pwc-archive/papers-with-abstracts huggingface dataset:
Consistent Segregation Metrics: Addressing Structural Variations in Global Labor Markets
Authors: Ana Kujundzic, Janneke Pieters
Date: 2025-03-04 00:00:00

The Index of Dissimilarity (ID), widely utilized in economic literature as a measure of segregation, is inadequate for cross-country or time series studies due to its failure to account for structural variations across countries' labor markets or changes over time within a single country's labor market. Building on the works of Karmel and MacLachlan (1988) and Blackburn et al. (1993), we propose a new measure - the standardized ID - that isolates structural differences from true differences in segregation across space or time. A key advantage of our proposed measure lies in its ease of implementation and interpretation, even when working with datasets encompassing a large number of countries or time periods. Moreover, our measure can be consistently applied in the case of lumpy sectors or occupations that account for a large fraction of the workforce. We illustrate the new measure in an analysis of the cross-country relationship between economic development (as measured by GDP per capita) and occupational and sectoral gender segregation. Comparing the crude ID with the standardized ID, we show that the crude ID overestimates the positive correlation between income and segregation, especially between low- and middle-income countries. This suggests that analyses relying on the crude ID risk overestimating the importance of income differentials in explaining cross-country variation in gender segregation.
Seeded Poisson Factorization: Leveraging domain knowledge to fit topic models
Authors: Bernd Prostmaier, Jan Vávra, Bettina Grün, Paul Hofmarcher
Date: 2025-03-04 00:00:00
Tasks: Computational Efficiency, Topic Models, Variational Inference

Topic models are widely used for discovering latent thematic structures in large text corpora, yet traditional unsupervised methods often struggle to align with predefined conceptual domains. This paper introduces Seeded Poisson Factorization (SPF), a novel approach that extends the Poisson Factorization framework by incorporating domain knowledge through seed words. SPF enables a more interpretable and structured topic discovery by modifying the prior distribution of topic-specific term intensities, assigning higher initial rates to predefined seed words. The model is estimated using variational inference with stochastic gradient optimization, ensuring scalability to large datasets. We apply SPF to an Amazon customer feedback dataset, leveraging predefined product categories as guiding structures. Our evaluation demonstrates that SPF achieves superior classification performance compared to alternative guided topic models, particularly in terms of computational efficiency and predictive performance. Furthermore, robustness checks highlight SPF's ability to adaptively balance domain knowledge and data-driven topic discovery, even in cases of imperfect seed word selection. These results establish SPF as a powerful and scalable alternative for integrating expert knowledge into topic modeling, enhancing both interpretability and efficiency in real-world applications.
Educational Assortative Mating and Household Income Inequality: Evidence from Brazil, Indonesia, Mexico, and South Africa
Authors: Ana Kujundzic
Date: 2025-03-04 00:00:00

This paper presents new empirical evidence from four emerging economies on the relationship between educational assortative mating and household income inequality. Using a methodological approach that allows for studying marital sorting patterns without imposing restrictive assumptions about search frictions, the study finds that people in Brazil, Indonesia, Mexico, and South Africa tend to sort into internally homogeneous marriages based on education level. While educational sorting has a noticeable impact on household income inequality in any given year, changes in the degree of sorting over time barely have any impact on inequality. Further analysis reveals that this counterintuitive result is due to different dynamics within educational groups. The inequality-decreasing impact from reduced sorting among the highly educated is almost entirely offset by the inequality-increasing impact from increased sorting among the least educated. While it is certainly reassuring that concerns about educational assortative mating having a potentially large effect on income disparities between households appear to be unwarranted, these findings suggest another concerning narrative. Marginalization processes are occurring at low levels of the educational distribution. The least educated are being left behind, facing limited labor market opportunities and diminished chances of achieving upward socioeconomic mobility through marriage to more educated partners.
Seeing Stereotypes
Authors: Elisa Baldazzi, Pietro Biroli, Marina Della Giusta, Florent Dubois
Date: 2025-03-04 00:00:00
Tasks: Decision Making, Survey, valid

Reliance on stereotypes is a persistent feature of human decision-making and has been extensively documented in educational settings, where it can shape students' confidence, performance, and long-term human capital accumulation. While effective techniques exist to mitigate these negative effects, a crucial first step is to establish whether teachers can recognize stereotypes in their professional environment. We introduce the Stereotype Identification Test (SIT), a novel survey tool that asks teachers to evaluate and comment on the presence of stereotypes in images randomly drawn from school textbooks. Their responses are systematically linked to established measures of implicit bias (Implicit Association Test, IAT) and explicit bias (survey scales on teaching stereotypes and social values). Our findings demonstrate that the SIT is a valid and reliable measure of stereotype recognition. Teachers' ability to recognize stereotypes is linked to trainable traits such as implicit bias awareness and inclusive teaching practices. Moreover, providing personalized feedback on implicit bias improves SIT scores by 0.25 standard deviations, reinforcing the idea that stereotype recognition is malleable and can be enhanced through targeted interventions.
Using firm-level supply chain networks to measure the speed of the energy transition
Authors: Johannes Stangl, András Borsos, Stefan Thurner
Date: 2025-03-03 00:00:00

While many national and international climate policies clearly outline decarbonization targets and the timelines for achieving them, there is a notable lack of effort to objectively monitor progress. A significant share of the transition from fossil fuels to low-carbon energy will be borne by industry and the economy, requiring both the decarbonization of the electricity grid and the electrification of industrial processes. But how quickly are firms adopting low-carbon electricity? Using a unique dataset on Hungary\textquotesingle{}s national supply chain network, we analyze the energy portfolios of 27,067 firms, covering more than 80% of gas, 70% of electricity, and 50% of oil consumption between 2020 and 2023. This enables us to objectively measure the trends of decarbonization efforts at the firm level. Although more than half of firms have increased their share of low-carbon electricity, many have reduced it. Extrapolating the observed trends, we find a transition of only 20% of total energy consumption to low-carbon electricity by 2050. The current speed of transition in the economy is not sufficient to reach climate neutrality by 2050. If firms would adopt the same efforts as the decarbonization frontrunners in their industry, a low-carbon energy share of up to 86% could be reached, putting climate targets within reach. As a key barrier, we identify a \textquotesingle{}lock-in\textquotesingle{} effect, where firms with a high ratio of fossil fuel costs per revenue are less likely to transition. Accelerating the energy transition will require targeted policies that address these barriers, ensuring that firms can align their decarbonization strategies with best practices.
Keynesian Beauty Contest in Morocco's Public Procurement Reform
Authors: Nizar Riane
Date: 2025-03-02 00:00:00
Tasks: Fairness

This paper examines the recent reform of Morocco's public procurement market through the lens of Keynesian beauty contest theory. The reform introduces a mechanism akin to a guessing-the-average game, where bidders attempt to estimate a reference price, which in turn impacts bidding strategies. We utilize this setup to empirically test key hypotheses within auction theory, specifically the roles of common knowledge and bounded rationality. Our findings indicate potential manipulation risks under the current rules, suggesting that a shift to a median criterion could improve robustness and reduce the likelihood of manipulation. This work contributes to the broader understanding of strategic interactions in procurement and offers a foundation for future research on improving fairness and efficiency in public contract allocation.
The effect of remote work on urban transportation emissions: evidence from 141 cities
Authors: Sophia Shen, Xinyi Wang, Nicholas Caros, Jinhua Zhao
Date: 2025-03-01 00:00:00

The overall impact of working from home (WFH) on transportation emissions remains a complex issue, with significant implications for policymaking. This study matches socioeconomic information from American Community Survey (ACS) to the global carbon emissions dataset for selected Metropolitan Statistical Areas (MSAs) in the US. We analyze the impact of WFH on transportation emissions before and during the COVID-19 pandemic. Employing cross-sectional multiple regression models and Blinder-Oaxaca decomposition, we examine how WFH, commuting mode, and car ownership influence transportation emissions across 141 MSAs in the United States. We find that the prevalence of WFH in 2021 is associated with lower transportation emissions, whereas WFH in 2019 did not significantly impact transportation emissions. After controlling for public transportation usage and car ownership, we find that a 1% increase in WFH corresponds to a 0.17 kilogram or 1.8% reduction of daily average transportation emissions per capita. The Blinder-Oaxaca decomposition shows that WFH is the main driver in reducing transportation emissions per capita during the pandemic. Our results show that the reductive influence of public transportation on transportation emissions has declined, while the impact of car ownership on increasing transportation emissions has risen. Collectively, these results indicate a multifaceted impact of WFH on transportation emissions. This study underscores the need for a nuanced, data-driven approach in crafting WFH policies to mitigate transportation emissions effectively.
The Impact of Employee Education and Health on Firm-Level TFP in China
Authors: Yuhan He
Date: 2025-02-28 00:00:00

This study examines the influence of employee education and health on firm-level Total Factor Productivity (TFP) in China, using panel data from A-share listed companies spanning from 2007 to 2022. The analysis shows that life expectancy and higher education have a significant impact on TFP. More optimal health conditions can result in increased productivity through decreased absenteeism and improved work efficiency. Similarly, higher levels of education can support technological adaptation, innovation, and managerial efficiency. Nevertheless, the correlation between health and higher education indicates that there may be a point where further improvements in health yield diminishing returns in terms of productivity for individuals with advanced education. These findings emphasise the importance of implementing comprehensive policies that improve both health and education, maximising their impact on productivity. This study adds to the current body of research by presenting empirical evidence at the firm-level in China. It also provides practical insights for policymakers and business leaders who want to improve economic growth and competitiveness. Future research should take into account wider datasets, more extensive health metrics, and delve into the mechanisms that contribute to the diminishing returns observed in the relationship between health and education.
BiHRNN -- Bi-Directional Hierarchical Recurrent Neural Network for Inflation Forecasting
Authors: Maya Vilenko
Date: 2025-02-27 00:00:00

Inflation prediction guides decisions on interest rates, investments, and wages, playing a key role in economic stability. Yet accurate forecasting is challenging due to dynamic factors and the layered structure of the Consumer Price Index, which organizes goods and services into multiple categories. We propose the Bi-directional Hierarchical Recurrent Neural Network (BiHRNN) model to address these challenges by leveraging the hierarchical structure to enable bidirectional information flow between levels. Informative constraints on the RNN parameters enhance predictive accuracy at all levels without the inefficiencies of a unified model. We validated BiHRNN on inflation datasets from the United States, Canada, and Norway by training, tuning hyperparameters, and experimenting with various loss functions. Our results demonstrate that BiHRNN significantly outperforms traditional RNN models, with its bidirectional architecture playing a pivotal role in achieving improved forecasting accuracy.
Measure of Morality: A Mathematical Theory of Egalitarian Ethics
Authors: Shuang Wei
Date: 2025-02-25 00:00:00
Tasks: Ethics, Philosophy

This paper develops a rigorous mathematical framework for egalitarian ethics by integrating formal tools from economics and mathematics. We motivate the formalism by investigating the limitations of conventional informal approaches by constructing examples such as probabilistic variant of the trolley dilemma and comparisons of unequal distributions. Our formal model, based on canonical welfare economics, simultaneously accounts for total utility and the distribution of outcomes. The analysis reveals deficiencies in traditional statistical measures and establishes impossibility theorems for rank-weighted approaches. We derive representation theorems that axiomatize key inequality measures including the Gini coefficient and a generalized Atkinson index, providing a coherent, axiomatic foundation for normative philosophy.
The Limits of Search Algorithms
Authors: Xiaoyu Chen, Jingmin Huang, Yibo Lian
Date: 2025-03-05 00:00:00

A platform commits to a search algorithm that maps prices to search order. Given this algorithm, sellers set prices, and consumers engage in sequential search. This framework generalizes the ordered search literature. We introduce a special class of search algorithms, termed ''contracts,'' show that they implement all possible equilibrium prices and then characterize the set of implementable prices. Within this set, we identify the seller-optimal contract, whose first-best outcome remains an open problem for a multiproduct seller. Our findings highlight the conditions under which the platform favors price dispersion or price symmetry. Furthermore, we characterize the consumer-optimal and socially optimal contracts, which exert opposing forces to the seller-optimal contract: while the seller-optimal contract promotes higher prices, the consumer-optimal and socially optimal contracts favor lower prices.
Walrasian equilibrium: An alternate proof of existence and lattice structure
Authors: Komal Malik
Date: 2025-03-05 00:00:00

We consider a model of two-sided matching market where buyers and sellers trade indivisible goods with the feature that each buyer has unit demand and seller has unit supply. The result of the existence of Walrasian equilibrium and lattice structure of equilibrium price vectors is known. We provide an alternate proof for existence and lattice structure using Tarksi's fixed point theorem.
Markets for Models
Authors: Krishna Dasaratha, Juan Ortner, Chengyang Zhu
Date: 2025-03-04 00:00:00
Tasks: Prediction

Motivated by the prevalence of prediction problems in the economy, we study markets in which firms sell models to a consumer to help improve their prediction. Firms decide whether to enter, choose models to train on their data, and set prices. The consumer can purchase multiple models and use a weighted average of the models bought. Market outcomes can be expressed in terms of the \emph{bias-variance decompositions} of the models that firms sell. We give conditions when symmetric firms will choose different modeling techniques, e.g., each using only a subset of available covariates. We also show firms can choose inefficiently biased models or inefficiently costly models to deter entry by competitors.
On voting rules satisfying false-name-proofness and participation
Authors: Agustin G. Bonifacio, Federico Fioravanti
Date: 2025-03-04 00:00:00

We consider voting rules in settings where voters' identities are difficult to verify. Voters can manipulate the process by casting multiple votes under different identities or abstaining from voting. Immunities to such manipulations are called false-name-proofness and participation, respectively. For the universal domain of (strict) preferences, these properties together imply anonymity and are incompatible with neutrality. For the domain of preferences defined over all subsets of a given set of objects, both of these properties cannot be met by onto and object neutral rules that also satisfy the tops-only criterion. However, when preferences over subsets of objects are restricted to be separable, all these properties can be satisfied. Furthermore, the domain of separable preferences is maximal for these properties.
Approximate Equilibria in Nonconvex Markets: Theory and Evidence from European Electricity Auctions
Authors: Thomas Hübner
Date: 2025-03-04 00:00:00

The existence of Walrasian equilibrium is usually not guaranteed when some market participants have nonconvex preferences. This limitation applies to many real-world markets, including day-ahead electricity auctions. Despite this, we observed equilibrium on about 80% of days in several European electricity markets during 2023. Our analysis of commercial microdata suggests that this high frequency of equilibrium is caused by a market primarily composed of divisible (convex) bids compared to indivisible (nonconvex) ones. To explain why predominantly convex markets are more likely to reach equilibrium, we revisit classical results on approximate equilibria. Focusing on the nonconvexity of agents' demand sets rather than their preferences allows us to refine deviation bounds. This shows that better equilibrium approximations are guaranteed than previously thought. Ultimately, we apply these refined bounds to simple random markets with both convex and nonconvex agents to explain our empirical findings.
Women's Status and Fertility: A Novel Perspective on Low Fertility Issue
Authors: Ruiwu Liu
Date: 2025-03-04 00:00:00

This model offers a compelling explanation for the observed decline in fertility rates in developed countries, correlating it with the rising economic status of women, and thereby providing valuable insights for policy-making. In summary, through a game theory model, we identify the rising economic status of women as the underlying cause of low fertility rates in modern developed countries.
Economic dynamics with differential fertility
Authors: Francis Dennig, Bassel Tarbush
Date: 2025-03-03 00:00:00

We characterize the outcomes of a canonical deterministic model for the intergenerational transmission of capital that features differential fertility. A fertility function determines the relationship between parental capital and the number of children, and a transmission function determines the relationship between the capital of a parent and that of their children. Together these functions generate an evolving cross-sectional distribution of capital. We establish easy-to-verify conditions on the fertility and transmission functions that guarantee (a) that the dynamical system has a steady state distribution that is either atomless (exhibiting inequality) or degenerate (not exhibiting inequality), and (b) that the system converges to such states from essentially any initial distribution. Our characterization provides new insights into the link between differential fertility and long-run cross-sectional inequality, and it gives rise to novel comparative statics relating the two. We apply our results to several parametric examples and to a model of economic growth that features endogenous differential fertility.
Price Impact of Health Insurance
Authors: Andrea Di Giovan Paolo, Jose Higueras
Date: 2025-03-03 00:00:00

This paper examines the equilibrium effects of insurance contracts on healthcare markets using a mechanism design framework. A population of risk-averse agents with preferences as in Yaari (1987) face the risk of developing an illness of unknown severity, which can be treated in a competitive hospital services market at the prevailing market price. After privately observing their health risk, but before learning their sickness level, agents have the option to purchase insurance from a monopolistic provider. Insurance contracts specify premiums, out-of-pocket costs (OPCs), and hospital service coverage, thus determining demand and price in the downstream hospital market through a market-clearing condition. Our first main result shows that optimal insurance contracts take a simple form: agents can choose between full hospital coverage with a high OPC or restricted coverage with a low OPC. This highlights a novel form of under-insurance (rationing or restricted access to healthcare services) emerging purely due to the insurer's attempt to control his price impact. Our second key result illustrates the nuanced effect of price impact on the amount of insurance provided. Higher healthcare prices increase insurer payouts but also worsen agents' outside options, making them more willing to pay for insurance ex ante. The net effect of these forces determines whether insurance provision exceeds or falls short of a price-taking benchmark.
The Evolution of Health Investment: Historical Motivations and Fertility Implications
Authors: Ruiwu Liu
Date: 2025-03-01 00:00:00

In this working paper, I developed a suite of macroeconomic models that shed light on the intricate relationship between economic development, health, and fertility. These innovative models conceptualize health as an intermediate good, paving the way for new interpretations of dynamic socio-economic phenomena, particularly the non-monotonic effects of health on economic and population growth. The evolving dynamic interactions among economic growth, population, and health during the early stages of human development have been well interpreted in this research.
The Unequal Costs of Pollution: Carbon Tax, Inequality, and Redistribution
Authors: Cristiano Cantore, Giovanni Di Bartolomeo, Francesco Saverio Gaudio
Date: 2025-02-28 00:00:00

This paper studies how household heterogeneity affects the level and cyclical behavior of the optimal carbon tax in a real economy. We demonstrate that an equity-efficiency trade-off arises due to income inequality and heterogeneity in the marginal disutility of pollution. Two scenarios are analyzed: one with unrestricted income redistribution to mitigate inequality and another where redistribution is constrained to carbon tax revenues. Our findings reveal that household heterogeneity and redistribution policies significantly shape the level and cyclical behavior of the optimal carbon tax, decoupling it from the social cost of carbon. When the planner prioritizes redistribution towards poorer households, the optimal tax rate is lower than in the unconstrained scenario, and its fluctuations are amplified by countercyclical inequality.