SEPTEMBER 14 2017

Regis Barnichon, Christian Matthes, David A. Price, Richmond FED: Are the Effects of Fiscal Policy Asymmetric? Economic research on the size of the fiscal multiplier has assumed that the effects of changes in government spending are symmetric — that is, they influence economic output to the same degree whether the change is an increase or a decrease. Richmond Fed research indicates that this is not the case; the fiscal multiplier does vary according to the direction of the fiscal action and also varies with the stage of the economic cycle. This finding sheds light on likely outcomes of fiscal policies and helps account for inconsistent estimates of the multiplier in the literature.

Mary C. Daly, Bart Hobijn, Joseph H. Pedtke, San Francisco FED: Disappointing Facts about the Black-White Wage Gap. More than half a century since the Civil Rights Act became law, U.S. workers continue to experience different levels of success depending on their race. Analysis using microdata on earnings shows that black men and women earn persistently lower wages compared with their white counterparts and that these gaps cannot be fully explained by differences in age, education, job type, or location. Especially troubling is the growing unexplained portion of the divergence in earnings for blacks relative to whites.

Joelle Emerson, Harvard Business Review: Colorblind Diversity Efforts Don’t Work. As organizations struggle with stalled diversity efforts, some are considering moving toward a “colorblind” approach: deemphasizing initiatives focused on specific demographic groups in favor of more general inclusion efforts. For some, this approach seems like an appealing strategy for engaging majority group members and company leaders, while reducing the tensions that can arise when efforts are focused explicitly on identities like race and gender. Some studies have shown, for example, that even though many companies’ existing diversity efforts aren’t helping more women or people of color to get ahead, they still make white men think they aren’t being treated fairly. But colorblindness is not the answer to this problem. It will almost certainly backfire, ultimately undermining the very inclusion efforts it’s designed to improve.

Anna Raute, NBER: Can Financial Incentives Reduce the Baby Gap? Evidence from a Reform in Maternity Leave Benefits. To assess whether earnings-dependent maternity leave positively impacts fertility and narrows the baby gap between high educated (high earning) and low educated (low earning) women, I exploit a major maternity leave benefit reform in Germany that considerably increases the financial incentives for higher educated and higher earning women to have a child. In particular, I use the large differential changes in maternity leave benefits across education and income groups to estimate the effects on fertility up to 5 years post reform. In addition to demonstrating an up to 22% increase in the fertility of tertiary educated versus low educated women, I find a positive, statistically significant effect of increased benefits on fertility, driven mainly by women at the middle and upper end of the education and income distributions. Overall, the results suggest that earnings-dependent maternity leave benefits, which compensate women commensurate with their opportunity cost of childbearing, could successfully reduce the fertility rate disparity related to mothers’ education and earnings.

Angela K. Dills, Sietse Goffard, Jeffrey Miron, NBER: The Effects of Marijuana Liberalizations: Evidence from Monitoring the Future. By the end of 2016, 28 states had liberalized their marijuana laws: by decriminalizing possession, by legalizing for medical purposes, or by legalizing more broadly. Yet evidence on these liberalizations remains scarce, in part due to data limitations. We use data from Monitoring the Future’s annual surveys of high school seniors to evaluate the impact of marijuana liberalizations on marijuana use, other substance use, alcohol consumption, attitudes surrounding substance use, youth health outcomes, crime rates, and traffic accidents. These data have several advantages over those used in prior analyses. We find that marijuana liberalizations have had minimal impact on the examined outcomes. Notably, many of the outcomes predicted by critics of liberalizations, such as increases in youth drug use and youth criminal behavior, have failed to materialize in the wake of marijuana liberalizations.

Martin G. Kocher, Simeon Schudy, Lisa Spantig, Management Science: I Lie? We Lie! Why? Experimental Evidence on a Dishonesty Shift in Groups. Unethical behavior such as dishonesty, cheating and corruption occurs frequently in organizations or groups. Recent experimental evidence suggests that there is a stronger inclination to behave immorally in groups than individually. We ask if this is the case, and if so, why. Using a parsimonious laboratory setup, we study how individual behavior changes when deciding as a group member. We observe a strong dishonesty shift. This shift is mainly driven by communication within groups and turns out to be independent of whether group members face payoff commonality or not (i.e., whether other group members benefit from one’s lie). Group members come up with and exchange more arguments for being dishonest than for complying with the norm of honesty. Thereby, group membership shifts the perception of the validity of the honesty norm and of its distribution in the population.

Raul Caruso, Marco Di Domizio, David A. Savage, KYKLOS: Differences in National Identity, Violence and Conflict in International Sport Tournaments: Hic Sunt Leones! This work examines the relationship between national identity and conflict during international sporting tournaments and the impact of referees as an institutional countermeasure. The empirical analysis covers the FIFA World, Confederations and Under 20's World Cups and Olympic tournaments from 1994 to 2014, resulting in 1152 individual matches. We use the issuing of cards (red and yellow) and the number of sanctions (fouls) as a conflict proxy, plus macro-level national identity markers to determine between team variations. Our results indicate that national identity is robustly significant in the prediction of conflict, whereas the match-specific variables seem to be of less importance. Additionally, we observe that referees are a highly successful control of on-field aggression.