Knowledge that Transforms

In 2005 an earthquake in northern Pakistan led to a significant inflow of international relief groups. Four years later, trust in Europeans and Americans was markedly higher among those exposed to the earthquake and the relief that followed. These differences reflect the greater provision of foreign aid and foreigner presence in affected villages rather than preexisting population differences or a general impact of disasters on trust. We thus demonstrate large-scale, durable attitudinal change in a representative Muslim population. Trust in Westerners among Muslims is malleable and not a deeply rooted function of preferences or global (as opposed to local) policy and actions.

We present new evidence on the evolution of labor mobility in the United States over the past four decades. Building on the seminal methodology by Blanchard and Katz (1992), combined with multiple sources of regional population and migration data, we show that interstate mobility in response to relative labor demand conditions is not as high as previously established and has been weakening since the early 1990s. In addition, we find that mobility is countercyclical: net migration across regions responds more strongly to spatial disparities in recessions than in normal times. While the declining trend in mobility has been driven by weaker out-migration from states experiencing negative relative shocks, the mobility surge in recessions is mostly accounted for by temporarily stronger in-migration to better-performing states.

We decompose the wealth effect on consumption into two components. First, we distinguish between exogenous and endogenous wealth changes. Second, we distinguish between anticipated and unanticipated exogenous changes. We estimate the impact of exogenous components using data from the 2008—2010 panel of the Italian Survey of Household Income and Wealth. The wealth effect is about 3 cents per (unexpected) euro increase in wealth and driven by house price changes. The consumption response to anticipated changes in wealth is of similar magnitude and also driven by housing. We show that these findings are consistent with binding borrowing constraints.

African elections often reveal low levels of political accountability. We assess different forms of voter education during an election in Mozambique. Three interventions providing information to voters and calling for their participation were randomized: an information campaign using SMS, an SMS hotline for electoral misconduct, and the distribution of a free newspaper. To measure impact, we look at official electoral results, reports by electoral observers, and behavioral and survey data. We find positive effects of all treatments on voter turnout. However, only the distribution of the free newspaper led to more accountability-based participation and to a decrease in electoral problems.

Using unique consumer financial transactions of more than 56,000 consumers, we study the consumption response to a housing policy experiment in Singapore that resulted in a decrease in access to home equity. Using difference-in-differences analysis, we find a significant negative consumption response to the policy shock. Moreover, the consumption response is concentrated in credit card spending and is stronger among individuals with limited access to credit market or with a high precautionary saving motive. These results suggest that a decrease in access to home equity reduces the role of housing as a self-insurance mechanism for consumption smoothing.

This paper estimates the effect of Chapter 13 bankruptcy protection on financial health using a new data set linking bankruptcy filings to credit bureau records. Our empirical strategy uses the leniency of randomly assigned judges as an instrument for Chapter 13 protection. We find that Chapter 13 protection decreases an index measuring adverse financial events such as civil judgments and repossessions by 0.323 standard deviations and increases the probability of being a homeowner by 13.2 percentage points. Chapter 13 protection has little impact on open unsecured debt but decreases the amount of debt in collections by $1,333.

For a cluster-robust t-statistic under cluster heterogeneity we establish that the cluster-robust t-statistic has a gaussian asymptotic null distribution and develop the effective number of clusters, which scales down the actual number of clusters, as a guide to the behavior of the test statistic. The implications for hypothesis testing in applied work are that the number of clusters, rather than the number of observations, should be reported as the sample size, and the effective number of clusters should be reported to guide inference. If the effective number of clusters is large, testing based on critical values from a normal distribution is appropriate.

Developing democracies are experiencing unprecedented increases in primary and secondary schooling. To identify education's long-run political effects, we use a difference-in-differences design that leverages variation across local government areas and gender in the intensity of Nigeria's 1976 universal primary education reform—one of Africa's largest ever educational expansions—to instrument for education. We find large increases in basic civic and political engagement: better educated citizens are more attentive to politics, more likely to vote, and more involved in community associations. The effects are largest among minority groups and in fractionalized areas, without increasing support for political violence or own-group identification.

Using a dynamic factor model that allows for changes in both the long-run growth rate of output and the volatility of business cycles, we document a significant decline in long-run output growth in the United States. Our evidence supports the view that most of this slowdown occurred prior to the Great Recession. We show how to use the model to decompose changes in long-run growth into its underlying drivers. At low frequencies, a decline in the growth rate of labor productivity appears to be behind the recent slowdown in GDP growth for both the United States and other advanced economies. When applied to real-time data, the proposed model is capable of detecting shifts in long-run growth in a timely and reliable manner.

This paper examines the effects of gunfights between drug gangs in Rio de Janeiro's favelas on student achievement. We explore variation in violence that occurs across time and space when gangs battle over territories. Within-school estimates indicate that students' scores are lower in math in years in which they are exposed to drug battles. The effect increases with conflict intensity, duration, and proximity to exam dates and decreases with the distance between the school and the conflict location. School supply is an important mechanism. Gunfights are associated with higher teacher absenteeism, principal turnover, and temporary school closings.