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Abstract: This paper assesses the cost and benefits of extensions in the duration of unemployment insurance (UI) benefits in recessions. Using multiple sharp eligibility thresholds by age in the German UI system we obtain regression discontinuity estimates for the effect of extensions in the duration of UI benefits. Using the universe of unemployment spells and career histories we implement this strategy for twenty years and across industries and correlate with measures of the business cycle. We find large extensions in UI durations have modest effects on non-employment durations that are similar across demographic groups, but have no effects on measures of job quality, or longer-term job and employment outcomes. While the non-employment effects of UI extensions we find are at best declining somewhat in large recessions, the effect on benefit duration (a measure of the UI exhaustion rate) is strongly countercyclical. Our findings imply that large expansions in UI duration during recessions are unlikely to lead to sizable increases in unemployment duration or the unemployment rate, to contribute to unemployment persistence, or to lead to worsening job outcomes for the long-term unemployed. Moreover, we show that in a model of job search with liquidity constraints, increases in the welfare benefits of UI extensions in recession, as indicated by the UI exhaustion rate, are likely to outweigh the welfare costs in terms of higher non-employment and program durations.

This paper's findings suggest that an arbitrary Chinese policy that greatly increases total suspended particulates (TSPs) air pollution is causing the 500 million residents of Northern China to lose more than 2.5 billion life years of life expectancy. The quasi-experimental empirical approach is based on China's Huai River policy, which provided free winter heating via the provision of coal for boilers in cities north of the Huai River but denied heat to the south. Using a regression discontinuity design based on distance from the Huai River, we find that ambient concentrations of TSPs are about 184 μg/m 3 [95% confidence interval (CI): 61, 307] or 55% higher in the north. Further, the results indicate that life expectancies are about 5.5 y (95% CI: 0.8, 10.2) lower in the north owing to an increased incidence of cardiorespiratory mortality. More generally, the analysis suggests that long-term exposure to an additional 100 μg/m 3 of TSPs is associated with a reduction in life expectancy at birth of about 3.0 y (95% CI: 0.4, 5.6). airborne particulate matter | unintended consequences of policy | premature mortality | health costs of coal combustion | Chinese environmental quality

A key policy question is whether the benefits of additional medical expenditures exceed their costs. We propose a new approach for estimating marginal returns to medical spending based on variation in medical inputs generated by diagnostic thresholds. Specifically, we combine regression discontinuity estimates that compare health outcomes and medical treatment provision for newborns on either side of the very low birth weight threshold at 1,500 grams. First, using data on the census of U.S. births in available years from 1983 to 2002, we find that newborns with birth weights just below 1,500 grams have lower one-year mortality rates than do newborns with birth weights just above this cutoff, even though mortality risk tends to decrease with birth weight. One-year mortality falls by approximately one percentage point as birth weight crosses 1,500 grams from above, which is large relative to mean infant mortality of 5.5 % just above 1,500 grams. Second, using hospital discharge records for births in five states in available years from 1991 to 2006, we find that newborns with birth weights just below 1,500 grams have discontinuously higher charges and frequencies of specific medical inputs. Hospital costs increase by approximately $4,000 as birth weight crosses 1,500 grams from above, relative to mean hospital costs of $40,000 just above 1,500 grams. Under an assumption that observed medical spending fully captures the impact of the “very low birth weight ” designation on mortality, our estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1,500 grams is on the order of $550,000 in 2006 dollars. ∗ We thank Christine Pal and Jean Roth for assistance with the data, Christopher Afendulis and Ciaran Phibbs for data on California neonatal intensive care

Uppsala, Wharton and Zürich. Andrea Weber gratefully acknowledges research funding from the Austrian

The wage paid to elected officials affects both the self-selection of citizens willing to run for office and the performance of those who are appointed. On one side, if skilled individuals shy away from politics because of higher opportunities in the private sector, an increase in politicians ’ pay might change their mind. On the other side, if the reelection prospects of incumbents depend on their in-office deeds, a higher wage might foster performance. In this paper, we use data on all Italian municipalities from 1993 to 2005 and test these hypotheses in a quasi-experimental framework. In Italy, the wage of the mayor depends on population size and sharply changes at different thresholds. We apply a regression discontinuity design on the only threshold that uniquely identifies a wage change (1,000 inhabitants) to control for unobservable town characteristics. The empirical results show that a higher wage attracts more educated candidates, more entrepreneurs and self-employed, but less white and blue collars. At the same time, better-paid politicians are able to raise more external funds, reduce taxes, cut deficit, and increase investments. Exploiting the existence of a two-term limit, we further disentangle the selection from the incentive component of the performance effect, and find that most of it is driven by the higher quality of the elected mayors, rather than by the incentive to be reelected.

In the regression-discontinuity (RD) design, units are assigned to treatment based on whether their value of an observed covariate exceeds a known cutoff. In this design, local polynomial estimators are now routinely employed to construct confidence intervals for treatment effects. The performance of these confidence intervals in applications, however, may be seriously hampered by their sensitivity to the specific bandwidth employed. Available bandwidth selectors typically yield a “large” bandwidth, leading to data-driven confidence intervals that may be severely biased, with empirical coverage well below their nominal target. We propose new, more robust, theory-based con…dence interval estimators for average treatment e¤ects in sharp RD, kink RD, fuzzy RD and fuzzy kink RD designs. Our proposed confidence intervals rely on a recentered RD estimator together with a novel standard-error estimator. For practical implementation, we propose a consistent standard-error estimator that does not require an additional bandwidth choice, as well as valid bandwidth choices compatible with our underlying large-sample theory. In a simulation study, we find that our novel data-driven confidence intervals exhibit close-to-correct empirical coverage and good empirical interval length on average, remarkably improving upon the alternatives available in the literature. We illustrate the performance of our proposed methods with household data from Progresa/Oportunidades, a conditional cash transfer program in Mexico. All the results in this paper are readily available in STATA using our companion package (rdrobust) described in Calonico, Cattaneo, and Titiunik (2013).

This paper studies the effects of an electronic voting technology that introduced visual aids in Brazilian elections and facilitated voting for the less educated. Estimates exploiting a regression discontinuity design embedded in its phase-in through time indicate that electronic voting reduced residual (error-ridden and uncounted) votes and generated the de facto enfranchisement of a large fraction (11%) of the electorate. This enhanced political participation of less educated (poorer) voters is then shown to have: (1) increased the number of state legislators that are themselves less educated; and (2) shifted government spending towards public health care, a policy that is particularly beneficial to the poor; leading to (3) improved health services utilization (pre-natal visits) by less educated mothers and (4) reduced occurrence of low-weight births in this group. No effects on health care utilization by more educated mothers and on the weight of their newborns are found. The results are consistent with the predictions of political economy models and demonstrate that electronic voting can promote the political empowerment of the poor and raise their living standards.

This article documents the fact that ventures funded by two successful angel groups experience superior outcomes to rejected ventures: They have improved survival, exits, employment, patenting, Web traffic, and financing. We use strong discontinuities in angelfunding behavior over small changes in their collective interest levels to implement a regression discontinuity approach. We confirm the positive effects for venture operations, with qualitative support for a higher likelihood of successful exits. On the other hand, there is no difference in access to additional financing around the discontinuity. This might suggest that financing is not a central input of angel groups. (JEL D81, G24, L26, M13, O31, O32) One of the central and more enduring questions in the entrepreneurial finance literature asks to what extent early-stage financiers, such as angels or venture funds, have a real impact on the firms in which they invest. An extensive body of theoretical literature suggests that the combination of intensive monitoring, provision of value-added services, and powerful control Downloaded from

This paper investigates whether improvements in the firm’s internal corporate gov-ernance create value for shareholders. We analyze the market reaction to governance proposals that pass or fail by a small margin of votes in annual meetings. This pro-vides a clean causal estimate that deals with the endogeneity of internal governance rules. We find that passing a proposal leads to significant positive abnormal returns. Adopting one governance proposal increases shareholder value by 2.8%. The market reaction is larger in firms with more antitakeover provisions, higher institutional ownership, and stronger investor activism for proposals sponsored by institutions. In addition, we find that acquisitions and capital expenditures decline and long-term performance improves. CORPORATE GOVERNANCE PROVISIONS grant managers independence to man-age the firm. However, they also insulate managers from the monitoring and control of shareholders.1 Establishing empirically how these provisions affect shareholder value and what type of shareholder rights have greater