Economics and Institutional Change Research Seminars

In addition to unemployment insurance (UI), many advanced economies operate short-time compensation (STC) schemes which partially compensate workers for a loss of income due to a reduction in hours. This paper studies the welfare effects of STC in a model in which firms experience idiosyncratic shocks to profitability and can respond by adjusting both employment and hours per worker. Firms have only limited access to external private insurance, hence government-provided insurance can be welfare-improving. When introduced into an economy with an existing UI scheme, STC can improve welfare through two channels. First, it may directly enhance the provision of insurance. Second, it can mitigate distortions of the composition of labor input caused by UI. Depending on whether technology at the firm level favors adjustment through layoffs or work sharing, the welfare effect through insurance can be negative. Even in this case the availability of STC can allow for improved insurance by counteracting UI distortions, thereby raising the optimal level of UI. Since higher optimal UI reduces employment, however, adopting the optimal combination of UI and STC does not necessarily increase employment.

Between 1984 and 1989 more than 20,000 tons of toxic chemicals, containing high concentrations of lead, were brought to the city of Arica (north of Chile). Initially, the chemical waste was located several kilometers from the city. The rapid expansion of Arica in the early 1990s, which included the construction of social housing projects meters away from the waste deposit, put at risk a large number of families. For more than a decade, individuals living in the vicinity of the contaminated areas were exposed to critical levels of lead. The medical literature suggests that even minimum lead exposure might have long-term consequences on individual's behavior and cognitive ability. However, there is little evidence on the direct effects on academic achievement and (fortunately) the literature rarely examines cases in which large number of individuals have been affected by lead exposure. In this paper we examine the effects of lead exposure on academic achievement studying the case of Arica. We analyze longitudinal data from a large population of individuals living and attending primary and secondary schools in Arica between 2004 and 2008. Our data include longitudinal information on proximity to the polluted areas (from individual's place of residence), levels of lead exposure, comprehensive sets of controls, and multiple nationally-representative academic test scores. Our findings indicate significant and negative effects of household's proximity to contaminated areas on student's academic performance. We also estimate the effect of blood lead levels on student academic performance finding significantly negative effects. Finally, combining these estimates with those obtained from regressions of annual earnings on student's academic performance we provide an estimate of the effect of lead exposure on life-time earnings.

We develop two different social network models with different economic foundations. In the local-aggregate model, it is the sum of friends' efforts in some activity that affects the utility of each individual while, in the local-average model, it is costly to deviate from the average effort of friends. Even though the two models are fundamentally different in terms of behavioral foundation, their implications in terms of Nash equilibrium are relatively close since only the adjacency (social interaction) matrix differs in equilibrium, one being the row-normalized version of the other. We test these alternative mechanisms of social interactions to study peer effects in education, sport and screen activities for adolescents in the United States using the AddHealth data. We extend Kelejian’s (2008) J test for spatial econometric models helping differentiate between these two behavioral models. We find that peer effects are not significant for screen activities (like e.g. video games). On the contrary, for sport activities, we find that students are mostly influenced by the aggregate activity of their friends (local- aggregate model) while, for education, we show that both the aggregate performance at school of friends and conformism matter, even though the magnitude of the effect is higher for the latter.

Does information about rampant political corruption increase electoral participation and the support for challenger parties? Democratic theory assumes that offering more information to voters will enhance electoral accountability. However, if there is consistent evidence suggesting that voters punish corrupt incumbents, it is unclear whether this translates into increased support for challengers and higher political participation. We provide experimental evidence that information about copious corruption not only decreases incumbent support in local elections in Mexico, but also decreases voter turnout, challengers' votes, and erodes voters' identification with the party of the corrupt incumbent. Our results suggest that while flows of information are necessary, they may be insufficient to improve political accountability, since voters may respond to information by withdrawing from the political process. We conclude with a discussion of the institutional contexts that could allow increased access to information to promote government accountability.

Peace support operations have become one of the most important tools in the foreign policy of Western democracies. The recent volume "Italian military operations abroad: just don't 'call it war" (Palgrave 2012) is a study of the operations of a medium-size democracy in the last twenty years. The author presents the volume, which examines Italy's military operations through analysis of parliamentary debates and interviews with leading policy-makers from the time of the various missions abroad. The book presents a profile of Italy's long-term foreign and defence policy by applying a constructivist approach. It analyses the political culture of the MPs and top decision-makers in foreign and defence policy and compares their cultural frameworks with conditions of actual military deployment in the field.

In the Netherlands, most municipalities insure property risks by means of coinsurance, that is, the risk is shared by several insurance companies. In the past, such contracts were established by means of active broker involvement through a negotiation procedure, but this changed after the European Commission intervened and enforced the use of an EU-tender procedure. The question then is how to organize such a tender. In particular, is coinsurance better than single-sourcing with one insurance company? While insurance firms argue that coinsurance yields efficiency benefits, the competition authority fears that coinsurance limits competition. In this paper, we analyze, by means of a game theoretic model, several tender procedures. Some of these are currently used; others (such as menu auctions) are inspired by the academic literature. We show that with an adequate design of the tender procedure, coinsurance indeed benefits the insurance taker. Some procedures might yield anti-competitive outcomes, with the “do or die” procedure from practice being particularly vulnerable.

In 1500, Europe was composed of hundreds of statelets and principalities, with weak central authority, no monopoly over the legitimate use of violence, and multiple, overlapping levels of jurisdiction. By 1800, Europe had consolidated into a handful of powerful, centralized nation states. We build a model that simultaneously explains both the emergence of capable states and growing divergence between European powers. In our model, the impact of war on the European state system depends on: i) the capital intensity of war (which stands for the …nancial cost of war), and ii) a country’s initial level of domestic political fragmentation. We emphasize the role of the “Military Revolution”, which raised the cost of war. Initially, this caused more internally cohesive states to invest in state capacity, while other (more divided) states rationally dropped out of the competition. This led to both increasing divergence between European states, and greater average state building on the continent overall.

The history of European city development provides an important opportunity to examine the e¤ect of political oligarchy on economic growth. Since at least the time of Max We- ber, scholars have claimed that the presence of politically autonomous cities in medieval Europe, which tended to be controlled by merchant oligarchies, helped lead to its eco- nomic rise when compared with other regions. But there also exists an alternative, and equally long standing claim - autonomous cities were a hindrance to growth because the merchant oligarchies that governed them created barriers to entry that stifled innovation and trade. I present new evidence and a new interpretation that reconciles these two contrasting views. Using evidence from growth in city populations, I show that politi- cally autonomous cities tended to initially have higher growth rates than non-autonomous cities, but over time this situation reversed itself as politically autonomous cities became stagnant. However, even with stagnant economies, autonomous cities were able to main- tain their independence because their institutions and the oligarchies that controlled them provided for abundant access to credit in times of war. My evidence regarding the growth path of autonomous cities is consistent with several recent theoretical models of oligarchy and growth, and most directly Acemoglu (2008). It also suggests more generally that Europe's particular political institutions, which are so often said to have secured property rights and favored growth, sometimes had more ambiguous e¤ects.

This paper presents evidence on the consequences of the 1912 introduction of "quasiuniversal" male suffrage in Italy. The reform increased the electorate from slightly less than three million to 8,650,000 and left the electoral rules and the district boundaries unchanged. This allows us to exploit the heterogeneity in enfranchisement rates across electoral districts to identify the causal effects of franchise extension on a number of political outcomes. The reform caused an increase in the vote share of social reformers (Socialists, Republicans and Radicals), together referred to as the Estrema. One standard deviation in the share of newly enfranchised voters over the total number of registered 1913 voters caused an increase of around 2% in votes for Estrema candidates but had no impact on their parliamentary net seat gains. Enfranchisement had also no impact on the parliamentary representation of aristocracy and traditional elites. Other outcomes (the chances of having candidates from the Estrema and the Herfindel-Hirshman index of electoral competition) were also unaffected, with the exception of turnout, which decreased. These findings show that de jure political equalization did not cause major changes to political representation, although the voting choices of the formerly and newly enfranchised citizens differed on average. This apparent puzzle is the consequence of the heterogeneity of the effect across a number of both social and political dimensions. The paper documents elite's effort to minimize the political impact of the reform.

We model a patron-client relationship where the incumbent may either persuade or mobilize voters; that is, he can pay citizens to vote for him -vote buying- or he can pay citizens to show up to vote-turnout buying- respectively. Furthermore, we are interested in the optimal budget allocation across groups of citizens, thus we focus on a single member, majoritarian election in a multidistrict environment. Our findings enrich the distributive politics literature that frames the problem into swing vs. core states, by showing that (1) the distributive/clientelist game favors districts where more voters prefer the opposition party, resembling Dixit and Londregan (1996); (2) in every district, citizens who support the incumbent party (weakly or strongly) are the first target of its distributive/clientelist eff orts; and (3) within those voters who receive transfers, mobilization occurs mainly across the weak supporters and weak opposers, while persuasion occurs across the strong opposers to the incumbent party, simultaneously. Using data from argentina we show that politicians behave consistently with the predictions, and we can estimate the cost of buying votes and turnout. Moreover, we show that gender and monitoring technologies are important in understanding not only vote and turnout buying behavior, but also targeting strategies. We estimate the number of votes bought during the 2003 presidential race, its average price, and their effect.

This talk deals with planning and scheduling the operating theater of a medium-sized hospital for elective surgery. In a block-scheduling strategy, first the Master Surgical Schedule (MSS) is determined, assigning different surgical disciplines to the available operating room sessions. Then, elective surgeries are selected and allocated to each session. While in most hospitals the MSS is kept constant throughout the year, in this talk we want to investigate the potential improvements (in terms of quality of service) from having a MSS that dynamically changes, depending on the actual state of the waiting lists. This is in line with a lean approach to patient flow, according to which the demand (patients) should pull processing (operations). We present various approaches to MSS design and operation scheduling, and the results obtained by applying the proposed models to the operating theater of a public hospital in Empoli, Italy. Experiments over a one-year time horizon show that even a limited degree of flexibility in MSS design allows major improvements in workload balancing and due date performance.

This contribution approaches the value of some artistic works for the notion of experience. The word experience has different meanings in different contexts and time spots. My main hypothesis is that, if we pay attention to some contemporary artistic works, we discover an original and disconcerting sense of that notion. It doesn’t bound up anymore with meaning, order and familiar world. It refers to some liminal and sublime states of our life, that we could also comprehend as loss of control, rupture and trauma. I will focus on Andy Wahrol’s series Death in America and Marco Bechis’ film Garage Olympo. Here the experience of death and persecution is not endowed with meaning, but it is just repeated. I will analyze repetition (Widerkehr) as the basilar psychological strategy for recording the original and traumatic experience. In this form the notion of experience will take a new relevance. It can not be fragmented by languages and interpretations, because it is beyond both of them. Through other artistic works (Liebeskind, memory monuments) I will further show art-experience-effects, irreducible to meaning bestowals. All that hints to a post-post-modern art: it is at odds with the fragmentation and the evaporation of the concrete world. But it also challenges the idea of reality as stable and unchangeable world or object of reference.

For papers see www.cramton.umd.edu/papers/health-care

For papers see www.cramton.umd.edu/papers/spectrum

For papers see www.cramton.umd.edu/papers/electricity and www.cramton.umd.edu/papers/climate

We document an empirical relationship between the cross-country adoption of technologies and the degree of long-term historical relatedness between human populations. Historical relatedness is measured using genetic distance, a measure of the time since two populations’ last common ancestors. We find that the measure of human relatedness that is relevant to explain technology adoption is not the simple genetic distance between populations, but genetic distance relative to the world technological frontier. This evidence is consistent with long term historical relatedness acting as a barrier to technology adoption: societies that are more distant from the technological frontier tend to face higher imitation costs. The results can help explain current differences in total factor productivity and income per capita across countries.

The experience of art in urban space represents a very special case in the area of the studies of reception. In museums or galleries, reception of art often tries visitors' membership of the "worlds of art" (H. S. Becker, 1988). But the whole "apparatus" of museums and galleries (as a "system of relations" between material and non material, human and non human elements - Foucault, 1973) generally can help them in going beyond this "trial". In urban space, this apparatus is lacking, most of the time... In such a context, the meeting with a work of art is like this "astounding complex" (or "negative experience") Goffman described in his Frame analysis (1986). After an overlook on theories of reception, and its process that involves memories and affects, we particularly will point out the role that plays the apparatus in giving its "form" to the experience of art, including in urban space. On this "system of relations" basically depend the true nature of things (what is a work of art ?... Or another kind of symbolic objects) and our subjective "response" (Freedberg, 1986) : cognitive and emotional as well.

We analyze the relationship between offshoring and the onshore workforce composition in German multinational enterprises (MNEs), using plant data that allow us to discern tasks, occupations, and workforce skills. Offshoring is associated with a statistically signi¯cant shift towards more non-routine and more interactive tasks, and with a shift towards highly educated workers. Moreover, the shift towards highly educated workers is in excess of what is implied by changes in either the task or the occupational composition. Whether offshored activities are located in low-income or high-income countries does not alter the direction of the relationship. We find offshoring to predict between 10 and 15 percent of observed changes in wage-bill shares of highly educated workers and measures of non- routine and interactive tasks.

The aim of this seminar is to present the EEC/EU cooperation policy with the African states from 1957 (year of the signature of the treaty of Rome) to 2000 (signature of the Cotonou agreement). Originally called association policy (because the African states, mainly the French and Belgian African colonies were associated to the EEC), the development policy evolved with the Lomé Convention, signed in 1975. I will present the main features of the first Lomé Convention, pointing out the role of the ACP (African, Caribbean, Pacific countries) and the importance of the international context. In the third part, I will examine the evolution of the Lomé Convention from 1975 to 1989, focusing on the reasons leading to the Cotonou agreement. In the last part, I will analyze the Cotonou agreement, discussing how the EU/African-states relations have evolved from 1957.

Popper’s theory of progress in science was originally a simple theory about the logic of all research. It merely said that scientific progress was then possible and only then possible when theories were put to serious tests and at times refuted. This idea led to the discovery that science needed specific methodological rules, which prevented scientists from avoiding such refutations and which encouraged them to put forth daring conjectures. This in turn led to the generalized theory that all rationality, whether in science or outside of science, is critical. And this discovery led to the realization that all rationality is social, that it depends on differing individuals engaging in critical discussions. This development has been quite impressive. During this process it led as well to the desire to apply these results to both social theory and the methodology of the social sciences. In social theory it led to the quite desirable defense of an open society, in which free thinking and free criticism are defending by law and by governments. This theory was, however, combined with the endorsement of the social scientific methods of economists. These methods seemed to be tied to that of the defense of an open society, as Hayek so strongly maintained. But the core of this approach in economics is the use of the rationality principle as the core of the framework for social scientific research. But this principle makes assumptions which conflict with the new theory of ratioanlity as the pursuit of truth, which says that rationality is partial, social and critical. It needs, then, to be replaced as the foundation of the intellectual research program which has by far the most influence on social scientific research today. The new program views the study of rationality as beginning with the study of rules and then the study of how these rules effect the critical appraisal of alternatives. The consequences which follow from such a change in the philosophical research program in the social sciences are enormous. In sociology new possibilities for studying how social rules, especially those employed by institutions, affect the rationality of social actions by looking at the critical responses to problems they encourage and/or hinder. In anthropology the study of social rules need not be placed beyond the study of rationality, but made part of it. In cognitive psychology new studies of the social aspects of individual thought processes seem possible. In political science new studies about how established views of rationality further or hinder good or bad political developments. In economics more realistic studies about developments and risks and oppurtunities seem possible, when the artificial separation of the studies of social structures from economic well-being or economic difficulties are removed. And in ethics one may switch from the rather primitive utilitarian views to a more humane and general view of that which is morally good and bad as products of the ability of individuals to solve, or not solve, the problems they pose as individuals.

Spatial interdependence is ubiquitous and central substantively and theoretically across social science. Empirically, clustering of outcomes on some dimension(s), spatial association, is also obvious. However, outcomes may exhibit spatial association for three reasons. Units may respond similarly to similar exposure to similar exogenous internal or external stimuli (common exposure), units’ responses may depend on others’ responses (interdependence, or contagion), or the putative outcome may affect the variable along which clustering manifests (selection). We may find states’ adoptions of some economic treaty, e.g., to cluster geographically or along other dimensions of proximity, e.g., bilateral trade-volume, because proximate states experience similar exogenous domestic or foreign conditions or because each state’s decision to sign depends on whether proximate others sign or because signing the treaty spurs bilateral trade. The theories and policy implications that these alternative sources of spatial association support differ starkly. We discuss how to specify and estimate empirical models that can distinguish these alternative sources of spatial association, using spatial lags to reflect interdependence, and how to interpret and present the spatial and spatiotemporal effects, response paths, and long-run steady-states that such models imply (along with their associated standard errors). We illustrate such spatial-econometric modeling of interdependence with replications of previous studies and applications of our own to a wide range of much-studied topics in the political and social sciences, such as: globalization and international tax-competition, active labor-market policies in the EU, children's welfare and health-care policies in the U.S. states, and international trade, alliance-formation, and conflict behavior.

We present evidence consistent with the Schumpeterian view that financial systems play a key role in fostering innovation. Our empirical approach exploits the wave of banking deregulations passed in the U.S. during the 1980s and early 1990s to estimate the effect of an exogenous increase in both credit availability and quality of intermediation on corporate innovation. Our findings indicate that the deregulations of the banking sector lead firms to innovate more. The effect is particularly pronounced for small firms, financially-constrained firms, firms operating in skill-intensive industries and competitive industries. We also find that the positive effect of banking deregulations on innovation does not depend upon the quality of corporate governance, measured by exploiting the passage of Business Combination (BC) laws in 30 U.S. states during the latter half of the 1980s.

Structural realism is arguably one of the most influential movements to have emerged in philosophy of science in the last decade or so. Advocates of this movement attempt to answer epistemological and/or ontological questions concerning science by arguing that the key to all such questions is the mathematical formalism of a theory. This is so, according to structural realists, because the mathematical formalism encodes all and only what is important about a theory’s target domain, namely its structure. Almost without exception, discussions of structural realism centre on the natural sciences and in particular on modern physics. Given that a number of other sciences are less – indeed in some cases much less – mathematised than modern physics, does structural realism have anything informative to say about them? In this talk, I take up the task of articulating what structural realists ought to say about the social sciences if they are to consider themselves as offering a coherent philosophy for the whole of science.

In this seminar we focus on material culture, specifically how the physical properties of objects convey or inhibit our understanding of their social meaning

In this seminar we explore the links between social structure and culture by looking at the interplay among the social world, creators, audiences, and culture

The extreme right-wing movement Croix de Feu and its leader Colonel de La Rocque are perhaps the most controversial element in the debate about the existence and, if so, the extension and impact of a genuinely French Fascism. For a long time almost ignored by historical research, since the “paxtonian trauma” of the 1970’s its enigmatic and in all regards particular characteristics have been the object of a harsh dispute between French and mainly anglo-saxon historians. For a short period the greatest mass movement and political party in France ever, the Croix de Feu (later PSF) experienced a strange destiny, finally declining – though equivocal until the very end – in the swirl of war and foreign occupation. It’s performance leads us to the core of the conflict-ridden relations between fascism and democracy and their struggle in the specific context of the 1930’s. Interpretations of the movement reached from distinctively fascist and totalitarian in outlook to proto-gaullist and loyal to the republican institutions; only recent research has attempted to turn away from this ideological impasse and instead to inquire about its real and practical intentions in case it would have taken power. The seminar will attempt to illustrate the complex set of questions related to the Croix de Feu and their importance in a wider stream of interpretations about the extreme right as an element in French democracy

The main objective of this seminar is to outline a roadmap for the definition of the vision of the Culture, Communication and Computing unit and discuss it with the students of the Management and Development of Cultural Heritage phd program. The C3 unit, Culture, Communication & Computing at the IMT Lucca aims at conducting innovative research and designing technologies and applications to explore new paradigms related to cultural heritage, to rethink how innovative technologies can improve users’ activities & experiences, and generate new concepts to enrich the user experience in the context of cultural heritage. During the seminar, a critical review of several case studies related to the intersection between interactive technologies and cultural heritage will be provided. The main assets of the C3 vision will be identified as well as long-term research objectives. Furthermore, the Locast Tourism - Lucca project will be introduced as the first concrete step of the unit.

The aim of this talk is to explain some of the benefits of perusing a far-fetched goal: a general theory of communication. The greatest theoretical difficulty faced by our standard scientific world-view is its unavoidable admission of emergent properties. Such admission threatens the consistency of that very world-view, as it ascribes to various objects of scientific inquiry incompatible properties. To make just one illustration among many, it ascribes to human beings both some autonomy and total heteronomy, as they are assumed to be both volitional, rational beings by psychologists, and pieces of inert matter whose behavior is determined by the laws of physics alone, as already Immanuel Kant has rightly observed. Now, I am not going to overcome this inconsistency, of course. It is expressed in many domains of freedom, communication being one of them. My contention is that a general theory of communication, if and when it will be achieved, will not only allow for free communication, despite causality, but also for freedom in general, which is essential to the solution of such emergence puzzles as the mind-body problem.

The speaker will discuss that challenges of constructing voting systems that guarantee the accuracy of the outcome while ensuring ballot secrecy. He will present some cryptographic schemes that provide such assurance with minimal dependance on the correct behaviour of officials, hardware or software. Instead, the assurance is based on maximal transparency, consistent with the secrecy requirements. In particular the speaker will outline the polling station scheme Pret a Voter and the internet scheme Pretty Good Democracy. Such schemes are arguably highly trustworthy. The challenge remains to ensure that they are also trusted by the relevant stakeholders: the voters, voting officials, politicians.

Large scale changes in the structure of the economy or financial markets, such as the current economic crisis, have their origin in the behavioral rules which agents follow. In some cases, rules have a self-reinforcing effect: the more agents adopt a rule, the more it becomes reasonable for others to accept it. This promotes such rules to social norms. Example include trusting counter-parties in financial transactions and (over-) reliance on credit rating. However, as rules develop and spread, becoming the norm, they may have consequences at the aggregate level which are not anticipated by the individuals. In particular, the conditions under which rules self-reinforce may gradually erode, thus provoking sharp transitions whereby most agents suddenly change their behavior. I will argue that the liquidity crisis in credit derivative markets and in the interbank market can indeed be traced back to these effects. This provides hints on policy measures and on the regulation of financial markets.

The notion that rising powers are bound to affect global order is well established in IR literature and increasingly important in the foreign-policy practice of major powers. This presentation looks at the core themes that come out of the current wave of emergence in international society. It will seek explicit connections between notions of power-transition, upward mobility, status, recognition and great-power devolution. The empirical focus will be mainly on the BRIC countries and the world they inhabit in the 2000s, but the talk will explore historical analogies with the last wave of emergence as it ebbed and flowed during the Cold War

IMT Fall 2008 Seminar Series in Economics

IMT Fall 2008 Seminar Series in Economics