ECONOMICS 1410 / KENNEDY SCHOOL SUP-125 Public Economics: Designing Government Policy

ECONOMICS 1410 / KENNEDY SCHOOL SUP-125 Public Economics: Designing Government Polic

Do political protests matter? Evidence from the Tea Party movement

Can protests cause political change, or are they merely symptoms of underlying shifts in policy preferences? We address this question by studying the Tea Party movement in the United States, which rose to prominence through coordinated rallies across the country on Tax Day, April 15, 2009. We exploit variation in rainfall on the day of these rallies as an exogenous source of variation in attendance. We show that good weather at this initial, coordinating event had significant consequences for the subsequent local strength of the movement, increased public support for Tea Party positions, and led to more Republican votes in the 2010 midterm elections. Policy making was also affected, as incumbents responded to large protests in their district by voting more conservatively in Congress. Our estimates suggest significant multiplier effects: an additional protester increased the number of Republican votes by a factor well above 1. Together our results show that protests can build political movements that ultimately affect policy making and that they do so by influencing political views rather than solely through the revelation of existing political preferences

Economic Policy in a More Uncertain World

The Aspen Economic Strategy Group's Annual Policy Volume Economic Policy in a More Uncertain World marks the group's 5th anniversary and is released against a backdrop historic economic and strategic uncertainty. The book's seven chapters, each written by leading experts and edited by AESG Director Melissa S. Kearney and Deputy Director Amy Ganz, provide a deep-dive on long-term economic headwinds confronting the country, including demographic changes—declining fertility and population aging—and what a smaller worker to population ratio means in terms of slower economic growth, reduced revenue, and lower productivity growth. Additional chapters on the US immigration system and US innovation policy highlight potential solutions for countering these trends.  Another chapter explores potential adverse impacts on local labor markets from the green energy transition and highlights policies to avoid repeating painful mistakes of the past, including the response to the decline of the coal industry and rise of globalization and automation. A final chapter highlights lessons learned from the unprecedented federal aid to state and local governments during the COVID-19 pandemic

Essays in Political Economy

This dissertation consists of three essays on political economy. The first essay studies the various ways in which political activism affects policy making, drawing upon evidence from the Tea Party movement in the United States in 2009 and 2010. The second essay develops a policy-centered framework for understanding voting behavior in proportional-representation systems, and tests its predictions using survey data collected around the 2002 Dutch general elections. The third essay focuses on a specific aspect of the implementation of policy, the consequences regulatory supervision may have on firm performance, and assesses the net effect of this kind of supervision on firms' operating costs in the setting of the commercial-banking sector in the United States in the period 2001-2007.Economic

Shops and the city

We report three findings: (1) Using evidence from chain bankruptcies and data on 12-18 million establishments per year, we show that large retailers produce significant positive spillovers. (2) Local governments respond to the size of these externalities. When a town's boundaries allow it to capture a larger share of retail spillovers, it is more likely to offer retail subsidies. (3) These subsidies crowd out private-sector mechanisms that also subsidize large retailers, such as shopping malls. These facts provide powerful evidence of the Coase theorem at work and highlight a concern for local development policies even when externalities can be targeted.Updated February 201

Can Regulatory Oversight Help Firm Performance? Evidence from U.S. Commercial Banks

Information frictions between firms and regulators are typically seen as a means by which firms evade enforcement or, alternatively, a means through which they can limit rent-seeking behavior. In contrast, we argue that information frictions between firms and regulators reduce the efficiency of firms' compliance efforts, particularly when industry rules are open-ended or qualitative. We use physical distance between firms and regulators to test these competing theories of information exchange on a panel of U.S. community banks between 2001 and 2010. We exploit overlapping regulatory jurisdictions to generate plausibly exogenous variation in distance between bank and supervisor. We find that banks located at a greater distance from regulatory field offices face significantly higher administrative costs, at an average rate of about 20% of administrative costs per hour of travel time. These cost differences are not accompanied by differences in compliance outcomes, are not driven by endogenous regulator choice, and are stable over our time period. Further, the inefficiency of distant firms is negatively related to the scale of the jurisdiction in which they operate, suggesting that information spillovers within jurisdictions limit the uncertainty about regulatory expectations in decentralized oversight regimes

Intergovernmental Grants and Policy Competition: Concepts, Institutions, and Evidence

Our purpose is three-fold. First, we summarize some of the core insights from both classic and more recent papers in the literature on the role of intergovernmental grants in systems of fiscal federalism. Second, we provide an updated look at some of the key institutions through which intergovernmental transfers are implemented in the United States. Third, we consider the rich environment of the COVID-19 pandemic in which new additional intergovernmental transfers were deployed, and present empirical evidence on how they affected state-level corporate tax policy. We conclude by discussing productive directions for future research on the economics of fiscal federalism and the role of intergovernmental grants as policy instruments in federal systems.Updated May 202

Ban-the-Box Measures Help High-Crime Neighborhoods

Many localities have in recent years regulated the use of questions about criminal history in hiring, or “banned the box.” We show that these regulations increased employment of residents in high-crime neighborhoods by up to 4 percent, consistent with the central objective of these measures. This effect can be seen in both aggregate employment patterns for high-crime neighborhoods and commuting patterns to workplace destinations with this type of ban. The increases are particularly large in the public sector and in lower-wage jobs. This is the first nationwide evidence that these policies do indeed increase employment opportunities in neighborhoods with many ex-offenders

Uncertainty and the geography of the Great Recession

We create a state-level measure of economic and police uncertainty during the 2007-2009 recession. Despite claims in the literature, the variation in this uncertainty measure matches the cross-sectional distribution of unemployment outcomes in this period. This relationship is robust to numerous controls for other determinants of labor market outcomes and produces a within-state pattern of effects across industries, occupations, and individuals that is consistent with standard "wait-and-see" models of firm behavior under uncertainty. Using preexisting state institutions that amplified uncertainty, we find evidence that this type of local uncertainty played a causal role in increasing unemployment. Together, these results suggest that increased uncertainty contributed to the severity of the Great Recession