CER-ETH Research Seminar, Fall Term 2017
The CER-ETH Research Seminar takes place on Mondays during term time from 5:15 pm to 6:45 pm at ETH Zurich, Room ZUE G1 (Zürichbergstr. 18). Per term we invite 6 to 7 internationally known speakers to present and discuss their work.
Programme
Everyone who is interested is cordially invited!
If you would like to receive our weekly invitation via e-mail, or if you have any other question, please contact Marie-Catherine Riekhof.
Speakers
People who delay claiming Social Security receive higher lifelong benefits upon retirement. We survey individuals on their willingness to delay claiming later, if they could receive a lump sum in lieu of a higher annuity payment. Using a moment-matching approach, we calibrate a lifecycle model tracking observed claiming patterns under current rules and predict optimal claiming outcomes under the lump sum approach. Our model correctly predicts that early claimers under current rules would delay claiming most when offered actuarially fair lump sums, and for lump sums worth 87% as much, claiming ages would still be higher than at present.
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This paper develops a dynamic macroeconomic model with heterogeneous financial intermediaries and endogenous entry. It features time-varying endogenous macroeconomic risk that arises from the risk-shifting behaviour of financial intermediaries combined with entry and exit. We show that when interest rates are high, a decrease in interest rates stimulates investment and increases financial stability. In contrast, when interest rates are low, further stimulus can increase systemic risk and induce a fall in the risk premium through increased risk-shifting. In this case, the monetary authority faces a trade-off between stimulating the economy and financial stability .
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Retirement reforms are high on the agenda of policy makers nowadays. Retirement policies target individuals but the majority of people of retirement age are married and likely to plan to retire together with their spouse. It follows that both spouses may be affected by such policy changes, either directly (own effects) or indirectly (cross-effects). We exploit a recent reform that made partial retirement more attractive for certain categories of private sector workers in Norway to assess the size of the direct and indirect effects on spouses. We focus on couples in which a partner was working in the affected sector and the other one in the non-impacted sector to identify the own and cross-effects separately. We find sizable and significant own and cross effects of the reform on both spouses’ labor supply. Therefore, neglecting the indirect effects of the reform would underestimate its economic impact.
The goal of this paper is to document how high-skill work performance changes in response to biological aging, and the implications of this has for employment policy. Our data set is constructed from the work product of all state supreme court judges for the years 1947 through 1994. Older judges have the same work output as younger judges but write lower-quality opinions. Older judges use a different writing style, with shorter words but longer sentences. Conditional on current age, judges who retire later in life write write higher-quality opinions than judges who retire earlier in life. Mandatory retirement policies have a demotivating effect on judge work output, but not on work quality.
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The paper presents a model of trade liberalization that integrates the dynamics effects of human capital accumulation into the welfare analysis of the gains from trade. Agents' individual skill acquisition decisions are affected by the intergenerational externalities within a dynasty while the state of technology depends on the total level of human capital in the economy. We demonstrate that depending on the set of parameters our model is consistent with a variety of outcomes in the wake of trade liberalization (ranging from growth disasters to growth miracles). The analysis can reconcile conflicting empirical findings regarding the effects of trade opening on economic development. The paper also shows that trade liberalization can lead to leapfrogging.
Using gravity methods, we estimate the trade effects of various steps of European product market integration in 50 goods and services sectors. We also estimate parameters of sectoral productivity dispersion. We embed these results into the Ricardian general equilibrium trade model that gave rise to the gravity equation and simulate the effects of “undoing Europe”. The theoretical model features intra- and international input-output linkages and reserves a critical role for non-tariff trade barriers. We show that the losses from European disintegration differ very strongly across EU members, from 24% of 2014 real income to 3% in UK. Putting an end to the single market accounts for the largest part of these losses, but Schengen- and Eurozone membership are quantitatively important as well. The end of fiscal transfers matters strongly for net recipients, but only slightly for net payers. Bootstrapping standard errors, we find that most general equilibrium outcomes are statistically significant at the 10% level. Proportional losses are more pronounced in more central EU members, while larger and richer countries tend to lose less.
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This paper advances the hypothesis that the intensity of status preferences depends negatively on the average wealth of society (endogenous dynamic status effect), in accordance with empirical evidence. Our theory replicates the contradictory historical facts of an increasing saving rate along with declining returns to capital over time. By affecting the dynamics of the saving rate, the dynamic status effect raises inequality, thereby providing a behavioural mechanism for the observed diverse dynamics of income inequality across countries. In countries in which the dynamic status effect is strong (weak) inequality rises (declines) over time in response to a positive productivity shock.
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In light of increasing health care expenditures, patient cost-sharing schemes have been introduced to reduce medical spending. Based on claims-level data from a Dutch health insurer we exploit within-year variation in economic incentives using an instrumental variables approach. We show that health care utilization is affected not only by the economic incentives that are provided by various cost-sharing schemes, but also by the way these economic incentives are presented. Specifically, we compare patients’ responses to deductibles and to no-claim refunds, two cost-sharing schemes that have been used at different points in time in the Netherlands. We find that patients react to comparable incentives twice as strongly when they are implemented as a deductible, which suggests that the framing of incentives can be quantitatively almost as important as the incentive itself. Our preferred explanation is that individuals are loss-averse and respond differently to both schemes because they perceive a deductible payment as a loss and a no-claim refund as a gain.
We investigate the welfare implications of two pre-crisis immigration waves (1991– 2000 and 2001–2010) and of the post-crisis wave (2011–2015) for OECD native citizens. To do so, we develop a general equilibrium model that accounts for the main channels of transmission of immigration shocks – the employment and wage effects, the fiscal effect, and the market size effect – and for the interactions between them. We parameterize it for 20 selected OECD member states. We find that the three waves induce positive effects on the real income of natives, although the size of these gains varies across countries and across skill groups. In relative terms, however, the post-crisis wave induces smaller welfare gains compared to the previous ones. This is due to the changing origin-mix of immigrants, which translates into lower levels of human capital. This overall result applies to virtually all OECD countries and to all categories of native citizens; they are robust to various technological externalities related to schooling, birthplace diversity, and diaspora externalities.
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