MARKET ENTRY MODE: EVIDENCE FROM THE GOLDEN AGE OF HOLLYWOOD

I examine international market entry modal choice using novel data sources on the early years of the U.S. motion picture industry. These data detail how studios built out their international distribution networks and give unusual access to revenues generated across modes. Motion picture exporters used a variety of entry modes: exports, licensed agents, and offices. Studios opened offices in distant, large markets first and used these markets as platforms to build out their distribution network. This pattern indicates that directed search for export customers is important. Offices generated more total revenue than licensed agents. They allowed headquarters to monitor employees through strict control of financial assets, limiting the diversion of intellectual property. (JEL F14, F21, L22, L24, L82)     

IMPACT OF CORRUPTION ON FIRM‐LEVEL EXPORT DECISIONS

This article examines the impact of corruption on the self‐selection of firms into domestic and export markets. A heterogeneous firm model predicts that corruption decreases the probability that a firm only sells domestically, increases the probability that a firm exports indirectly through an intermediary, and decreases the probability that a firm exports directly. The propositions of the model are tested using a comprehensive dataset of over 23,000 firms in 80 developing countries. The results confirm both the self‐selection of firms according to their productivity and the anticipated impact of corruption. This indicates that in developing countries where corruption is especially severe, intermediaries provide a crucial link to global markets. (JEL F1, O1)     

THE LOCAL ECONOMIC IMPACT OF A LARGE RESEARCH UNIVERSITY: EVIDENCE FROM UC MERCED

In this paper, I estimate the short‐run economic effects of the opening of The University of California, Merced in 2005 by comparing Merced with a counterfactual constructed by the synthetic control method. During the period 2005–2014, the opening of the campus has increased local employment by 13%, mainly in nontraded industries, such as the service sector. These findings suggest that a large research university could bring immediate benefits to the local economy because of its large demand from students and employees. (JEL J24, O18, R11)     

THE NATURE OF OUTSOURCING RELATIONSHIPS: EVIDENCE FROM OAP PRICES

This paper studies the extent and variation in production cost pass‐through for U.S. outsourcing imports. Data from 4,676 products imported through the U.S. overseas assembly program show that outsourcing imports were characterized by incomplete pass‐through of production and trade costs to import prices. Notably, pass‐through was higher for products assembled in high education countries while the response of outsourcing import prices to competing suppliers' prices was largest for products sold by firms in capital‐intense industries. The reasons for these cross‐country and cross‐industry differences, as they relate to theories of outsourcing and trade, are explored. (JEL F1, F2)     

RISING AUTISM PREVALENCE: REAL OR DISPLACING OTHER MENTAL DISORDERS? EVIDENCE FROM DEMAND FOR AUXILIARY HEALTHCARE WORKERS IN CALIFORNIA

Autism is a development disorder that has increased in prevalence from 0.5 to 14.7 per 1,000 children over 1970–2010. Using annual wages and provider counts from the American Community Survey and information from 21 regional development centers in California, we estimate the labor demand for auxiliary health providers. We focus on this subset of providers because, unlike physicians and psychologists who can diagnose autism, these workers cannot induce their own demand. If the incidence of autism is increasing independently of other mental disorders, then the demand for auxiliary health providers should increase, leading to higher wages and labor supply. Otherwise, the increase in autism diagnosis is merely displacing other mental disorders. We find that a 100% increase in autism cases increases the wages of auxiliary health workers over non‐autism health occupations by 8–11% and the number of providers by 9–14%. Furthermore, we find that one of every three new autism diagnoses is merely supplanting mental retardation diagnoses, but does not displace other mental disorders. These estimates suggest that at least part of the increase in autism diagnoses, about 50–65%, reflects an increase in the true prevalence of the disorder. (JEL L11, J2, J3)     

EFFECTS OF WELFARE REFORM ON ILLICIT DRUG USE OF ADULT WOMEN

Exploiting changes in welfare policy across states and over time and comparing relevant population subgroups within an econometric difference‐in‐differences framework, we estimate the effects of welfare reform on adult women's illicit drug use from 1992 to 2002, the period during which welfare reform unfolded in the United States. The analyses are based on all available and appropriate national data sets, each offering unique strengths and measuring a different drug‐related outcome. We investigate self‐reported illicit drug use (from the National Household Surveys on Drug Abuse and National Surveys on Drug Use and Health), drug‐related prison admissions (from the National Corrections Reporting Program), drug‐related arrests (from Federal Bureau of Investigation Uniform Crime Reports), and drug‐related emergency department episodes (from the Drug Abuse Warning Network). We find robust evidence that welfare reform led to a 10%–21% decline in illicit drug use among women at risk of relying on welfare, as well as associated declines in drug‐related arrests (6%–7%), drug‐related hospital emergency department episodes (7%–11%), and possibly drug‐related prison admissions (11%–19%). The findings indicate that an appropriately designed welfare system with sufficient job opportunities for those who are able to work can result in both increases in employment and decreases in drug use. (JEL I38, K42, J21)     

SODA WARS: THE EFFECT OF A SODA TAX ELECTION ON UNIVERSITY BEVERAGE SALES

We examine how soda sales changed due to the campaign attention and election outcome of a local excise tax on sugar‐sweetened beverages. Using panel data of beverage sales from university retailers in Berkeley, California, we estimate that soda purchases relative to control beverages significantly dropped immediately after the election, months before the tax was implemented in the city of Berkeley or on campus. Supplemental scanner data from off‐campus retailers reveal this result is not unique to the university setting. Our findings suggest soda tax media coverage and election outcomes can have larger effects on purchasing behavior than the tax itself. (JEL D12, H20, C23, I38, Q18)     

Media,migrants and human rights in the cultural history. Dialogue with Lynn Hunt

Lynn Hunt is an American historian and writer; she is Distinguished Research Professor at the University of California in Los Angeles (U.C.L.A.), and before coming to U.C.L.A., she taught at the University of Pennsylvania (1987–1998) and at the University of California, Berkeley (1974–1987). She is known for her studies in European Cultural History, and in 2007 she published the book Inventing Human Rights, where she examines the rise of the human rights in the eighteenth century.

We are specifically interested in her work because it gives us the chance to create a dialogue and disclose the moment we are living in comparing it with the cultural history and the role the media can have during a humanitarian crisis.

Therefore, we ask Lynn Hunt to explain how the exodus of migrants can be interpreted in light of the meta-narrative model, and to make clear what is and what will be the role of the cultural historians in offering us an interpretation of this historical moment. According to what the writer says in Writing History in the Global Era (2014), Hunt also deals with the importance of the relationship between means of communication, development of empathy and the emergence of human rights. For this reason, we asked the researcher, What is the role of the media today in mapping a humanitarian crisis?     

Risk as Social Context: Immigration Policy and Autism in California1

Motivated by the dramatic increase in autism diagnoses in recent years, research into risk factors has uncovered substantial variation in autism prevalence by race/ethnicity, SES, and geography. Less studied is the connection between autism diagnosis rates and the social and political context. In this article, we link the temporal pattern of autism diagnosis for Hispanic children in California to state and federal anti‐immigrant policy, particularly ballot initiative Proposition 187, limiting access to public services for undocumented immigrants and their families. Using a population‐level data set of 1992–2003 California births linked to 1992–2006 autism case records, we show that the effects of state and federal policies toward immigrants are visible in the rise and fall of autism risk over time. The common epidemiological practice of estimating risk on pooled samples is thereby shown to obscure patterns and mis‐estimate effect sizes. Finally, we illustrate how spatial variation in Hispanic autism rates reflects differential vulnerability to these policies. This study reveals not only the spillover effects of immigration policy on children’s health, but also the hazards of treating individual attributes like ethnicity as risk factors without regard to the social and political environments that give them salience.     

TRADE COSTS AND JOB FLOWS: EVIDENCE FROM ESTABLISHMENT‐LEVEL DATA

Changes in the costs of trading inputs or final goods affect establishment‐level job flows. Using a longitudinal database containing the universe of manufacturing establishments in California from 1992 to 2004, we find that a decline in input or final‐good trade costs is associated with job destruction in the least productive establishments, job creation in the most productive establishments, and an increase in the death likelihood of the least productive establishments. The evidence is consistent with predictions of models of trade with heterogeneous firms. Additionally, the evidence shows that the effects of input trade costs on establishment‐level job flows are larger than the effects of final‐good trade costs. (JEL F14, F16)     

NEW MEASURES OF THE COSTS OF UNEMPLOYMENT: EVIDENCE FROM THE SUBJECTIVE WELL‐BEING OF 3.3 MILLION AMERICANS

Using two large U.S. surveys, we estimate the effects of unemployment on the subjective well‐being (SWB) of the unemployed and the rest of the population. For the unemployed, the nonpecuniary costs of unemployment are several times as large as those resulting from lower incomes, while the indirect effect at the population level is 15 times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well‐being roughly equivalent to a 4% decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment. (JEL E24, H23, J64, J68)     

IDENTIFYING CHANGES IN THE SPATIAL DISTRIBUTION OF CRIME: EVIDENCE FROM A REFEREE EXPERIMENT IN THE NATIONAL FOOTBALL LEAGUE

Between the 2009–2010 and 2010–2011 seasons, the National Football League (NFL) repositioned one of its officials in order to prevent injuries among officials. This creates a quasi‐experiment for studying how a change in the extent of policing affects detection of offenses. Using play‐by‐play data from the 2009–2010 and 2010–2011 NFL season, I estimate how the detection of offensive holding changes when the positioning of an official changes. I find that there is approximately a 20 increase in the number of offensive holding penalties called after the NFL repositioned the official. Penalties called on defensive linemen fell as a result of the repositioning. Overall, there was no change in the total number of penalties called. Using the estimated change in the probability of a penalty, I estimate the probability of an official calling a penalty. I infer that NFL officials detect approximately 60% of crimes committed on the field. (JEL K4, Z0, D0)     

Rainfall interception by Santa Monica's municipal urban forest

Effects of urban forests on rainfall interception and runoff reduction have been conceptualized, but not well quantified. In this study rainfall interception by street and park trees in Santa Monica, California is simulated. A mass and energy balance rainfall interception model is used to simulate rainfall interception processes (e.g., gross precipitation, free throughfall, canopy drip, stemflow, and evaporation). Annual rainfall interception by the 29,299 street and park trees was 193,168 m³ (6.6 m³/tree), or 1.6% of total precipitation. The annual value of avoided stormwater treatment and flood control costs associated with reduced runoff was $110,890 ($3.60/tree). Interception rate varied with tree species and sizes. Rainfall interception ranged from 15.3% (0.8 m³/tree) for a small Jacaranda mimosifolia (3.5 cm diameter at breast height) to 66.5% (20.8 m³/tree) for a mature Tristania conferta (38.1 cm). In a 25-year storm, interception by all street and park trees was 12,139.5 m³ (0.4%), each tree yielding $0.60 (0.4 m³/tree) in avoided flood control costs. Rainfall interception varied seasonally, averaging 14.8% during a 21.7 mm winter storm and 79.5% during a 20.3 mm summer storm for a large, deciduous Platanus acerifolia tree. Effects of differences in temporal precipitation patterns, tree population traits, and pruning practices on interception in Santa Monica, Modesto, and Sacramento, California are described.     

FINANCIAL CONTAGION ON THE INTERNATIONAL TRADE NETWORK

We combine data on international trade linkages with a network approach to map the global trading system as an interdependent complex network. This enables us to obtain indicators of how well connected a country is into the global trading system. We use these network‐based measures of connectedness to explain stock market returns during recent episodes of financial crisis. We find that a crisis is amplified if the epicenter country is better integrated into the trade network. However, target countries affected by such a shock are in turn better able to dissipate the impact if they are well integrated into the network. A network approach can help explain why the Mexican, Asian, and Russian financial crises were highly contagious, while the crises that originated in Venezuela and Argentina did not have such a virulent effect. We suggest that a network approach incorporating the cascading and diffusion of interdependent ripples when a shock hits a specific part of the global trade network provides us with an improved explanation of financial contagion. (JEL F10, F36, F40, G15)     

ESTIMATING MARKET POWER IN HOMOGENOUS PRODUCT MARKETS USING A COMPOSED ERROR MODEL: APPLICATION TO THE CALIFORNIA ELECTRICITY MARKET

This study proposes a novel econometric approach to estimating market power in homogenous product markets. We use a composed error model to estimate the stochastic part of firms' strategic pricing equation. This part is formed by two random variables: a traditional error term, which captures random shocks, and a random conduct term, which measures the degree of market power. This approach allows for the conduct parameter to vary flexibly across firms and within firms over time, and avoids ad hoc structural restrictions for identifying firms' conduct. The empirical application of our approach is based on a well‐known California wholesale electricity market data set, which has been rigorously used to study market power. Our results suggest that realization of market power varies over both time and firms, and reject the assumption of a common or time‐invariant conduct parameter. (JEL C34, C51, L13, L94)     

THE EFFECT OF ABORTION LEGALIZATION ON CHILDBEARING BY UNWED TEENAGERS IN FUTURE COHORTS

This article examines the long‐term impact of legalized abortion on childbearing by unwed teenagers in the United States. I find that the 1970 legalization of abortion in the repeal states led to about a 6% reduction in unwed childbearing rates for white women aged 15–20 who were born in these states immediately after abortion became legal. I find a larger long‐term impact for African‐American women of the same ages: a 7.5%–13% reduction in unwed childbearing. My estimates are smaller and not as precise for the effect of Roe v. Wade. This outcome is not surprising given that I am able to estimate only a potential lower bound of the effect on unwed childbearing rates. On the other hand, when I estimated a Difference‐in‐Difference regression for the non‐repeal states assuming that there was no national trend that affected the childbearing behavior of the treatment age groups and their respective control age groups separately, I found that the true effect of Roe v. Wade on childbearing by unwed teenagers was about an 11% and 3% reductions for white and African‐American teenagers, respectively. (JEL J13, I18)     

QUOTA‐HOPPING IN‐BOND DIVERSION

We show that the U.S. in‐bond system of imports may be used by firms to illegally avoid trade barriers, a practice known as in‐bond diversion. The illicit scheme involves declaring Chinese exports bound for Mexico but diverting them to the U.S. market while in transit, thus creating a gap between Chinese and Mexican reports. Using the phaseout and removal of U.S. quotas at the end of the Multifiber Agreement as a policy experiment, as well as variation in quota bindingness across products, we show that quota‐bound products were associated with larger trade gaps which shrunk following the quota removals. (JEL F13, O17, O19)     

DOES THE VAT TAX EXPORTS?

While a VAT should in principle be neutral with respect to international trade, it may in practice function as a tax on exporters' input purchases if firms receive incomplete VAT refunds. Using data for over 100 countries that span the majority of historical VAT adoption episodes, this paper finds that—consistent with this hypothesis—the VAT reduces the exports of an industry with a 10 percentage point higher intermediate goods share of output by over 8% relative to an industry with a lower share. This effect is driven by developing countries and is absent for high-income countries. (JEL F13, F14, H25, H87, O11)     

Response to Nazneen Mayadas

California has actively engaged in the Hartford Geriatric Social Work Initiative. Subsequently, the California Social Work Education Center Aging Initiative conducted a university survey of gerontology education in California graduate social work schools (N?=?17). In 2005, students taking aging courses were 12% in comparison to a national report of 7% by the Council on Social Work Education and an earlier 1993 national survey of 3%. Still, the number of gerontology students remains less than needed numbers. However, California social work schools are well-prepared with infused curricula for all social workers and exceed previous standards for gerontology faculty and aging field placements. The implications for California are discussed as well as recommendations for updating the earlier gerontology curricula criteria.