1-10 of 49 Results  for:

  • Public Economics and Policy x
Clear all


The Hong Kong Housing Market  

Lok Sang Ho and Yonglin Wang

The Hong Kong Special Administrative Region (SAR) government made a tremendous effort to raise the homeownership rate, starting with Mr. Tung Chee-hwa, the first Chief Executive, who, in his Policy Address in 1997, vowed to raise the homeownership rate from below 50% to 70% in 10 years. The figures showed, however, that while the total homeownership rate had gone up by 18 percentage points in 15 years prior to 1997, from 1997 to Q3 2022, in the space of 25 years, the total homeownership rose from 46.7% to 52.6%, or a mere 5.9 percentage points in 25 years. The nonsubsidized private homeownership rate rose from 30% in 1985 to 36.2% in 1997 (6.2 percentage points in 12 years), yet it rose only from 36.2% in 1997 to 37.2% in 2022Q3, amounting to only 1 percentage point in 25 years. The puzzle may lie in the SAR government’s mistaken strategy of providing increasing opportunities for public housing tenants and subsidized flat owners to profit from the housing benefits. These benefits turn out to be at the expense of the middle-class people who provide much impetus to economic growth and who bear the brunt of the tax burden. The various transaction taxes meant to curb speculation turn out to impede the trading-up process. By significantly reducing the supply of existing homes, and especially that of starter homes, an unintended consequence is much sharper price increases for starter homes than for larger homes. This leads to the proliferation of so-called nanoflats that are tiny yet very expensive.


Unintended Fertility: Trends, Causes, Consequences  

Christine Piette Durrance and Melanie Guldi

Unintended fertility occurs when an individual, who did not intend to, becomes pregnant or gives birth. Most measures of unintended fertility account for whether the pregnancy (birth) was wanted and whether it occurred at a desired time. Economic models of fertility provide a framework for understanding an individual’s desire to have children (or not), the number of children to have alongside the quality of each child, and the timing of childbirth. To study fertility intendedness, researchers often classify pregnancies or births as unintended using self-reported retrospective (or prospective) survey responses. However, since survey information on the intendedness of pregnancies and births is not always available, the research on unintended fertility using survey data is necessarily limited to the population surveyed. Consequently, to broaden the population studied, researchers also often rely on reported births, abortions, and miscarriages (fetal deaths) to estimate intendedness. However, other factors (such as laws restricting access or financial hurdles to overcome) may restrict access to the methods used to control reproduction, and these restrictions in turn may influence realized (observed) pregnancies, births, and abortions. Furthermore, abortion and miscarriages are not consistently reported and, when reported, they exhibit more measurement error than births. Despite these research challenges, the available data have allowed researchers to glean information on trends in unintendedness and to study the relationship between fertility-related policies and unintendedness. Over the last 2 decades, unintended fertility has declined in many countries and fewer births are happening “too soon.” There are multiple factors underlying these changes, but changes in access to and quality of reproductive technologies, changes in macroeconomic conditions, and socioeconomic characteristics of fertility-aged individuals appear to be crucial drivers of these changes.


COVID-19 and Mental Health: Natural Experiments of the Costs of Lockdowns  

Climent Quintana-Domeque and Jingya Zeng

The global impact of the COVID-19 pandemic has been profound, leaving a significant imprint on physical health, the economy, and mental well-being. Researchers have undertaken empirical investigations across different countries, with a primary focus on understanding the association between lockdown measures—an essential public health intervention—and mental health. These studies aim to discern the causal effect of lockdowns on mental well-being. Three notable studies have adopted natural experiments to explore the causal effect of lockdowns on mental health in diverse countries. Despite variations in their research methodologies, these studies collectively support the conclusion that lockdowns have had detrimental consequences on mental health. Furthermore, they reveal that the intensity of these negative effects varies among distinct population groups. Certain segments of the population, such as women, have borne a more profound burden of the mental health costs associated with lockdown measures. In light of these findings, it becomes imperative to consider the implications for mental health when implementing public health interventions, especially during crises like the COVID-19 pandemic. While rigorous measures like lockdowns are essential for safeguarding public health, striking a balance with robust mental health support policies becomes crucial to mitigating the adverse impacts on mental well-being.


The Economic Benefits of Education for the Reduction of Crime  

Joel Carr, Olivier Marie, and Sunčica Vujić

Historically, social observers have repeatedly noted a correlation between education and crime, observing that individuals with lower levels of education are more likely to commit crime. However, the relationship between education and crime is complex, and it is important to clearly establish causality to determine if investing in education can effectively reduce crime. Merely observing persistent educational-attainment inequalities between offenders and non-offenders is not sufficient to make any causal claims about the underlying relationship between education and crime. Many other factors can influence an individual’s decision to stay in school or commit a crime, and these factors need to be accounted for when estimating the relationship between education and crime. Economists theoretically predicted in the late 1960s that education, via its positive effect on future earnings, would reduce the probability of criminal participation. Empirical studies have since used various econometric methods to establish that, on average, education has a strong causal crime-reducing effect. One strand of this literature has established in various contexts that individuals from cohorts forced by law to stay longer in school were much less likely to end up in court or prison. There is, however, still much to be discovered about the effect of education on crime, such as the underlying mechanisms related to income or non-cognitive effects, and heterogeneities by context, education level and quality, and individual characteristics. Overall, economists widely agree that investing in education is an efficient public-spending strategy to effectively reduce crime.


Explaining the Mathematics Gender Gap: The Role of Stereotypes  

Pilar Cuevas Ruiz, Ismael Sanz, and Almudena Sevilla

Descriptive stereotypes such as “girls are not good at mathematics” or prescriptive stereotypes, that is, fixed views about women’s societal roles, can explain the persistent gender gap in mathematics. Stereotypes lower girls’ beliefs, expectations, and incentives to put forth effort, and can constrain girls’ choices in male-dominated high-paying careers that are math-intensive and that require strong math skills. This gap slows progress toward gender equality in the labor market and hinders productivity and economic growth. Policy interventions to alleviate the negative impacts of descriptive stereotypes aim to prevent girls from internalizing socially constructed behaviors aligned with prevalent gender stereotypes regarding the innate mathematical abilities of boys and girls. Boosting girls’ confidence in their math skills includes introducing them to female role models, such as women math teachers, using gender-neutral language, and providing textbooks and other teaching materials that challenge gender stereotypes. A different set of policies focuses on altering the environment in which girls learn, rather than modifying their beliefs. By adjusting the testing methods (such as reducing the level of competition) or adapting the instructional approach to better align with the learning style of girls, it is possible to create an environment that enables more girls to achieve their maximum potential and to accurately assess their math abilities and interests, rather than simply their test-taking or classroom performance. However, interventions that aim to modify the beliefs and attitudes of girls and women ex post, as well as those that seek to alter the environment, may not work in the long term because they reinforce preexisting stereotypes and operate within the constraints of those stereotypes. For instance, while modifying the testing environment may result in higher grades for girls, it may not necessarily alter the perception that girls are incapable of excelling in math. In some cases, these interventions may even have negative consequences. Encouraging girls to “lean in” and behave like boys, for example, can lead to unequal, unjust, and inefficient outcomes because the benefits (economic returns) of doing so are lower or even negative for girls in light of existing gender stereotypes. One popular and affordable approach to combating gender stereotypes involves addressing (unconscious) biases among teachers, parents, and peers through initiatives such as unconscious bias training and self-reflection on biases. The underlying premise is that by increasing awareness of their own (unconscious) biases, individuals will engage their more conscious, non-gender-stereotypical thinking processes. However, such behavioral interventions can sometimes have unintended consequences and result in backlash, and their effectiveness may vary significantly depending on the context, so that their external validity is often called into question. The recognition of the adaptable nature of both conscious and unconscious stereotypes has led to progress in economics, with the development of social learning and information-based theories. Interventions resulting from these models can effectively counteract prescriptive stereotypes that limit girls’ education to certain fields based on societal expectations of gender roles. However, prescriptive gender stereotypes are often based on biased beliefs about the innate abilities of girls and women. Overcoming deeply ingrained descriptive stereotypes about innate abilities of boys and girls is a fruitful avenue for future economics research and can help close the gender performance gap in mathematics.


Mismatch in Higher Education  

Gill Wyness

The first studies of higher education mismatch were motivated by a desire to understand the consequences of affirmative action policies, which lowered academic admission requirements for underrepresented students (typically disadvantaged racial and ethnic groups). This is the so-called “mismatch hypothesis,” which suggests that affirmative action may actually be harmful because it enables students to attend colleges they are academically underprepared for (“mismatched” to) while squeezing out students who would otherwise have enrolled and succeeded. At its heart, the study of mismatch is motivated by the proposed existence of complementarities between students and courses—the assumption that the highest-achieving students would get the most benefit from attending the highest-quality schools, and vice versa. Both undermatch—where high-attaining students attend low-quality universities—and overmatch—where low-attaining students attend high-quality universities—have been studied. Only a very small number of studies have been able to causally examine the impact of mismatch. A major challenge is that unobserved factors that influence individuals’ decisions to attend a particular college (and for the college to accept them) are likely to affect their likelihood of completion and their probability of doing well in the labor market. Several recent studies have made progress in this area, but the evidence on the impact of mismatch still shows mixed results, suggesting that more research is needed, for example, in studying different policy shocks (e.g., natural experiments such as the use of affirmative action bans, which create exogenous variation in mismatch) for students at different margins. There is also a need to expand the study of mismatch beyond the United Kingdom and the United States, which has been the main focus of studies so far, and also beyond higher education into other contexts such as further education colleges.


The Early Origins of the Civil Rights Movement in the United States: An Analysis of the Growth of the NAACP  

Daniel Aaronson, Jala Abner, Mark Borgschulte, and Bhashkar Mazumder

A newly digitized panel of county-level branch activity of the National Association for the Advancement of Colored People (NAACP) is used to describe the potential factors underlying the expansion of political participation in the American South, with a particular emphasis on the short period from the late 1930s through the 1940s. This period has long been recognized for its significant progress in reducing sizable racial gaps in labor market outcomes. But little work in economics has considered the role of political participation in shaping that progress. As the preeminent civil rights organization prior to the 1950s, the NAACP provides a natural lens in which to explore the expansion in political activism during this crucial period. Associative evidence suggests that a few potential channels could be especially worthy of future study, including the role of demographics, increased human capital, expansion in labor demand driven by wartime efforts, reduction in racial violence, latent political activism, and expansions in political and social networks, all of which have been highlighted in a variety of history and social science literatures. However, careful causal empirical work does not currently exist on these factors. Filling in this hole is important for providing compelling evidence on the origins of the 20th century’s most important U.S. political movement, as well as adding to a growing literature in political economy and development economics which examines the role that grassroots activism has played on economic growth and income inequality around the world.


Housing, Neighborhoods, and Education  

Sarah A. Cordes, Jeehee Han, and Amy Schwartz

Children’s educational outcomes are determined not only by school inputs, such as teachers, curriculum, or classroom peers, but also by a broad range of resources and experiences outside the classroom. Housing and neighborhoods—where children live—are likely where students spend most of their time when not in school and can play a crucial role in children’s development. Housing may influence children’s K–12 educational outcomes through three key channels. First, unit quality (i.e., size, ventilation, etc.) may affect student performance through sleep, ability to concentrate, or health. Second, affordability and tenure may shape student outcomes by affecting disposable income or wealth accumulation, which could be used for complementary educational inputs or could influence outcomes by affecting parental stress and housing stability. Third, housing stability/mobility may itself result in better or worse academic outcomes depending on whether moves are made to access better opportunities or are disruptive. Neighborhoods may also play an important role in education by shaping the peers and adult role models to whom children are exposed, through levels of exposure to crime and violence, and access to opportunities, such as the quality of local schools. A growing body of research points to the importance of both housing and neighborhoods in shaping educational outcomes, suggesting investments in housing or neighborhoods may pay an educational dividend and such investments may be leveraged to improve children’s educational outcomes. Yet there is still work to be done to better understand the roles that housing and neighborhoods play in shaping educational outcomes. In particular, future research should focus on examining how the physical aspects of housing may shape children’s outcomes, disentangling the effects of residential mobility under different circumstances (i.e., forced moves due to job losses versus voluntary moves), and estimating the effects of specific neighborhood changes — or improvements — on academic outcomes.


The Academic Effects of United States Child Food Assistance Programs—At Home, School, and In-Between  

Michael D. Kurtz, Karen Smith Conway, and Robert D. Mohr

The primary goals of food assistance programs are to alleviate child hunger and reduce food insecurity; if successful, such programs may have the added benefit of improving child academic outcomes (e.g., test scores, attendance, behavioral outcomes). Some U.S. government programs serve children in the home, such as the Supplemental Nutritional Assistance Program (SNAP), others serve them at school, such as the National School Lunch Program (NSLP) and School Breakfast Program (SBP), and still others fall in-between, such as the Summer Food Service Program (SFSP) and the Child and Adult Care Food Program (CACFP). Most empirical research seeking to identify the causal effect of such programs on child academic outcomes addresses the endogeneity of program participation with a reduced form, intent-to-treat approach. Specifically, such studies estimate the effect of a program’s availability, timing, or other specific feature on the academic outcomes of all potentially affected children. While findings of individual studies and interventions are mixed, some general conclusions emerge. First, increasing the availability of these programs typically has beneficial effects on relatively contemporaneous academic and behavioral outcomes. The magnitudes are modest but still likely pass cost-benefit criteria, even ignoring the fact that the primary objective of such programs is alleviating hunger, not improving academic outcomes. Less is known about the dynamics of the effects, for example, whether such effects are temporary boosts that dissipate or instead accumulate and grow over time. Likewise, the effects of recent innovations to these programs, such as breakfast in the classroom or increases in SNAP benefits to compensate for reduced time in school during the pandemic, yield less clear conclusions (the former) and/or have not been studied (the latter). Finally, many smaller programs that likely target the neediest children remain under- or un-examined. Unstudied government-provided programs include SFSP and CACFP. There are also a growing number of understudied programs provided primarily by charitable organizations. Emerging evidence suggests that one such program, Weekend Feeding or “Backpack” programs, confers substantial benefits. There, too, more work needs to be done, both to confirm these early findings and to explore recent innovations such as providing food pantries or “Kids’ Cafés” on school grounds. Especially in light of the uncertain fate of many pandemic-related program expansions and innovations, current empirical evidence establishes that the additional, beneficial spillover effects to academic outcomes—beyond the primary objective of alleviating food insecurity—deserve to be considered as well.


Housing Policy and Affordable Housing  

Christian A.L. Hilber and Olivier Schöni

Lack of affordable housing is a growing and often primary policy concern in cities throughout the world. The main underlying cause for the “affordability crisis,” which has been mounting for decades, is a combination of strong and growing demand for housing in desirable areas in conjunction with tight long-term supply constraints—both physical and man-made regulatory ones. The affordability crisis tends to predominately affect low- and moderate-income households. Increasingly, however, middle-income households—which do not usually qualify for government support—are similarly affected. Policies that aim to tackle the housing affordability issue are numerous and differ enormously across countries. Key policies include mortgage subsidies, government equity loans, rent control, social or public housing, housing vouchers, low-income tax credits, and inclusionary zoning, among others. The overarching aim of these policies is to (a) reduce the periodic housing costs of or (b) improve access to a certain tenure mode for qualifying households. Existing evidence reveals that the effectiveness and the distributional and social welfare effects of housing policies depend not only on policy design but also on local market conditions, institutional settings, indirect (dis)incentives, and general equilibrium adjustments. Although many mainstream housing policies are ineffective, cost-inefficient, and/or have undesirable distributional effects from an equity standpoint, they tend to be politically popular. This is partly because targeted households poorly understand adverse indirect effects, which is exploited by vote-seeking politicians. Partly, it is because often the true beneficiaries of the policies are the politically powerful existing property owners (homeowners and landlords), who are not targeted but nevertheless benefit from positive policy-induced house price and rent capitalization effects. The facts that existing homeowners often have a voter majority and landlords additionally may be able to influence the political process via lobbying lead to the conundrum of ineffective yet politically popular housing policies. In addition to targeted policies for individuals most in need (e.g., via housing vouchers or by providing subsidized housing), the most effective policies to improve housing affordability in superstar cities for all income groups might be those that focus on the root causes of the problem. These are (a) the strongly and unequally growing demand for housing in desirable markets and (b) tight land use restrictions imposed by a majority of existing property owners that limit total supply of housing in these markets. Designing policies that tackle the root causes of the affordability crisis and help those in need, yet are palatable to a voter majority, is a major challenge for benevolent policymakers.