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COVID-19 and emerging markets: A SIR model, demand shocks and capital flows
Çakmaklı, C., et al., 2023. COVID-19 and emerging markets: A SIR model, demand shocks and capital flows. Journal of International Economics , 145. Publisher's VersionAbstract
We quantify the macroeconomic effects of COVID-19 for a small open economy. We use a two-country framework combined with a sectoral SIR model to estimate the effects of collapses in foreign demand and supply. The small open economy (country one) suffers from domestic demand and supply shocks due to its own pandemic. In addition, there are external shocks coming from the rest of the world (country two). Aggregate exports of the small open economy decline when foreign demand goes down, and aggregate imports suffer from lockdowns in the rest of the world. We calibrate the model to Turkey. Our results show that the optimal policy, which yields the lowest output loss and saves the maximum number of lives, for the small open economy, is an early and globally coordinated full lockdown of 39 days.
Martin, D.A. & Romero, D.A., 2023. Pretending to be the Law: Violence to Reduce the COVID-19 Outbreak.Abstract
2023-09-cid-fellows-wp-155-violence-covid-outbreaks.pdf
Did the COVID-19 pandemic create an opportunity to earn population control through illegal violence? We argue that criminal groups in Colombia portray as de facto police by using mass killings to reduce the COVID-19 outbreak. They used massacres as a threat to enforce social distance measures in places they considered worth decreasing mobility. Our results from an Augmented Synthetic Control Method model estimated that commuting to parks fell 20% more in areas with massacres than in places without mass killings. In addition, we do not find a decline in mobility to workplaces and COVID-19 deaths after the first mass killing. These findings are congruent with the hypothesis that illegal armed groups used fear to enforce mobility restrictions without hurting economic activities and their sources of revenue. However, violence slightly impacted the virus’ spread. Treated areas had a decline of 35 cases per 100,000 inhabitants four months after the first massacre.
2023 Oct 11

Research Seminar: Dancing With the Stars -Innovations through Interactions

10:00am to 11:30am

Location: 

Belfer L1 Weil Town Hall, HKS (Harvard Community) & Zoom

The Growth Lab's Research Seminar series is a weekly seminar that brings together researchers from across the academic spectrum who share an interest in growth and development.

In this hybrid seminar, Santiago Caicedo, an Associate Professor at the Economics Department and Finance Group at Northeastern University will discuss his research on innovation, which uses a new large-scale panel dataset on European inventors matched to their employers and patents.

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2023 Sep 20

Fighting for Growth: Labor Scarcity and Technological Progress During the British Industrial Revolution

10:00am to 11:15am

Location: 

Online Only

The Growth Lab Research Seminar series is a weekly seminar that brings together researchers from across the academic spectrum who share an interest in growth and development.

This session is online only. Please register in advance. 

In this seminar, Bruno Caprettini will discuss new data and present new evidence on the effects of labor scarcity on the adoption of labor-...

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2023 Sep 13

Research Seminar: The Role of Green & Non-Green Relatedness in the Development of New Green Specialization in Argentinean Provinces

10:00am to 11:15am

Location: 

Online Only

The Growth Lab's Research Seminar series is a weekly seminar that brings together researchers from across the academic spectrum who share an interest in growth and development.

Register for the session.

In this Research Seminar, Andrea Belmartino will analyze the role of relatedness in developing new green specialisations for the Argentinean provinces between 2008-2019....

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Egger, P., et al., 2023. Gravity with History: On Incumbency Effects in International Trade.Abstract
2023-07-cid-fellows-wp-153-incumbency-effects.pdf
We introduce incumbency effects into a tractable dynamic model of international trade. The framework nests the canonical Melitz (2003)-Chaney (2008) model as a special case. The key novelty is that fixed costs of market access decrease with tenure. As a consequence, there is less market exit and entry in response to a shock. We derive a gravity equation and show that, ceteris paribus, countries that liberalized their trade relationship earlier trade more today. We provide supporting evidence for the underlying mechanism and derive an augmented ACR formula (Arkolakis et al., 2012) for the gains from trade that accounts for incumbency effects. A quantitative analysis suggests that our mechanism can explain up to 25% of countries’ home shares and that the gains from trade are, on average, 10% larger when accounting for incumbency effects. The analysis further reveals novel distributional effects of trade that benefit real wages but reduce profits.
Nedelkoska, L., et al., 2023. Eight Decades of Changes in Occupational Tasks, Computerization and the Gender Pay Gap.Abstract
2023-06-cid-fellows-wp-151-occupational-tasks.pdf
We build a new longitudinal dataset of job tasks and technologies by transforming the U.S. Dictionary of Occupational Titles (DOT, 1939 -1991) and four books documenting occupational use of tools and technologies in the 1940s, into a database akin to, and comparable with its digital successor, the O*NET (1998 -today). After creating a single occupational classification stretching between 1939 and 2019, we connect all DOT waves and the decennial O*NET databases into a single dataset, and we connect these with the U.S. Decennial Census data at the level of 585 occupational groups. We use the new dataset to study how technology changed the gender pay gap in the United States since the 1940s. We find that computerization had two counteracting effects on the pay gap -it simultaneously reduced it by attracting more women into better-paying occupations, and increased it through higher returns to computer use among men. The first effect closed the pay gap by 3.3 pp, but the second increased it by 5.8 pp, leading to a net widening of the pay gap.
Martin, D.A., 2023. The Impact of a Rise in Expected Income on Child Labor: Evidence from Coca Production in Colombia.Abstract
2023-06-cid-fellows-wp-150-coca-production-child-labor.pdf
Can households' beliefs about future income shocks affect child labor? This paper examines whether the three-year gap between the announcement (in 2014) and the start (in 2017) of the Illicit Crop Substitution Program (ICSP) increased child labor in Colombia. The ICSP provides farmers with financial support for not planting and harvesting coca leaves – the key input of cocaine. My results from a difference-in-differences model using differences in historical coca production show that due to the ICSP announcement, children became four percentage points more likely to work in municipalities with historical coca production than in non–coca-growing areas. Although the likelihood of working increased in coca–growing areas, the hours worked per child declined modestly after the ICSP announcement. The expansion of the children working in coca fields but the decline in working hours per child produce null effects of the announcement on education outcomes. The rise in the expected income affects the time allocation decision within households in rural areas.
2023 May 15

Research Seminar: Exploration and Exploitation in US Technological Change

10:30am to 11:30am

Location: 

Belfer L1 Weil Town Hall, HKS / Zoom (registration information below)

The Growth Lab Research Seminar series is a weekly seminar that brings together researchers from across the academic spectrum who share an interest in growth and development.

Location: Zoom

Please register in advance. The Zoom webinar is open to the public.

About the Seminar: How do firms and inventors move through knowledge space as they develop their...

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The impact of return migration on employment and wages in Mexican cities
Diodato, D., Hausmann, R. & Neffke, F., 2023. The impact of return migration on employment and wages in Mexican cities. Journal of Urban Economics , 135 (May). Publisher's VersionAbstract
How does return migration from the US to Mexico affect local workers? Return migrants increase the local labor supply, potentially hurting local workers. However, having been exposed to a more advanced U.S. economy, they may also carry human capital that benefits non-migrants. Using an instrument based on involuntary return migration, we find that, whereas workers who share returnees’ occupations experience a fall in wages, workers in other occupations see their wages rise. These effects are, however, transitory and restricted to the city-industry receiving the returnees. In contrast, returnees permanently alter a city’s long-run industrial composition, by raising employment levels in the local industries that hire them.
Li, Y. & Neffke, F., 2023. Evaluating the Principle of Relatedness: Estimation, Drivers and Implications for Policy.Abstract
2023-03-cid-fellows-wp-146-principle-of-relatedness.pdf
A growing body of research documents that the size and growth of an industry in a place depends on how much related activity is found there. This fact is commonly referred to as the "principle of relatedness." However, there is no consensus on why we observe the principle of relatedness, how best to determine which industries are related or how this empirical regularity can help inform local industrial policy. We perform a structured search over tens of thousands of specifications to identify robust – in terms of out-of-sample predictions – ways to determine how well industries fit the local economies of US cities. To do so, we use data that allow us to derive relatedness from observing which industries co-occur in the portfolios of establishments, firms, cities and countries. Different portfolios yield different relatedness matrices, each of which help predict the size and growth of local industries. However, our specification search not only identifes ways to improve the performance of such predictions, but also reveals new facts about the principle of relatedness and important trade-offs between predictive performance and interpretability of relatedness patterns. We use these insights to deepen our theoretical understanding of what underlies path-dependent development in cities and expand existing policy frameworks that rely on inter-industry relatedness analysis.

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