Knowledge that Transforms

We examine gender differences in the response to competitive pressure using data from the most competitive entrance exam—China's Gaokao. Compared to male students, females underperform on the competitive and high-stakes Gaokao, relative to their performance on the low-stakes mock examination. Moreover, women's performance suffers more than men's in response to negative performance shocks in an earlier exam on the same day. These effects are more pronounced for subgroups of students where the stakes matter more. Overall, these findings appear to be best explained by women's lower tolerance for pressure and weaker incentives to do well in high-stakes settings.

Whereas attitudes toward risk play an important role in many decisions over the life course, factors that affect those attitudes are not fully understood. Using longitudinal survey data collected in Mexico before and during the Mexican war on drugs, we investigate how risk attitudes change with variation in insecurity and uncertainty brought on by unprecedented changes in local-area violent crime. Exploiting the fact that the timing, virulence, and spatial distribution of changes in violent crime were unanticipated, we establish there is a rise in risk aversion spread across the entire local population as local-area violent crime increases.

This paper investigates whether attitudes are affected by politico-economic regimes. We exploit the efforts of state socialist regimes to promote women's economic inclusion. Using the German partition after World War II, we show that women from East-Germany are more likely to place importance on career success compared to women from West-Germany. Further, the population at large in East Germany is less likely to hold traditional gender role attitudes. Examining possible mechanisms, we find that the change in attitudes under the East German regime was larger in areas where the growth in female employment was larger. A comparison of Eastern versus Western Europe confirms these results.

Environmental regulations may cause firms to reoptimize over pollution inputs. By regulating air emissions in particular counties, the Clean Air Act (CAA) gives firms incentives to substitute toward polluting other media, like waterways, and toward pollution from plants in other counties. I test these hypotheses using the EPA Toxic Release Inventory (TRI). Regulated plants increase their ratio of water-to-air emissions by 177% (102 log points) and their level of water emissions by 105% (72 log points). Regulation of an average plant increases air emissions at unregulated plants within the same firm by 11%.

Fire has long served as a tool in agriculture, but the practice's link with economic activity has made its health consequences difficult to study. Drawing on data from satellite-based fire detection systems, air monitors, and vital records in Brazil, we study how in utero exposure to smoke from sugarcane harvest fires affects health at birth. Exploiting daily changes in fire location and wind direction for identification, we find that late-pregnancy smoke exposure decreases birthweight, gestational length, and in utero survival. Fires less associated with smoke exposure predict improved health, highlighting the importance of disentangling pollution from its economic correlates.

We document that international input-output linkages contribute substantially to synchronizing producer price inflation (PPI) across countries. Using a multicountry, industry-level data set that combines information on PPI and exchange rates with global input-output linkages, we recover the underlying cost shocks that are propagated internationally via the global input-output network, thus generating the observed dynamics of PPI. We then compare the extent to which common global factors account for the variation in actual PPI and in the underlying cost shocks. Across a range of econometric tests, input-output linkages account for half of the global component of PPI inflation.

We estimate the impact of Kenya's postelection crisis on individual risk preferences. The crisis interrupted a longitudinal survey of more than five thousand Kenyan youth, creating plausibly exogenous variation in exposure to civil conflict prior to the survey. Our results indicate that the postelection crisis sharply increased individual risk aversion. Immediately after the crisis, the fraction of subjects displaying extreme risk aversion increased by more than 80%. Findings remain robust when we use an IV estimation strategy that exploits random assignment of respondents to waves of surveying. The crisis also affected trust, social capital, and beliefs about the economy.

We derive an inference method that works in differences-in-differences settings with few treated and many control groups in the presence of heteroskedasticity. As a leading example, we provide theoretical justification and empirical evidence that heteroskedasticity generated by variation in group sizes can invalidate existing inference methods, even in data sets with a large number of observations per group. In contrast, our inference method remains valid in this case. Our test can also be combined with feasible generalized least squares, providing a safeguard against misspecification of the serial correlation.

This paper examines the claim that exchange rate regimes are of little salience in the transmission of global financial conditions to domestic financial and macroeconomic conditions by focusing on a sample of about forty emerging market countries over 1986 to 2013. Our findings show that exchange rate regimes do matter. The transmission of global financial shocks to domestic credit and house price growth, as well as to banking sector leverage and domestic output, is magnified under fixed exchange rate regimes relative to more flexible (though not necessarily fully flexible) exchange rate regimes.

We attribute the recent quadrupling of heroin death rates to the August 2010 reformulation of an oft-abused prescription opioid, OxyContin. The new abuse-deterrent formulation led many consumers to substitute an inexpensive alternative, heroin. Using structural break techniques and variation in substitution risk, we find that opioid consumption stops rising in August 2010, heroin deaths begin climbing the following month, and growth in heroin deaths was greater in areas with greater prereformulation access to heroin and opioids. The reformulation did not generate a reduction in combined heroin and opioid mortality: each prevented opioid death was replaced with a heroin death.