Discussion Paper No. 490
January 15, 2024
Workplace Connections and Labor Migration: The Role of Information in Shaping Expectations
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In a context where improved employment outcomes entail relocating to a new destination, how does information from former coworkers alter workers’ labor migration decisions? We explore this question using the unique backdrop of German reunification in the early 1990s. For former workers of the German Democratic Republic (GDR), improving employment outcomes typically meant relocating to West Germany, which most were reluctant to do. We show that information from former GDR coworkers in West Germany significantly increased the employment probability of East Germans in West Germany. To identify these network effects, we document and exploit that GDR workers were as-good-as randomly assigned to networks by the GDR system from the perspective of the West German market economy. We then establish that the networks only trigger migration responses among East Germans whose contacts had positive work experiences in the West and were similar in their earnings potential in the market-based economy of reunified Germany. These contacts, in essence, serve as role models for the workers’ prospects in the West, leading workers to trust the advice and assessments provided and ultimately altering the expected benefits from labor migration for the specific worker.
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Discussion Paper No. 449
November 13, 2023
The Persistent Effect of Competition on Prosociality
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We present the first causal evidence on the persistent impact of enduring competition on prosociality. Inspired by the literature on tournaments within firms, which shows that competitive compensation schemes reduce cooperation in the short-run, we explore if enduring exposure to a competitive environment persistently attenuates prosociality. Based on a large-scale randomized intervention in the education context, we find lower levels of prosociality for students who just experienced a 2-year competition period. 4-year follow-up data indicate that the effect persists and generalizes, suggesting a change in traits and not only in behavior.
Keywords:
prosociality; competition; cooperation; social skills; socio-emotional skills; tournaments; comparative pay; incentive schemes;
JEL-Classification:
D64; C90;
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Discussion Paper No. 436
October 24, 2023
Have Preferences Become More Similar Worldwide?
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Recent evidence shows substantial heterogeneity in time, risk, and social preferences across and within populations; yet little is known about the dynamics of preference heterogeneity across generations. We apply a novel identification strategy based on dyadic differences in preferences using representative data for 80,000 individuals from 76 countries. Our results document that, among more recent birth cohorts, preferences are more similar across countries and gender gaps in preferences are smaller within countries. This decline in preference heterogeneity across cohorts relates to country-specific differences in preference endowments, population composition, and socioeconomic conditions during formative years, and points at global cultural convergence.
Keywords:
cohort effects; patience; willingness to take risks;
JEL-Classification:
D01; J10; J11;
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Discussion Paper No. 428
September 19, 2023
Recession Experiences During Early Adulthood Shape Prosocial Attitudes Later in Life
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This paper explores whether the experience of a severe recession during early adulthood shapes individuals’ prosocial attitudes. The analysis uses survey responses to experimentally validated questions that measure prosocial attitudes for approximately 65,000 respondents in 75 countries. The identification approach exploits variation in recession experiences across 78 different birth cohorts. We find that exposure to a recession during early adulthood is associated with lower levels of prosociality later in life. The effect only emerges for experiences during impressionable years (age 18-25), mainly affects prosocial attitudes among men, and is orthogonal to the effect of experiences with democracy.
Keywords:
prosocial attitudes; impressionable years; experience effects; cohort effects;
JEL-Classification:
D91; E30; E71;
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Discussion Paper No. 342
November 30, 2022
The Effect of Preferential Admissions on the College Participation of Disadvantaged Students: The Role of Pre-College Choices
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Exploiting the randomized expansion of preferential college admissions in Chile, we show they increased admission and enrollment of disadvantaged students by 32%. But the intended beneficiaries were nearly three times as many, and of higher average ability, than those induced to be admitted. The evidence points to students making pre-college choices that caused this divergence. Using linked survey-administrative data, we present evidence consistent with students being averse to preferential enrollment, misperceiving their abilities, and having social preferences towards their friends (although social preferences did not mediate the admission impacts). Simulations from an estimated structural model suggest that aversion to the preferential channel more than halved the enrollment impacts, by inducing some to forgo preferential admission eligibility, and that students' misperceptions worsened the ability-composition of college entrants, by distorting pre-college investments into admission qualifications. The results demonstrate the importance of understanding high school students' preferences and beliefs when designing preferential admissions.
Keywords:
preferential college admissions; experimental policy evaluation; subjective beliefs; dynamic choice model;
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Discussion Paper No. 339
The Empirics of Economic Growth Over Time and Across Nations: A Unified Growth Perspective
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This research develops an expanded unified growth theory that incorporates the endogenous accumulation of physical capital, population, human capital, and technology. The model incorporates a complementarity between physical capital and human capital and can be extended to a multi-country setting with international technology diffusion. The analytical characterization of the mechanisms behind the observed patterns of long-run growth and comparative development delivers a consistent explanation for a large set of seemingly unrelated empirical facts. A quantitative multi-country version of the model matches various empirical regularities of long-run growth dynamics and comparative development patterns that have previously been studied in isolation. The findings also shed new light on the role of the demographic transition for convergence patterns, the specification of cross-country growth regressions, technology spillovers, and the secular stagnation debate.
Keywords:
unified growth; long-run development; demographic transition; secular stagnation;
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Discussion Paper No. 338
Does Demography Determine Democratic Attitudes?
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This paper presents new evidence on how demography affects democratic attitudes in Western democracies. Using individual survey responses, the empirical analysis disentangles age from cohort patterns and other contemporaneous economic and political influences that shape democratic attitudes. The results reveal that support for democracy increases with age and is lower for more recent birth cohorts. These patterns are more pronounced in Western democracies than in the former Eastern bloc and in other countries around the world. Additional findings document that demography's effect partly captures heterogeneity in experiences with democracy, and that socioeconomic factors impact democratic attitudes.
Keywords:
support for democracy; age-periods-cohort models; population aging; demographic composition; stability of democracy; modernization hypothesis;
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Discussion Paper No. 317
February 18, 2022
Speed, Quality, and the Optimal Timing of Complex Decisions: Field Evidence
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This paper presents an empirical investigation of the relation between decision speed and decision quality for a real-world setting of cognitively-demanding decisions in which the timing of decisions is endogenous: professional chess. Move-by-move data provide exceptionally detailed and precise information about decision times and decision quality, based on a comparison of actual decisions to a computational benchmark of best moves constructed using the artificial intelligence of a chess engine. The results reveal that faster decisions are associated with better performance. The findings are consistent with the predictions of procedural decision models like drift-diffusion-models in which decision makers sequentially acquire information about decision alternatives with uncertain valuations.
Keywords:
response times; speed-performance profile; drift-diffusion model; uncertain evaluations;
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Discussion Paper No. 296
November 15, 2021
Malleability of Preferences for Honesty
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Reporting private information is a key part of economic decision making. A recent literature has found that many people have a preference for honest reporting, contrary to usual economic assumptions. In this paper, we investigate whether preferences for honesty are malleable and what determines them. We experimentally measure preferences for honesty in a sample of children. As our main result, we provide causal evidence on the effect of the social environment by randomly enrolling children in a year-long mentoring programme. We find that, about four years after the end of the programme, mentored children are significantly more honest.
Keywords:
honesty; lying; truth-telling; formation of preferences; experiments with children;
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Discussion Paper No. 295
The Origins of Gender Differences in Competitiveness and Earnings Expectations: Causal Evidence from a Mentoring Intervention
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We present evidence on the role of the social environment for the development of gender differences in competitiveness and earnings expectations. First, we document that the gender gap in competitiveness and earnings expectations is more pronounced among adolescents with low socioeconomic status (SES). We further document that there is a positive association between the competitiveness of mothers and their daughters, but not between the competitiveness of mothers and their sons. Second, we show that a randomized mentoring intervention that exposes low-SES children to predominantly female role models causally affects girls' willingness to compete and narrows both the gender gap in competitiveness as well as the gender gap in earnings expectations. Together, the results highlight the importance of the social environment in shaping willingness to compete and earnings expectations at a young age.
Keywords:
competitiveness; gender; socioeconomic status; inequality; earnings expectations;
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