Fachbereich Wirtschaftswissenschaft

Physician prescribing style and the economic cost of health shocks

with  Flavia Cavallini (Università della Svizzera italiana), Karin Heck (Nivel, Netherlands Institute for Health Services Research), Fabrizio Mazzonna (Università della Svizzera italiana)

Abstract:

We investigate the role of primary care physicians‘ prescribing style in the transmission of health shocks to the labor market. Using administrative data from the Netherlands (2009–2020), we exploit the Dutch gatekeeping system and geographic constraints on GP choice to identify the causal effect of prescribing style on post-hospitalization recovery. We characterize GP style by a composite index of prescribing propensity for benzodiazepines, opioids, antidepressants, and antibiotics. Comparing patients in practices above versus below the median of this distribution, we find that while hospitalization leads to persistent earnings losses for all, the ”economic penalty‘” is 70% steeper for those in high-prescribing practices. Six years post-hospitalization, these patients earn 750 euro less annually, a gap that widens to 1,500 euro for those under 45. We identify persistent, potentially addictive benzodiazepine use as the primary mechanism, finding no systematic differences in mortality or rehospitalization rates that might otherwise explain the observed labor market trajectories.

The Housing Channel of Labor Market Turnover

with  Benjamin Born (University of Bonn) and Pascal Frank (University of Notre Dame)

Abstract:

We estimate the dynamic effect of housing turnover on labor market turnover in the United States. Using state-level panel data from 2001 to 2019 and a local projections instrumental variables framework, we exploit high-frequency monetary policy surprises as an exogenous source of variation in housing turnover. A one percentage point decline in housing turnover— comparable in magnitude to one standard deviation—leads to a persistent reduction in labor market turnover of about 0.3 percentage points over three years. The effect is stronger in states with higher homeownership rates, consistent with a mortgage lock-in channel. A decomposition analysis reveals that housing turnover accounts for at least two thirds of the impact transmission from monetary policy to labor market turnover. Results are robust to using an alternative instrument based on global economic activity, alternative measures of both housing and labor market turnover, and a range of further specification checks.

Dynamic Biases of Static Panel Data Estimators

Abstract:

This paper identifies an important bias — termed dynamic bias — in fixed effects panel estimators that arises when dynamic feedback is ignored in the estimating equation. Dynamic feedback occurs if past outcomes impact current outcomes, a feature of many settings ranging from economic growth to labor markets. When estimating equations omit past outcomes, dynamic bias can lead to significantly inaccurate treatment effect estimates, even with randomly assigned treatments. I show that dynamic bias stems from the estimation of fixed effects, as their estimation generates confounding in the data. This dynamic bias in simulations is an order of magnitude larger than Nickell bias. To recover consistent treatment effects, I develop a flexible estimator that provides fixed-T bias correction. I apply this approach to study the impact of temperature shocks on GDP, a canonical example where economic theory points to an important feedback from past to future outcomes. Accounting for dynamic bias lowers the estimated effects of higher annual temperatures on GDP growth by 10% and GDP levels by 120%.

The Variety Effect in Times of Uncertainty

with Francesco Saverio Gaudio (University of Rome)

Abstract: 

This paper shows that the variety effect, captured through monopolistic competition and increasing returns to specialization, acts as an amplification mechanism in the transmission of macroeconomic uncertainty shocks. By generating endogenous fluctuations in aggregate productivity through changes in the range of available products, due to firm entry and exit, the variety effect reinforces the risk channels through which uncertainty shocks propagate to the economy. The estimated intensity of the variety effect implies sizable productivity fluctuations, which shape the joint dynamics of households’ marginal utility, firms’ profits, and relative prices. When the equity risk-premium channel dominates, the variety effect implies deeper uncertainty-driven recessions, as discouraged investment in the stock market and the consequent fall in product creation leads to a drop in endogenous productivity.

The Reversal of the Mission: The Influence of Religious Leaders on Sociopolitical Attitudes

Abstract:

This paper examines the causal effect of religious leaders on local religiosity and political preferences. I collect a novel dataset containing the universe of Catholic priests appointments in rural Spain between 2000 and 2019 and conduct an original survey on their demographic characteristics, political views, and work habits. I exploit the quasi-natural experiment by which foreign-born priests are allocated to parishes using a staggered difference-in-differences design. I show that foreign-born priests, whom I find more devoted to their cause, are effective in revitalizing local religiosity, evidenced by an increase in Catholic marriages and fertility, while fewer divorces. Politically, they increase electoral mobilization, shift communities toward Catholic-aligned positions, and reduce support for openly xenophobic parties. These effects are driven by their broader community engagement and reinforcement of native in-group cohesion, rather than immigrant assimilation. These findings highlight the role of foreign religious leaders as traditional community builders.

Income and Well-Being

with Manja Derlin (Otto-von-Guericke-Universität Magdeburg), Carina Keldenich (Otto-von-Guericke-Universität Magdeburg)

Abstract:

We examine how modeling choices shape conclusions about the relationship between income and subjective well-being. Drawing on recent research using experience sampling and American Time Use Survey data, we focus on whether higher income continues to be associated with improvements in well-being at high income levels or whether income satiation emerges. The first part of this presentation demonstrates that conclusions regarding satiation are highly sensitive to functional form assumptions. In particular, imposing continuity in piecewise log-linear models substantially changes the estimated relationship and often eliminates evidence of satiation at commonly used thresholds. The second part broadens the analysis by comparing the relationship between income and multiple dimensions of well-being, including cognitive, affective, and eudaimonic measures. Using spline regressions, structural break models, and specification curve analyses, the results show that different estimation approaches can lead to markedly different conclusions. While higher income is consistently associated with higher life evaluation and lower sadness, the relationship with happiness and meaning appears substantially weaker and sometimes even negative. Overall, the findings highlight the importance of carefully evaluating functional form assumptions when studying income and well-being.

Bounding High Dimensional Comparative Statics

Abstract:

Comparative statics in high dimensional models are empirically demanding and analytically complicated. Computing them exactly requires complete knowledge of the correspondingly many model parameters, which is often infeasible given data availability. Under diagonal dominance, I derive novel bounds on high dimensional comparative statics that are sharp conditional on a set of low dimensional sufficient statistics. Knowledge of these statistics is often more feasible, and the resulting bounds have a simpler analytical form than the exact relationship. I illustrate the method in canonical models across economics and offer new results in the research on peer effects, gains from trade, and competitive equilibrium under gross substitutes.

Robustness in Empirical Economics: A Meta-Reproduction of 66 Articles from Leading Journals

with Gunther Bensch, Abel Brodeur, Anna Dreber, Magnus Johannesson, Florian Neubauer, Julian Rose, and 66 replicators. 

Abstract:

Despite increasing transparency standards in economics there is indication for low replicability rates due to selective reporting practices. We examine the robustness of 66 empirical economics articles published in three leading journals – the American Economic Review, American Economic Journal: Applied Economics, and the Journal of Development Economics. The replications are implemented by 66 globally recruited replicators, following a newly developed protocol to ensure similar standards. Each replication is internally reviewed by experienced replication experts – and subsequently revised by the replicators if necessary – to ensure the theoretical validity of the conducted robustness tests. Our major result suggests that 37% of all specifications for outcomes that were statistically significant in the original articles are no longer significant. This share is considerably higher for articles based on secondary data (45%), but still noteworthy for studies based on primary data (mostly RCTs, 28%). We also find that computational reproducibility differs considerably across the three journals, driven mainly by the Journal of Development Economics where data and code availability was low. 

Financial Openness: Where It Matters for CPI Inflation and Where It Does Not

with Hamish McHugh-Smith (University of Canterbury)

Abstract:

This paper identifies a distinct financial channel through which openness affects inflation in a simple model of a bank and a goods-producing firm. Greater financial openness leads to lower inflation if it is cheaper for the bank to borrow abroad than at home. This hypothesis is tested on cross-section data in a sample of 75 countries over the 1973-2016 period. While there is no robust evidence for lower CPI inflation in financially more open economies in all the countries studied, we do find such an inverse link in a subsample comprising OECD countries only. By contrast, the more common measure of openness, trade openness, matters only in non-OECD countries where greater trade openness is negatively related to CPI inflation.

The Long Shadow: The Health Effects of Lost In-School Instruction Across the Life Cycle

Abstract:

This study examines the long-term health consequences of reduced instructional time during compulsory schooling. I exploit a German reform of the school year schedule from the 1960s, which substantially shortened the length of two school years without adjusting the core curriculum. As a result, learning shifted out of the classroom, primarily through increased homework. Applying a difference-in-differences design to biographical administrative records, I estimate the impact of this policy on severe health issues, as measured by the number of long-term sick leave taken throughout individuals‘ careers. The results reveal a significant increase in long-term sick leave taking, suggesting that educational disruptions can have lasting effects on adult health.