior particularly in the form of residential sorting can lead to nonrandom assignment of pollution economists have employed a wide range of quasi experimental techniques to develop causal estimates of the effect of pollution second economic research has placed a considerable focus on the role of avoidance behavior which is an important component for understanding the difference between biological and behavioral effects of pollution and for proper welfare calculations lastly economic research has expanded the focus of analysis beyond traditional health outcomes to include measures of human capital including labor supply productivity and cognition our review of the quasi experimental evidence on this topic suggests that pollution does indeed have a wide range of effects on individual well being even at levels well below current regulatory standards given the importance of health and human capital as an engine for economic growth these findings underscore the role of environmental conditions as an important factor of production jel i12 i31 j24 q51 q53

hours of work labor productivity and environmental conditions a case study l ivelihood measures of foregone and compensating earnings are frequently used as measures of economic losses due to realized or potential damages to the health of labor inputs both measures as they have been used are incomplete though for quite different reasons the narrowness of the foregone earnings measure is widely acknowledged as set forth in smith 1974 thaler and rosen 1976 and viscusi 1979 the compensating earnings measure with its emphasis upon the earnings premia workers require to be willing to be exposed to job hazards they perceive certainly has broader analytical appeal however as empirically implemented these studies too are incomplete they deal with worker and time aggregates allowing only crude measures of differences in reward structures mixes of complementary inputs work day lengths risk aversions worker effort and other dissimilar factors across individuals firms and industries in this paper the productivity changes and consequent earnings adjustments that occur under differing work conditions for 17 individual citrus pickers in southern california are assessed interest is centered upon the acute effects of two environmental factors ambient ozone 03 and ambient temperature upon the daily work performances of these individuals 2 since each individual is separately analyzed the host of plausible confounding influences e g experience biological endowments health histories etc to which one must devote attention when dealing with the fictional representative individual are relevant here only insofar as they change within the short time periods being considered

okun s law across time and frequencies abstract we present the first assessment of u s okun s law across time and frequencies we use a set of continuous wavelet tools that allows for estimating okun s coefficient and the lead lag of output over unemployment at each moment and for each cyclical frequency we find similar results for the gaps and the first differences specifications at business cycles frequencies but not at lower frequencies okun s coefficient has increased in absolute value since the mid 1960s except in 1985 1995 and is not particularly sensitive to recessions the lead of output varies considerably over time and also at different frequencies we observe especially with the gaps specification that there are at least two cyclical processes relevant for the okun s relationship one at the business cycle and another at lower frequencies methods that do not take this into account are bound to mix the information embedded in both cycles

water works the economic impact of water infrastructure abstract billions of hours are spent each year on water collection in developing countries this paper explores whether improvements in water technologies which decrease household distance to drinking water source and the time intensity of home production enable changes in household time allocation and thereby productivity gains in kyrgyzstan adults reallocate time to leisure and labor on the household farm average yearly household cereals production increased significantly results imply a rate of return to labor equaling 0 11 hour approximately half the hourly farm wage absent evidence of improved adult health results suggest that productivity gains were realized primarily through increased farm labor

negotiating housing deal on a polluted day consequences and possible explanations abstract the topic of air pollution has drawn considerable attention globally in this paper we examine the immediate effect of air pollution on a substantial decision that is a housing purchase by linking housing purchasing behavior with the air quality in beijing we document market participants behaviors unexplained by rational economic theories our main result suggests that the transaction prices on a severely polluted day are 0 65 higher than those of the days without pollution other things being equal this translates into approximately 3 51 million yuan daily increase based on the average transaction volume and price on a typical day in beijing the heterogeneity analysis further suggests that this effect is mostly driven by non local and low income buyers after ruling out rational explanations we demonstrate that our empirical results are consistent with salience theory under weak assumptions

time use and labor productivity the returns to sleep abstract we investigate how the largest use of time sleep affects productivity time use data from the united states allow us to test a model in which sleep improves productivity consistent with t

recover overnight work interruption and worker productivity this paper investigates the effect of work interruption on workers subsequent productivity we employ a data set of individual productivity and machine conditions in which each worker faces the chance on a daily basis that her machine will break down randomly our analysis finds that compared to a workday with smooth production experiencing a machine breakdown is associated with a 3 3 percentage point decline in the worker s productivity the following day we discuss possible explanations for the observed effect including negative emotions increased cautiousness in operating the machine and proficiency loss our findings shed light on the importance of understanding and managing interruptions in the workplace and contribute to a growing literature on the determinants of productivity at the micro level data and the online appendix are available at https doi org 10 1287 mnsc 2017 2792 this paper was accepted by john list behavioral economics

arsenic mitigation in bangladesh a household labor market approach rural families in bangladesh one of the poorest countries in the world face financial risks from major illness both from the cost of medical care and from the loss of income associated with reduced labor supply and productivity chronic exposure to arsenic in drinking water has often been associated with the development of skin cancers and internal cancers especially of the bladder liver and lungs and a wide variety of other health conditions such as diabetes respiratory problems cardiovascular diseases hyperpigmentation hypopigmentation and keratosis a condition in which painful nodules grow on the palms of the hands and soles of the feet most of the economic work on arsenic contamination in bangladesh has had an epidemiological focus that has tried to effectively monetize a dose response relation using either a cost of illness or a willingness to pay approach

on the social desirability of urban rail transit systems despite a decline in its mode share investment to build new urban rail transit systems and extend old ones continues we estimate the contribution of each u s urban rail operation to social welfare based on the demand for and cost of its service we find that with the exception of bart in the san francisco bay area every system actually reduces welfare and is unable to become socially desirable even with optimal pricing or physical restructuring of its network we conclude rail s social cost is unlikely to abate because it enjoys powerful political support from planners civic boosters and policymakers

robust monetary policy with competing reference models abstract the existing literature on robust monetary policy rules has largely focused on the case in which the policymaker has a single reference model while the true economy lies within a specified neighborhood of the reference model in this paper we show that such rules may perform very poorly in the more general case in which non nested models represent competing perspectives about controversial issues such as expectations formation and inflation persistence using bayesian and minimax strategies we then consider whether any simple rule can provide robust performance across such divergent representations of the economy we find that a robust outcome is attainable only in cases where the objective function places substantial weight on stabilizing both output and inflation in contrast we are unable to find a robust policy rule when the sole policy objective is to stabilize inflation we analyze these results using a new diagnostic approach namely by quantifying the fault tolerance of each model economy with respect to deviations from optimal policy

does environmental pollution affect labor supply an empirical analysis based on 112 cities in china abstract recently some white collar workers in heavily polluted cities in china have begun to either demand higher payment due to serious air pollution or even flee the cities in this study the influence of urban pollution on labor supply is explored for the first time given that pollution and employment occur mainly in urban areas a city level panel data set consisting of 112 chinese cities from 2002 to 2013 is utilized to account for the spatial correlations of pollution a spatial factor that measures the influences of neighboring cities pollution is incorporated to deal with potential endogeneity and to ensure robust estimations the generalized method of moments and piece wise panel regression methods are utilized the estimation results indicate that the impact of pollution on labor supply is nonlinear as the environmental quality deteriorates the labor supply will increase at first and then decrease after the peak is reached moreover income level also affects the impact of air pollution on labor supply at a given pollution level the higher the average income the fewer people will work in the city the spatial correlation is verified to be significantly negative suggesting that air pollution in nearby areas has detrimental impacts on the local labor supply

public transit and air pollution evidence from canadian transit strikes little is known about the causal impacts of public transit on local air pollution exploiting variation in transit availability resulting from transit strikes in 18 canadian cities between 1974 and 2011 this study identifies the short run effect of public transit on air pollution our findings indicate that transit leads to a 3 5 part per billion increase in nitrogen oxides while having no statistically significant effect on carbon monoxide or pm2 5 estimates are robust to a series of specification tests and magnitudes are consistent with a calibrated simulation model overall the results suggest that expanding the current configuration of public transit in north american cities is unlikely to yield improvements in local air quality transports publics et pollution de l air l exemple des greves canadiennes il existe peu d informations sur l effet causal des transports publics sur la pollution de l air a l echelle locale en exploitant les variations au niveau de la disponibilite des transports publics a la suite de greves dans 18 villes canadiennes entre 1974 et 2011 cette etude identifie l effet a court terme des transports publics sur la pollution de l air nos resultats montrent que les transports publics generent une augmentation de 3 5 parties par milliard d oxyde d azote sans avoir d effet statistiquement significatif sur les taux de monoxyde de carbone ou de particules fines type pm2 5 nos estimations sont robustes a une serie de tests de specification et les mesures sont coherentes relativement a un modele de simulation calibre dans l ensemble les resultats suggerent que l expansion des transports publics en amerique du nord dans leur configuration actuelle n ameliorera probablement pas la qualite de l air a l echelle locale

carbon pricing technology transition and skill based development abstract we analyze the impact of carbon prices on human capital accumulation sectoral change and economic growth in our framework output is produced with dirty and or clean technologies using skilled and unskilled labor as inputs carbon policy affects technology selection which transmits incentives for human capital formation we show that a temporary policy may be sufficient for a transition to a clean economy and that such a policy also stimulates economic growth moreover in the presence of inter country knowledge spillovers a carbon policy in the north helps human capital formation in the south and induces south s transition to the clean steady state

does air pollution aggravate income inequality in china an empirical analysis based on the view of health abstract given the rapid development of the chinese economy especially its accelerated urbanization air pollution and income inequality as two of the most important global issues have also become hot topics in china however limited attention has been devoted to understanding their joint evolution in the literature in this study we thus investigate the relationship between them using a multi level nested data model which enables us to estimate the long run distribution effect of air pollution on individuals of different socioeconomic statuses based on china s city level pm2 5 emissions and individual level income we further examine the mechanisms behind the evolution using a 3sls model the estimation results reveal that the increase in air pollution concentration has short term positive production effects and long term negative impacts on individual income and will exacerbate the income inequality across socioeconomic statuses individuals of lower socioeconomic status have disadvantages in achieving efficient avoiding knowledge and measures the results of 3sls model confirm the existence of the health channel through which air pollution exerts influence on income inequality these results provide a roadmap for policymakers first a comprehensive assessment of the health burden distribution from air pollution on individuals of different socioeconomic statuses should be considered for environmental policymaking second the regional disparities and differences among income groups should also be considered during this process third equal access to basic public services should be the primary target of environmental regulations moreover compensation and assistance for the health issues caused by environmental pollution could be an important supplement to these regulations future study could do further analysis of the specific level of health burden due to different types of pollutants and their relationship with income inequality

something in the air pollution and the demand for health insurance we find that daily air pollution levels have a significant effect on the decision to purchase or cancel health insurance in a manner inconsistent with rational choice theory a one standard deviation increase in daily air pollution leads to a 7 2 increase in the number of insurance contracts sold that day conditional on purchase a one standard deviation decrease in air pollution during the cooling off i e cost free cancellation period relative to the order date level increases the return probability by 4 0 we explore a range of potential mechanism and find the most support for projection bias and salience

truth telling by third party auditors and the response of polluting firms experimental evidence from india in many regulated markets private third party auditors are chosen and paid by the firms that they audit potentially creating a conflict of interest this article reports on a two year field experiment in the indian state of gujarat that sought to curb such a conflict by altering the market structure for environmental audits of industrial plants to incentivize accurate reporting there are three main results first the status quo system was largely corrupted with auditors systematically reporting plant emissions just below the standard although true emissions were typically higher second the treatment caused auditors to report more truthfully and very significantly lowered the fraction of plants that were falsely reported as compliant with pollution standards third treatment plants in turn reduced their pollution emissions the results suggest reformed incentives for third party auditors can improve their reporting and make regulation more effective jel codes q56 m42 d22 copyright 2013 oxford university press

piece rates fixed wages and incentive effects statistical evidence from payroll records we develop and estimate an agency model of worker behavior under piece rates and fixed wages the model implies optimal decision rules for the firm s choice of a compensation system as a function of working conditions our model also implies an upper and lower bound to the incentive effect the productivity gain realized by paying workers piece rates rather than fixed wages that can be estimated using regression methods using daily productivity data collected from the payroll records of a british columbia tree planting firm we estimate these bounds to be an 8 8 and a 60 4 percent increase in productivity structural estimation which accounts for the firm s optimal choice of a compensation system suggests that incentives caused a 22 6 percent increase in productivity however only part of this increase represents valuable output because workers respond to incentives in part by reducing quality

spectral welfare cost functions if preferences are not time separable economic agents care not only about the magnitude of fluctuations in consumption but also about the persistence and other temporal characteristics of those fluctuations this paper extends and develops the theory of spectral utility functions which measure utility frequency by frequency to illustrate the interaction between consumption volatility and time non separable preferences to highlight the economic implications of the interaction spectral welfare cost functions are developed to provide a quantitative measure of the importance to economic agents of the temporal delivery of consumption volatility

real effects of workers financial distress evidence from teacher spillovers abstract this paper studies the effects of financial distress on workers productivity using detailed data from the public school system in texas we show that the student passing rate in the median sized grade decreases by 1 2 percentage points following a declaration of bankruptcy by one teacher in the grade the effect of financial distress increases with the complexity of the task overall our results suggest a potential feedback effect of worker financial distress on local economic conditions and thus contribute to the understanding of the propagation and potential amplification of shocks through a local economy

adaptation for mitigation this paper develops a two region north and south dynamic model in which regional stocks of effective labor are negatively influenced by the global stock of pollution by characterizing the equilibrium strategy of each region we show that the regions best responses can be strategic complements through a dynamic complementarity effect the model is then used to analyze the impact of adaptation assistance from north to south it is shown that north s unilateral assistance to south thus enhancing south s adaptation capacity can facilitate pollution mitigation in both regions especially when the assistance is targeted at labor protection pollution might increase in the short run but in the long run the level of pollution will decline the adaptation assistance we propose is incentive compatible and pareto improving

on the link between japanese oda and fdi in china a microeconomic evaluation using conditional logit analysis this study investigates the effectiveness of japan s official development assistance in promoting foreign direct investments inflows in the case of the people s republic of china conditional logit analysis using province level statistics from 1980 to 1999 shows that japanese aid flows did have a significant positive impact on private investors location choice even though other profit maximizing factors such as the level of economic activity had a leading spillover effect in a context of growing scarcity of aid the study concludes by asserting the importance of a complementary process in which foreign aid is aimed at enhancing the development of infrastructures acting as a pre requisite for future direct investments finally japan providing an interesting case study we stress the need for a better cooperation between public and private sectors in development assistance programmes

investigating geography and institutions as determinants of foreign direct investment in africa using panel data this article uses a cross country econometric approach to identify the determinants for foreign direct investment fdi in africa the contribution is 3 fold firstly we recognize that the estimation techniques used elsewhere such as ordinary least squares may be flawed we therefore use a dynamic one step generalized method of moments gmm estimator due to arellano and bond 1991 the gmm estimates identified a number of robust determinants of fdi namely government consumption inflation rate investment governance political stability accountability regulatory burden rule of law and initial literacy it is concluded that geography does not seem to have a direct influence on fdi flows to africa neither market seeking nor re exporting motives of fdi seem to dominate with different policy instruments being significant in the different specifications this does not discount the importance of good policies but probably indicates the importance of good policies made by good institutions institu

air pollution as a cause of sleeplessness social media evidence from a panel of chinese cities abstract we provide first evidence of a link from daily air pollution exposure to sleep loss in a panel of chinese cities we develop a social media based city level metric for sleeplessness and bolster causal claims by instrumenting for pollution with plausibly exogenous variations in wind patterns estimates of effect sizes are substantial and robust in our preferred specification a one standard deviation increase in aqi causes an 11 6 increase in sleeplessness and for pm2 5 is 12 8 the results sustain qualitatively under ols estimation but are attenuated the analysis provides a previously unaccounted for benefit of more stringent air quality regulation it also offers a candidate mechanism in support of recent research that links daily air quality to diminished workplace productivity cognitive performance school absence traffic accidents and other detrimental outcomes

does foreign aid increase foreign direct investment summary we examine the idea that aid and foreign direct investment fdi are complementary sources of foreign capital we argue that the relationship between aid and fdi is theoretically ambiguous aid raises the marginal productivity of capital when used to finance complementary inputs like public infrastructure and human capital investments but aid may crowd out private investments when it comes in the shape of pure physical capital transfers empirically we find that aid invested in complementary inputs draws in fdi while aid invested in physical capital crowds it out the paper shows that the composition of aid matters for its overall level of efficiency

will a shrink make you richer gender differences in the effects of psychotherapy on labour efficiency this paper provides a first theoretical and empirical analysis of the effects of psychotherapy on individual productivity we build a simple model in which a deterioration of mental health endogenously causes a decrease in productivity which is counterbalanced by psychotherapy we test our hypotheses on the british household panel survey data we find that individuals suffering from mental health problems benefit economically from consulting a psychotherapist moreover we find that the returns are higher for men than for women even though women are more likely to seek help

frequency specific effects of stabilization policies in this paper we describe a set of trade offs that policymakers face with respect to fluctua tions at different frequencies a complete treat ment is given in brock durlauf and rondina 2008 the presence of frequency specific effects of policy choices has generally not been a focus of macroeconomic policy analysis important exceptions include alexei onatski and noah m williams 2003 our analysis dif fers from previous studies in that our objective is to understand to what extent a policymaker is forced when choosing a feedback rule to sta bilize the economy to exacerbate volatility at some frequencies in order to reduce them at oth ers or whether it is possible to reduce volatil ity at all frequencies these trade offs known as design limits in the control theory literature are important in understanding what stabiliza tion policies do and also possess implications for policy design in the presence of policymaker ignorance

pricing for the clean air evidence from chinese housing market abstract air pollution is widely believed to cause healthy risks and influence nations economic dimensions this paper investigates the impact of air pollution on housing prices in china s 286 prefectural level cities during 2005 2013 to address the endogeneity problem of pm2 5 concentrations in our regression we propose an instrument variable strategy based on ventilation coefficient the estimation results suggest that a 10 increase in pm2 5 concentrations causes a 2 4 reduction in local housing prices air pollution also hinders the progress of urbanization limits cities human capital formation and changes people s expectations of housing prices that we interpret as three potential mechanisms behind our main findings

should urban transit subsidies be reduced this paper derives empirically tractable formulas for the welfare effects of fare adjustments in passenger peak and off peak rail and bus transit and for optimal pricing of those services the formulas account for congestion pollu tion accident externalities scale economies and agency adjustment of transit service offerings we apply them using parameter values for washington dc los angeles and london the results support the efficiency of the large cur rent fare subsidies even starting with fares at 50 percent of operating costs incremental fare reductions are welfare improving in almost all cases these findings are robust to alternative assumptions and parameters jel l92 r41

is foreign aid a vanguard of foreign direct investment a gravity equation approach summary this paper investigates whether and how foreign aid facilitates foreign direct investment fdi flows into less developed countries we employ a large data set of source recipient country pairs and conduct gravity equation type estimation our empirical methodology enables us to examine an effect through which aid from a donor country promotes fdi from the same donor in particular which we call a vanguard effect we find that foreign aid in general does not have any significant effect on fdi however when we allow for differences in the size of aid effects across donor countries we find robust evidence that foreign aid from japan in particular has a vanguard effect i e japanese aid promotes fdi from japan but does not attract fdi from other countries