Long-run Exposure Research Articles

Long-run exposure to low-dose radiation reduces cognitive performance

This paper examines the effect of long-run exposure to low-dose radiation on cognitive performance. We focus on the fallout from the Chernobyl accident, which increased the level of ground radiation in large parts of Europe. To identify a causal effect, we exploit unexpected rainfall patterns in a critical time window after the disaster as well as the trajectory of the radioactive plume, which determine local fallout but have no plausible direct effect on test scores. Based on geo-coded survey data from Germany, we show that people exposed to higher radiation perform significantly worse in standardized cognitive tests 25 years later. An increase in initial exposure by one standard deviation reduces cognitive test scores by around 5% of a standard deviation.

The exposure to routinization: Labor market implications for developed and developing economies

Polarization is the structural phenomenon observed over the last three decades where wages and employment of high- and low-skill labor rise relative to middle-skilled labor. Evidence that the automation of routine tasks has contributed to polarization has been documented for many developed economies, but little is known about its incidence in developing economies. We propose a measure of the exposure to routinization—that is, the risk of displacing labor by automation—and assemble several facts that link these exposures with the prospects of polarization. Drawing on exposures for 85 countries since 1990, we establish that: (1) developing economies are significantly less exposed to routinization than their developed counterparts; (2) the initial exposure to routinization is a strong predictor of the long-run exposure; and (3) among countries with high initial exposures to routinization, polarization dynamics have been strong causing subsequent exposures to decline; while among those with low initial exposure, structural transformation has prevailed resulting in raising exposures. Although we find little evidence of polarization in developing countries thus far, as their exposure to routinization rises, the risks of future labor market polarization will escalate with potentially significant consequences for productivity, growth, and distribution.

Long-Term Cultural Barriers to Sustaining Collective Effort in Vaccination Against COVID-19

This study attempts to shed light on long-term cultural barriers to strengthening collective action in COVID-19 vaccination. I propose that rugged individualism, characterized by emphasis on self-reliance and strong antipathy to government intervention, is linked to a greater prevalence of resistance to inoculation against the novel coronavirus across American counties. The main hypothesis of this paper rests upon the premise that a culture of rugged individualism is conducive to the emergence and persistence of mistrust, political polarization and distrust in science, which undermine collective effort in vaccination. Using subnational data for the United States, I consistently find evidence that rugged individualism, captured by long-run exposure to the westward-moving frontier in American history, has a positive influence on the predicted share of the population that is hesitant towards voluntary vaccination against COVID-19. In addition, individualistic counties tend to suffer from under-vaccination, measured by lower rates of the population that has been fully inoculated against COVID-19. More broadly, the findings suggest that rugged individualism is an impediment to resolving collective action problems, notwithstanding the widely acknowledged positive impact of individualistic cultures on innovation and long-run economic performance.

Is “Three” a lucky number? Exchange-rate exposure in a “Rule of Three” model

We examine exchange-rate exposure in an international model of differentiated goods using the frequently encountered in international markets “Rule of Three” (RoT) market structure that allows both within and between countries competition. In a static setting the addition of a domestic competitor increases the exposure of both internationally competing firms relative to duopoly unless the exchange-rate pass-through of one of its rivals is elastic. Using a dynamic model, we study the intertemporal effects on the firms’ long-run exposure. The exposure gap between the RoT market and the international duopoly increases in the long run for the firm facing domestic competition. The long-run exposure of that firm can be higher or lower than its short-run exposure, while the foreign monopolist has a smaller long-run exposure.

The Exposure to Routinization: Labor Market Implications for Developed and Developing Economies

Evidence that the automation of routine tasks has contributed to the polarization of labor markets has been documented for many developed economies, but little is known about its incidence in developing economies. We propose a measure of the exposure to routinization—that is, the risk of the displacement of labor by information technology—and assemble several facts that link the exposure to routinization with the prospects of polarization. Drawing on exposures for about 85 countries since 1990, we establish that: (1) developing economies are significantly less exposed to routinization than their developed counterparts; (2) the initial exposure to routinization is a strong predictor of the long-run exposure; and (3) among countries with high initial exposures to routinization, polarization dynamics have been strong and subsequent exposures have fallen; while among those with low initial exposure, the globalization of trade and structural transformation have prevailed and routine exposures have risen. Although we find little evidence of polarization in developing countries thus far, with rapidly rising exposures to routinization, the risks of future labor market polarization have escalated with potentially significant consequences for productivity, growth and distribution.

Exchange-Rate Exposure in a 'Rule of Three' Model

We examine exchange-rate exposure in an international Bertrand model of differentiated goods using a “Rule of Three” (RoT) market structure that allows both within and between countries competition. We construct two versions of our model, a static and a dynamic one. In the latter, we explore how the intertemporal effects of exchange rates on the optimal prices of a firm’s domestic and international rivals will affect a firm’s long-run exposure in relation to its short-run exposure. We find that in the static version, the addition of a domestic competitor increases the firm’s exposure, while the effect on its foreign competitor is ambiguous. In the dynamic case, we find that the gap in exposure between the RoT model and the international duopoly case is larger in the long run than in the short run for the company facing a domestic rival, while the exposure for that firm can be either smaller or larger in the long run relative to the short run. Finally, the firm that remains a monopolist in its domestic market has a smaller exposure in the long run as compared to the short run.

The Exposure to Routinization: Labor Market Implications for Developed and Developing Economies

Evidence that the automation of routine tasks has contributed to the polarization of labor markets hasbeen documented for many developed economies, but little is known about its incidence in developingeconomies. We propose a measure of the exposure to routinization-that is, the risk of the displacementof labor by information technology-and assemble several facts that link the exposure to routinizationwith the prospects of polarization. Drawing on exposures for about 85 countries since 1990, we establishthat: (1) developing economies are significantly less exposed to routinization than their developedcounterparts; (2) the initial exposure to routinization is a strong predictor of the long-run exposure; and(3) among countries with high initial exposures to routinization, polarization dynamics have been strongand subsequent exposures have fallen; while among those with low initial exposure, the globalization oftrade and structural transformation have prevailed and routine exposures have risen. Although we findlittle evidence of polarization in developing countries thus far, with rapidly rising exposures toroutinization, the risks of future labor market polarization have escalated with potentially significantconsequences for productivity, growth and distribution.

The Exposure to Routinization: Labor Market Implications for Developed and Developing Economies

Evidence that the automation of routine tasks has contributed to the polarization of labor markets has been documented for many developed economies, but little is known about its incidence in developing economies. We propose a measure of the exposure to routinization—that is, the risk of the displacement of labor by information technology—and assemble several facts that link the exposure to routinization with the prospects of polarization. Drawing on exposures for about 85 countries since 1990, we establish that (1) developing economies are significantly less exposed to routinization than their developed counterparts; (2) the initial exposure to routinization is a strong predictor of the long-run exposure; and (3) among countries with high initial exposures to routinization, polarization dynamics have been strong and subsequent exposures have fallen; while among those with low initial exposure, the globalization of trade and structural transformation have prevailed and routine exposures have risen. Although we find little evidence of polarization in developing countries thus far, with rapidly rising exposures to routinization, the risks of future labor market polarization have escalated with potentially significant consequences for productivity, growth and distribution.

State History and Contemporary Conflict: Evidence from Sub-Saharan Africa

I examine empirically the role of historical political centralization on the likelihood of modern civil conflict in Sub-Saharan Africa. I combine a wide variety of historical sources to construct an original measure of long-run exposure to statehood at the sub-national level. I then exploit within-country variation in this new measure along with georeferenced conflict data to document a robust negative statistical relationship between local long-run exposure to state institutions and contemporary conflict. From a variety of identification strategies I provide evidence suggesting that the relationship is causal. I argue that regions with long experience with statehood are better equipped with mechanisms to establish and preserve order. Consistently with this hypothesis, I provide evidence that those regions are less prone to experience conflict when hit by a negative economic shock. I finally exploit contemporary individual-level survey data for 18 Sub-Saharan countries to show that within-country long history of statehood is linked to people’s positive attitudes toward local state institutions and traditional leaders.

Optimizing the Fraction of Expensive Direct Measurements in an Exposure Assessment Study

When designing studies to assess occupational exposures, one persistent decision problem is the selection between two technical methods, where one is expensive and statistically efficient and the other is cheap and statistically inefficient. While a few studies have attempted to determine the relatively more cost-efficient design between two technical methods, no successful study has optimized the fraction of the expensive efficient method in a combined technique intended for long-run exposure assessment studies. The purpose of this study was therefore to optimize the fraction of the expensive efficient measurements by resolving a precision-requiring cost minimization problem. For an indefinite total number of measurements, the total cost of a working posture assessment study was minimized by performing only expensive direct technical measurements. However, for a definite total number of measurements, the use of combined techniques in assessing the posture could be optimal, depending on the constraints placed on the precision and on the research budget.

Stress EAD: Experience of 2003 Korea Credit Card Distress

The Advanced-IRB banks should be able to demonstrate to the regulatory supervisors that the long-run exposure at default (EAD) and downturn (or stress) EADs are validated with their own data on historical exposures. This paper proposes an empirical stress EAD model that is driven by a risk driver of the credit conversion factor (CCF) and by a systematic factor governing the cyclical effects of EAD and PD of facilities. Stress EAD is then computed as the expected value of EAD conditional on a particular value of the risk driver of a facility and on the value of a systematic factor that achieves, say, a 99.9% confidence level for a desired A or BBB+ rating. The reference data set (RDS) studied in the paper covers the corporate credit card exposures from 2001:Q1 to 2005:Q4. The most intriguing aspect of this RDS is that the sample period covers the severe 2003 credit card distress witnessed in Korea, which lenders it an excellent candidate for developing and validating the stress EAD models. The empirical evidence would provide ample opportunity to a better understanding of the meaning of Φ ?1 (.999) in the New Capital Accord.

Interpreting Risk Premia Across Size, Value, and Industry Portfolios

In this paper, we model cash flow and consumption growth rates as a vector-autoregression (VAR), from which we measure the response of cash flow growth to consumption shocks. As the appropriate cash flow proxy is not unambiguous, nor likely to be measured without error, we consider three alternatives for portfolio cash flows: cash dividends, dividends plus repurchases and corporate earnings. We find that the long-run exposure of cash flows to aggregate consumption risk can justify a significant degree of the observed variation in risk premia across size, book-to-market, and industry sorted portfolios. Also, our economic model highlights the reasons for the failure of the market beta to justify the cross-section of risk premia. Most importantly, our results indicate that measured diferences in the long-run exposures of cash flows to aggregate economic fluctuations as captured by aggregate consumption movements contain very valuable information regarding diferences in risk premia. In all, our results indicate that the size, book-to-market and industry spreads are not puzzling from the perspective of economic models.