Percentage Point Rise Research Articles

Hunger or Illness? a trade-off on fertilizer use

Although fertilizer can help alleviate hunger, it can also lead to disease. Using data from the National Fixed-Point Survey spanning from 1998 to 2017, we aimed to determine the impact of fertilizer use on healthcare costs. Our findings indicate that a ten percent increase in fertilizer use is responsible for a 0.63 percentage point rise in medical service fees, which translates to a staggering $678 million in medical expenses. Through an analysis of the various channels of pathogenic exposure, we discovered that food crops and drinking water are the primary sources of contamination. This implies that different rural environments, including fertilizer types, villages, terrain, and water sources, can exacerbate the negative effects of fertilizer use. Our research underscores the need for policymakers to consider compensating farmers who suffer from fertilizer pollution and incur health-related losses.

Split personalities? Behavioral effects of temperature on financial decision‐making

AbstractThe fact that environmental factors have a broader effect on financial decision‐making has been lengthily explored, but there is a gap in understanding how personality traits might mediate the effects of temperature on individual decision‐making. Using plausibly exogenous variation of individuals' exposure to changes in national temperature between 2004 and 2018 across NUTS 1 regions in 29 European countries, we estimate the causal effect of a marginal change in temperature on financial investments and its interaction with the trait of optimism/pessimism using Survey of Health, Ageing and Retirement in Europe (SHARE) data. A 10% increase in temperature is associated with a 0.03 percentage point (pp) rise in the probability that an optimist invests in bonds and a 0.024 pp decline in the probability for investment in stocks. However, among pessimists, we find null effects. The results are comparable on the intensive margin. In sum, our results highlight the potentially heterogeneous ways that environmental factors shape individual decision‐making.

Consumption smoothing or consumption binging? The effects of government-led consumer credit expansion in Brazil

Brazil initiated a major credit expansion program through government banks in 2011. The program primarily targeted public sector workers with offers of payroll-backed loans. Using individual-level administrative data we find that the program led to a 15 percentage point rise in debt to initial income for public sector workers. We develop a new method for estimating workers' expected income growth, and show that “consumption smoothing” cannot explain the rise in consumer borrowing. Instead, the evidence supports “consumption binging”: less financially sophisticated workers borrowed more at high real interest rates, and experienced both higher consumption volatility and lower average consumption.

Does foreign direct investment promote access to basic services? The case of drinking water in Africa

AbstractAddressing the challenge of limited access to drinking water requires a comprehensive understanding of its underlying causes. This study aims to evaluate the effect of foreign direct investment (FDI) on access to basic services in Africa, focusing specifically on people's access to drinking water. Utilizing data from a panel of 51 countries spanning the period 2000–2020, we employed a two‐step system generalized method of moments to estimate dynamic econometric models. Our analysis reveals a positive correlation between FDI inflows and improved access to drinking water. A one‐percentage point increase in FDI inflows leads to a 0.026 percentage point rise in the proportion of people with access to drinking water. Notably, the effects vary between urban and rural areas, with marginal effects of 0.022 and 0.160, respectively. Furthermore, our findings indicate an inverse U‐shaped relationship between FDI and access to drinking water in Africa, signifying that while access to drinking water improves with increasing FDI, the rate of improvement diminishes. The study recommends the judicious utilization of tax revenues from multinational enterprises to fund basic service infrastructures and advocates for measures aimed at attracting additional FDIs.

Economic growth and quality of education: Evidence from the national high school exam in Vietnam

This study considers the impact of economic growth on the quality of K-12 education in a transitional country over the 2016–2019 period, utilizing sub-national-level data. The study employs two-stage least squares for the panel-data model, confirming that (i) a one percentage point rise in per capita income increases national test scores in Vietnam by around 0.4–1.83%, and (ii) this nexus is influenced by the quality of institutions and by poverty levels. Notably, we find a non-linear relationship between economic growth and education: economic growth exhibits a U-shaped relationship with English scores, while its association with mathematics scores follows an inverse U-shaped pattern. The current study thus adds to the body of evidence supporting the link between educational quality and economic growth. As a result, policymakers in transitional nations can use the forces of economic growth to advance social objectives, rather than concentrating primarily on changing the educational system through increased government spending. In order to maximize the benefits of economic growth for the education system, the government policies should focus on assuring institutional quality improvement and multidimensional poverty reduction.

The labour market returns to sleep

Despite the growing prevalence of insufficient sleep among individuals, we still know little about the labour market return to sleep. To address this gap, we use longitudinal data from Germany and leverage exogenous fluctuations in sleep duration caused by variations in time and local sunset times. Our findings reveal that a one-hour increase in weekly sleep is associated with a 1.6 percentage point rise in employment and a 3.4% increase in weekly earnings. Such effect on earnings stems from productivity improvements given that the number of working hours decreases with longer sleep duration. We also identify a key mechanism driving these effects, namely the enhanced mental well-being experienced by individuals who sleep longer hours.

Estimating Growth Semi-Elasticity of Poverty Reduction Using Two Comparable Household Survey Datasets

ABSTRACT The study estimates poverty-growth semi-elasticity using two comparable household survey which excludes the 2019 survey since it is a base year survey, thus, not technically comparable with earlier surveys. Poverty-growth semi-elasticity estimates suggest that the more the percentage point rise in growth, the more poverty would deteriorate. Results further suggest that the expected poverty incidence generated by 1% of growth is less than the expected poverty incidence when growth is either 5% or 10% or more. A major finding is that the estimates of poverty-growth semi-elasticity are highly responsive to marginal changes when choosing among poverty indices.

Inflation expectations and household expenditure: Evidence from pseudo-panel data in Japan

This paper examines to what extent a rise in inflation expectations stimulates current household expenditure in Japan. Using matched household datasets, we find the following. First, to the extent that the rise in inflation expectations is from about 0% to the 2−10% range, durable goods expenditure is significantly stimulated. Second, total expenditure increases by 1.0% in response to a one percentage point rise in inflation expectations, about 82% of which is explained by the response of durable goods expenditure. Third, storable and non-storable non-durable goods expenditures (especially the latter) do not respond significantly to the inflation expectations. Finally, a temporary rise in inflation expectations immediately stimulates total expenditure, but produces a similar degree of decline over a few quarters, with virtually no long-run impact.

Consequences of a massive refugee influx on firm performance and market structure

This study combines an administrative dataset of the full population of Turkish firms and the setting of the sudden mass migration of Syrian refugees to Türkiye to identify the effect of migrants on firm performance and market structure. As a result of the migrant shock, existing firms expand and become more efficient in generating sales from assets, and new firms are established. There is suggestive evidence that market concentration shows less concentration, implying more competition. Quantitatively, a 10 percentage-point rise in the migrant-to-native ratio increases firm sales by 3.8%, sales-to-asset ratios by 2.3%, the number of active firms by 5.8%, and reduces firms’ average market share by 4.1%. We further document an increase in the export volume and variety of exported products to the Middle East and North Africa (MENA) region among existing exporters. New firms are also more likely to export to the MENA region. In addition, we observe a decline in export prices, implying a rise in the competitiveness of exporting firms. The results also indicate evidence for an effect of migrants’ skills and networks on exports, as the export value and variety of products to the MENA region increase more than those to the EU region while the prices of products exported to the two regions show similar changes.

Non-College Occupations, Workplace Routinization, and the Gender Gap in College Enrollment

Women used to lag behind men in college enrollment but now exceed them. We argue that changes in non-college job prospects contributed to these trends. We first document that routine-biased technical change disproportionately displaced non-college occupations held by women. We next employ a shift-share instrument for the impact of routinization to show that declining non-college job prospects for women increased female enrollment. Results show that a one percentage point decline in the share of routine task intensive jobs leads to a 0.6 percentage point rise in female college enrollment, while the effect for male enrollment is directionally smaller and insignificant. We next embed this instrumental variation into a dynamic model that links education and occupation choices. The model finds that routinization decreased returns to non-college occupations for women, leading them to shift to cognitive work and increasing their college premium. In contrast, non-college occupations for men were less susceptible to routinization. Altogether, our model estimates that workplace routinization accounted for 63% of the growth in female enrollment and 23% of the change in male enrollment between 1980 to 2000.

Recruitment, retention and employment growth in the long-term care sector in England.

This paper studies the relationship between turnover, hiring and employment growth in the long-term care (LTC) sector in England and sheds light on how challenges in both recruitment and retention affect the sector's ability to meet growing demand for care services. Using the Adult Social Care Workforce Data Set (ASC-WDS), a large longitudinal dataset of LTC establishments in England, and fixed effects estimation methods we: (a) quantify the relationship between the in/outflow of care workers and the expansion/contraction of employment within establishments, (b) establish the role of staff retention policy for workforce expansion, and (c) identify the role of recruitment frictions and its impact on hiring and employment contraction. Our analysis indicates that care worker turnover and employment growth are negatively related. A one percentage point increase in employment contraction is associated with a 0.71 percentage point rise in turnover, while a one percentage point increase in employment expansion is associated with a 0.23 percentage point fall in turnover. In contrast, we find that hiring rates and employment growth are positively related. A one percentage point increase in employment expansion is associated with a 0.76 percentage point rise in hiring, while a one percentage point increase in employment contraction is associated with a 0.26 percentage point decrease in hiring. We argue that the negative turnover-employment growth relationship within expanding establishments provides evidence that better staff retention is associated with higher employment growth. Using information on establishments' annual change in vacancies, and controlling for changes in new labor demand, we also find rising year-on-year vacancies amongst establishments with declining employment. This provides evidence that recruitment frictions drive the declining rate of replacement hiring amongst contracting establishments. Across sectors, we find that the employment growth-turnover and the employment decline-hiring relationships are relatively stronger in the private and voluntary sectors compared to the public sector, suggesting that the impact of staff retention and recruitment frictions on employment is more acute in these sectors.

Why Ukrainians Are Rallying Around Democracy

In democratizing countries it seems to make sense that any prolonged crisis will turn citizens away from democracy, from its "rules of the game," and from the institutions tasked with upholding them. If ever there was such a country, surely it is Ukraine. Long beset by political instability and corruption, it has in recent years seen its crises become biblical: pestilence (in the form of covid-19) and war (in the form of Russian aggression and later the all-out Russian invasion launched on 24 February 2022). Instead of losing confidence in democracy as the best form of government, however, Ukrainian citizens have done the opposite, survey research from the MOBILISE Project reveals a staggering 35 percentage-point rise in Ukrainians' support for democracy over just three years. Ukrainians moved toward greater support for democracy between 2019 and 2022 precisely because ordinary citizens were able to observe democracy in action and working even in the face of major compounding crises.

When houses of worship go empty: The effects of state restrictions on well-being among religious adherents

Using data on over 50,000 individuals between March 2020 and May 2021 in the United States, this paper investigates the effects of state-level house of worship restrictions on subjective well-being (SWB). My identification strategy exploits plausibly exogenous variation in the timing of these policies on religious adherents with their non-religious counterparts before versus after the adoption of the state restrictions. The adoption of these restrictions led to a 0.117 standard deviation reduction in current life satisfaction and a 4.8 percentage point rise in self-isolation among the religious, relative to their counterparts. Numeric caps (i.e., restrictions on exactly how many people can gather) are more harmful for SWB than percentage caps (i.e., restrictions on the percent of occupancy rates during “normal times” as set out for the building). The results are robust to a wide array of controls, including income, political affiliation, economic sentiment, industry, and occupation. Moreover, they are robust to state × time fixed effects, which exploit variation between religious and non-religious adherents after controlling for all shocks common in the same state over time. Finally, there is almost no evidence that these restrictions have any public health benefits.

Border enforcement and the sorting and commuting patterns of Hispanics

AbstractI analyze the effects of immigration enforcement by the US Border Patrol on the sorting and commuting patterns of Hispanics. Using a regression discontinuity design based on a 100‐Mile Border Zone, which permits Border Patrol agents to conduct warrantless searches within 100 air miles of the US border, I find that the share of Hispanics in southwestern states increases outside the Border Zone. This sorting effect disappears, however, when focusing on within‐county differences in shares of Hispanics. I also find no significant commuting effect on Hispanics at the 100‐mile cutoff. On the contrary, I show that Hispanics near Border Patrol checkpoints exhibit significantly different commuting patterns, where a 1 percentage point rise in Hispanic share is associated with a 0.08 percentage point decrease in the probability of commuting toward checkpoints and a 0.2 mile decrease in the average commute distance.

California’s Paid Family Leave Law and the Employment of 45- to 64-Year-Old Adults

AbstractPaid family leave allows workers to take time off from work to care for a family member with a serious health condition, with reduced financial risk and increased job continuity. In 2004, California was the first state in the nation to implement a paid family leave program allowing workers to take up to 8 weeks off work with partial pay to care for their own or a family member’s serious health condition. Although the effects of California’s law on the labor supply of parents of newborns have been extensively studied, the role of paid family leave in the labor supply of workers who may need to provide care for a spouse has not been studied widely. We examine the effects of California’s law on the employment of workers who are aged 45–64 and have a disabled spouse, using the 2001–2008 American Community Survey. Our preferred estimates suggest the paid leave program increased the employment of 45- to 64-year-old women with a disabled spouse in California by around 0.9 percentage points (or 1.4% on a prelaw base rate of 65.9%) in the postlaw period compared with their counterparts in other states, with a 2.9 percentage point rise in private-sector employment. The employment of men with a disabled spouse in California also increased, but by a smaller amount: 0.7 percentage points (or 0.8% on a prelaw base 86.8%; with a nonsignificant 0.4 percentage point decrease in private-sector employment).

Leave them kids alone! National exams as a political tool

In this paper, we show how results in state administered university entrance standardized exams in Portugal are sensitive to the electoral cycle. Using individual data for all senior high school students taking national exams between the years 2004 and 2018, we reveal that whenever exams occur in years of upcoming legislative elections, the average senior high-school student grade increases by 1.17 and 0.63—on a 0 to 20 scale, in the core disciplines of Mathematics and Portuguese, respectively. Furthermore, the probability of passing the exams, that is, of getting more than 9.5 out of 20, increases by ten and eight percentage points in those same exams. Neither the quality of students nor the leniency of grading in these years explain this rise in pre-election exam grades. Robustness tests using early legislative elections, held, exceptionally, before national exams, and therefore not anticipated by those who arguably manipulate the exams, show that there was no inflation of exam scores in those years. Furthermore, we highlight that exam inflation can be a powerful electoral tool, with a unit increase in the municipality average score in Mathematics and Portuguese exams associated with a 1.46 percentage point rise in the vote share of the sitting government.

Split Personalities? Behavioral Effects of Temperature on Financial Decision-making

How do environmental factors affect financial decision-making? Using plausibly exogenous variation in exposure to fluctuations in temperature over a sample of individuals between 2004 and 2018 across 28 European countries and Israel, we estimate the causal effect of a marginal change in temperature on financial investments and its interaction with individual personality characteristics. We find that a 10\% increase in temperature is associated with a 0.1 percentage point (pp) rise in the probability that an optimist invests in bonds, a 0.12 pp decline in the probability for stocks, and a 0.11 pp rise in mutual funds. However, among pessimists, we find null effects. We find similar results when we focus on the intensive margin of investment as well. Our results are identified of within-person variation after controlling for all shocks that are common within a country and year, thereby purging variation in time-varying country policies and macroeconomic conditions. These results are unique to optimists versus pessimists, rather than general happiness or interest. Furthermore, the variation in optimism is largely driven by attitudes about risk, rather than attitudes about trust. Our results are consistent with behavioral finance models where expectations moderate the transmission of shocks onto financial decision-making.

California's Paid Family Leave Law and the Employment of 45-64 Year Old Adults

Paid family leave allows workers to take time off from work to care for a family member with a serious health condition, with reduced financial risk and increased job continuity. In 2004, California was the first state in the nation to implement a paid family leave program allowing workers to take up to eight weeks off work with partial pay to care for their own or a family member's serious health condition. While the effects of California's law on the labor supply of parents of newborns have been extensively studied, the role of paid family leave in the labor supply of workers who may need to provide care for a spouse has not been studied widely. We examine the effects of California's law on the employment of workers who are aged 45-64 and have a disabled spouse, using the 2001-2008 American Community Survey. Our preferred estimates suggest the paid leave program increased the employment of 45-64 year old women with a disabled spouse in California by around 0.9 percentage points (or 1.4% on a pre-law base rate of 65.9%) in the post-law period compared to their counterparts in other states, with a 2.9 percentage point rise in private sector employment. The employment of men with a disabled spouse in California also increased, but by a smaller amount: 0.7 percentage points (or 0.8% on a pre-law base 86.8%) (with a non-significant 0.4 percentage point decrease in private sector employment).

Unemployment Insurance in Macroeconomic Stabilization

Does the generosity of unemployment insurance (UI) have a role to play in macroeconomic stabilization? When inefficient fluctuations arise from nominal rigidities and constraints on monetary policy, I demonstrate that it does, owing to the interaction between UI and aggregate demand. From a positive perspective, a marginal increase in UI generosity affects output and employment through a redistribution effect on aggregate demand. From a normative perspective, two forces determine optimal generosity beyond the classic trade-off between insurance and incentives: an aggregate demand externality and an effect of low aggregate demand on the social cost of disincentives. The aggregate demand externality summarizes the welfare impact of the redistribution effect when the economy is slack; both are governed by the difference in marginal propensities to consume between the unemployed and employed. Quantitatively, a calibrated model with search frictions, incomplete markets, and a binding zero lower bound suggests that the 2008–13 UI benefit extensions in the U.S. had important stabilization effects through these channels. Compared to counterfactual benefit durations capped at 9 months in the calibrated model, the extensions to 22 months prevent a 2-5 percentage point rise in the unemployment rate and generate a strict Pareto improvement.

Mobile Internet Adoption in West Africa

Mobile broadband internet is the main technology through which individuals access the internet in developing countries. Understanding the barriers to broadband adoption is thus a priority in designing policies aiming to expand access and close the digital divide across socioeconomic groups and territories. This paper exploits data from harmonized household expenditure surveys in seven countries in West Africa in 2018/19 — a subregion with one of the lowest levels of mobile internet penetration in the world — to identify the main factors that limit mobile broadband internet adoption. Results show that low levels of household consumption and prices of services are two key constraints. One standard deviation increase in household expenditure, about US$65 per capita per month, is associated with a 6.5 percentage point rise in the probability of adoption, while one standard deviation drop in the price of mobile internet services, about US$3.60, increases the probability of adoption by 2.4 percentage points. Other determinants include demographic characteristics (sex, age, language, urban location), socioeconomic features (educational attainment, sector of employment), and other factors linked to policy (access to electricity, ownership of assets, alternative means of internet access). Results are robust to specifications focusing only in areas with mobile internet coverage (3G).