andrea moro research page

[published or accepted for publication] [work in progress]

working paper	additional info
The Performance of the Pivotal-Voter Model in Small-scale elections: Evidence from Texas Liquor Referenda September 2004 (with Stephen Coate and Michael Conlin)	Abstract Slides: 1/2005
Why Do Incumbent Senators Win? Evidence from a Dynamic Selection Model, February 2005 (with Gautam Gowrisankaran and Matthew Mitchell)	Abstract Slides most recent talk 2004 Senatorial races outcome prediction
Endogenous Comparative Advantage April 2005 (with Peter Norman)	Abstract External appendix Slides of most recent talk A larger paper with the more general theory (December 2000) Figures and Examples: Mathematica notebook
Racial Wage Gaps and Test Score Differences: Incentives or Pre-Market Factors? (With Peter Norman)	Slides: 1/2005

published or accepted for publication	additional info
Persistent Distortionary Policies with Asymmetric Information March 2005 (with Matt Mitchell) (Forthcoming, American Economic Review)	Abstract
A General Equilibrium Model of Statistical Discrimination (with Peter Norman) Journal of Economic Theory 114 (1), January 2004, 1-30	Abstract External appendix Figures and Examples: Mathematica notebook
Empirical Implications of Statistical Discrimination on the Returns to Measures of Skill (with Peter Norman) Annales d'Économie et de Statistique 71-72, July-December 2003, 399-417	Abstract Slides of most recent talk
The Effect of Statistical Discrimination on Black-White Wage Inequality: Estimating a Model with Multiple Equilibria International Economic Review 44 (2), May 2003, 467-500	Abstract Omitted computations
Affirmative Action in a Competitive Economy (with Peter Norman) Journal of Public Economics 87 (3-4), March 2003, 567-594	Abstract
Dynamics of Demographic Development and its Impact on Personal Savings: Case of Japan (with Albert Ando, uan Pablo Cordoba, and Gonzalo Garland) Ricerche Economiche 49, 1995, 179-205.

work in progress
The Empirical Implications of Models with Multiple Equilibria (with Alberto Bisin and Giorgio Topa)	Abstract
Can Race Matter when Screening is Cheap? (with Peter Norman)

other papers
Informationally Efficient Trade Barriers June 2004 (with Matt Mitchell)	Abstract
Efficient Regulatory Mandates September 2003 (with Matt Mitchell)	Abstract Slides: SED (6/2001) AEA (1/2002)

paper abstracts
Persistent Distortionary Policies with Asymmetric Information (with Matt Mitchell) Why are distortionary policies used when seemingly Pareto improvements exist? According to a standard textbook argument, a Pareto improvement can be obtained by eliminating the distortions, compensating the losers with a lump sum transfer and redistributing the gains that are left over. We relax the assumption that winners know the losses suffred by the losers and show that the informationally efficient of compensating losers may involve the use of seemingly inefficient (but informationally efficient) distortionary policies. The risk of over-compensating losers may make distortions informationally efficient.
The Empirical Implications of Models with Multiple Equilibria (with Alberto Bisin and Giorgio Topa) We consider a generic environment with (potentially) multiple equilibria and analyze conditions that allow for the estimation of both the structural parameters and the "selected equilibrium''. We focus on a "easy to compute'' consistent 2-step estimator and use Monte Carlo methods to describe its finite sample properties.
Efficient Regulatory Mandates (with Matt Mitchell) This paper shows why, under incomplete information, regulatory practices that alter market prices can redistribute resources more efficiently than cash transfers. In our model the representative citizen cares about a project that benefits a special interest. An example of such a project is the adoption of accessibility devices regulated by the American with Disabilities act. The project can be funded either by transfering cash to the special interest, or by mandating businesses to bundle the project with the goods they are selling. When the cost of the project is unknown to the citizen, the cash transfer may involve overpayments that make mandates more efficient despite the associated deadweight loss.
Why Do Incumbents Senators Win? Evidence from a Dynamic Selection Model Since 1914, incumbent U.S. senators running for reelection have won almost 80% of the time. We investigate why incumbents win so often. We allow for three potential explanations for the incumbency advantage: selection, tenure, and challenger quality, which are separately identified from histories of election outcomes following an open seat election. We specify a dynamic model of voter behavior that allows for these three effects, and structurally estimate the parameters of the model using U.S. Senate data. We find that tenure effects are negative or small. We also find that incumbents face weaker challengers than candidates running for open seats. If incumbents faced challengers as strong as candidates for open seats, the incumbency advantage would be cut in half.
Informationally Efficient Trade Barriers (with Matt Mitchell) Why are trade barriers often used to protect home producers, even at the cost of introducing deadweight losses from higher commodity prices? We add an informational friction to the standard textbook argument in favor of free trade, and show that trade restrictions may be a moreefficient policy than a lump sum transfer to the displaced producers. Trade barriers, while generating deadweight losses, have the benefit that they do not generate a need for compensation. When the policy maker does not know the amount that should be transferred, the risk of over-compensating may make tradebarrier more efficient..
The Pivotal Voter Model: Evidence from Texas Liqor Referenda (with Stephen Coate and Michael Conlin) How well does the pivotal-voter model explain voter participation in small scale elections? This paper explores this question using data from Texas liquor referenda. It first structurally estimates the parameters of a pivotal-voter model using Texas liquor referendum data. It then uses the estimates to evaluate both the within and out-of-sample performance of the model. Results show that the model is capable of predicting turnout in the data fairly well, but tends, on average, to predict electoral outcomes that are closer to what we observe in the data. A comparison with the results obtained from an alternative model with non strategic voters based on expressive voting shows that the alternative model performs better in predicting electoral outcomes.
Empirical Implications of Statistical Discrimination on the Returns to Measures of Skill (with Peter Norman) This paper investigates how lack of information may bias the investigator's assessment of the presence of statistical discrimination. We show that the nature of the bias is such that statistical discrimination may be rejected in a Mincerian regression even when the data is generated from an equilibrium with statistical discrimination. This may occur even when the investigator has a more informative signal of productivity the employers have.
A General Equilibrium Model of Statistical Discrimination (with Peter Norman) We study a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated asymmetrically in equilibrium. The interaction between an informational externality and general equilibrium effects creates incentives for groups to specialize, and discrimination may arise even if the corresponding model with a single group has a unique equilibrium. The dominant group gains from discrimination, rationalizing why a majority may be reluctant to eliminate discrimination. The model is also consistent with "reverse discrimination'' as a remedy against discrimination since it may be necessary to decrease the welfare of the dominant group to achieve parity.
Endogenous Comparative Advantage (with Peter Norman) A stylized model of trade between identical countries is developed, where the only departure from standard neoclassical theory is that worker skills are imperfectly observable. This creates an informational externality since firms take aggregate investments into consideration when making inference about individual workers. The interaction between the informational externality and price effects generates a force in favor of specialization. Equilibria where comparative advantages in different industries arise endogenously exist even when the autarky model has a unique equilibrium.
Affirmative Action in a Competitive Economy (with Peter Norman) We consider a model of endogenous human capital formation with competitively determined wages. In the presence of two distinguishable, but ex ante identical groups of workers, we show that discrimination is sustainable in equilibrium, even if the corresponding model with a single group of workers has a unique equilibrium. An affirmative action policy consisting of a quota may ``fail'' in the sense that there still may be equilibria where groups are treated differently. However, the incentives to invest for agents in the discriminated group are improved by affirmative action if the initial equilibrium is the most discriminatory equilibrium in the model without the policy. The welfare effects are ambiguous. We demonstrate that it is possible that the policy makes the intended beneficiaries worse off: even if the starting point is the most discriminatory equilibrium the expected payoff may decrease for all agents in the target group.
The Effect of Statistical Discrimination on Black-White Wage Inequality: Estimating a Model with Multiple Equilibria This paper presents the structural estimation of a statistical discrimination model. Although the model is capable of displaying multiple equilibria, an estimation strategy that identifies both the parameters of the model and the equilibrium chosen by the economic agents is developed and empirically implemented. A comparison between the equilibria that were selected in the economy over time and the other potential equilibria reveals that the decline in wage inequality experienced in the U.S. economy in the last thirty years cannot be attributed to changes in the equilibrium selection.

paper abstracts

Persistent Distortionary Policies with Asymmetric Information (with Matt Mitchell)
Why are distortionary policies used when seemingly Pareto improvements exist? According to a standard textbook argument, a Pareto improvement can be obtained by eliminating the distortions, compensating the losers with a lump sum transfer and redistributing the gains that are left over. We relax the assumption that winners know the losses suffred by the losers and show that the informationally efficient of compensating losers may involve the use of seemingly inefficient (but informationally efficient) distortionary policies. The risk of over-compensating losers may make distortions informationally efficient.

The Empirical Implications of Models with Multiple Equilibria
(with Alberto Bisin and Giorgio Topa)

We consider a generic environment with (potentially) multiple equilibria and analyze conditions that allow for the estimation of both the structural parameters and the "selected equilibrium''. We focus on a "easy to compute'' consistent 2-step estimator and use Monte Carlo methods to describe its finite sample properties.

Efficient Regulatory Mandates (with Matt Mitchell)

This paper shows why, under incomplete information, regulatory practices that alter market prices can redistribute resources more efficiently than cash transfers. In our model the representative citizen cares about a project that benefits a special interest. An example of such a project is the adoption of accessibility devices regulated by the American with Disabilities act. The project can be funded either by transfering cash to the special interest, or by mandating businesses to bundle the project with the goods they are selling. When the cost of the project is unknown to the citizen, the cash transfer may involve overpayments that make mandates more efficient despite the associated deadweight loss.

Why Do Incumbents Senators Win? Evidence from a Dynamic Selection Model

Since 1914, incumbent U.S. senators running for reelection have won almost 80% of the time. We investigate why incumbents win so often. We allow for three potential explanations for the incumbency advantage: selection, tenure, and challenger quality, which are separately identified from histories of election outcomes following an open seat election. We specify a dynamic model of voter behavior that allows for these three effects, and structurally estimate the parameters of the model using U.S. Senate data. We find that tenure effects are negative or small. We also find that incumbents face weaker challengers than candidates running for open seats. If incumbents faced challengers as strong as candidates for open seats, the incumbency advantage would be cut in half.

Informationally Efficient Trade Barriers (with Matt Mitchell)

Why are trade barriers often used to protect home producers, even at the cost of introducing deadweight losses from higher commodity prices? We add an informational friction to the standard textbook argument in favor of free trade, and show that trade restrictions may be a moreefficient policy than a lump sum transfer to the displaced producers. Trade barriers, while generating deadweight losses, have the benefit that they do not generate a need for compensation. When the policy maker does not know the amount that should be transferred, the risk of over-compensating may make tradebarrier more efficient..

The Pivotal Voter Model: Evidence from Texas Liqor Referenda (with Stephen Coate and Michael Conlin)

How well does the pivotal-voter model explain voter participation in small scale elections? This paper explores this question using data from Texas liquor referenda. It first structurally estimates the parameters of a pivotal-voter model using Texas liquor referendum data. It then uses the estimates to evaluate both the within and out-of-sample performance of the model. Results show that the model is capable of predicting turnout in the data fairly well, but tends, on average, to predict electoral outcomes that are closer to what we observe in the data. A comparison with the results obtained from an alternative model with non strategic voters based on expressive voting shows that the alternative model performs better in predicting electoral outcomes.

Empirical Implications of Statistical Discrimination on the Returns to Measures of Skill (with Peter Norman)

This paper investigates how lack of information may bias the investigator's assessment of the presence of statistical discrimination. We show that the nature of the bias is such that statistical discrimination may be rejected in a Mincerian regression even when the data is generated from an equilibrium with statistical discrimination. This may occur even when the investigator has a more informative signal of productivity the employers have.

A General Equilibrium Model of Statistical Discrimination (with Peter Norman)

We study a general equilibrium model with endogenous human capital formation in which ex ante identical groups may be treated asymmetrically in equilibrium. The interaction between an informational externality and general equilibrium effects creates incentives for groups to specialize, and discrimination may arise even if the corresponding model with a single group has a unique equilibrium. The dominant group gains from discrimination, rationalizing why a majority may be reluctant to eliminate discrimination. The model is also consistent with "reverse discrimination'' as a remedy against discrimination since it may be necessary to decrease the welfare of the dominant group to achieve parity.

Endogenous Comparative Advantage (with Peter Norman)

A stylized model of trade between identical countries is developed, where the only departure from standard neoclassical theory is that worker skills are imperfectly observable. This creates an informational externality since firms take aggregate investments into consideration when making inference about individual workers. The interaction between the informational externality and price effects generates a force in favor of specialization. Equilibria where comparative advantages in different industries arise endogenously exist even when the autarky model has a unique
equilibrium.

Affirmative Action in a Competitive Economy (with Peter Norman)

We consider a model of endogenous human capital formation with competitively determined wages. In the presence of two distinguishable, but ex ante identical groups of workers, we show that discrimination is sustainable in equilibrium, even if the corresponding model with a single group of workers has a unique equilibrium. An affirmative action policy consisting of a quota may ``fail'' in the sense that there still may be equilibria where groups are treated differently. However, the incentives to invest for agents in the discriminated group are improved by affirmative action if the initial equilibrium is the most discriminatory equilibrium in the model without the policy. The welfare effects are ambiguous. We demonstrate that it is possible that the policy makes the intended beneficiaries worse off: even if the starting point is the most discriminatory equilibrium the expected payoff may decrease for all agents in the target group.

The Effect of Statistical Discrimination on Black-White Wage Inequality: Estimating a Model with Multiple Equilibria

This paper presents the structural estimation of a statistical discrimination model. Although the model is capable of displaying multiple equilibria, an estimation strategy that identifies both the parameters of the model and the equilibrium chosen by the economic agents is developed and empirically implemented. A comparison between the equilibria that were selected in the economy over time and the other potential equilibria reveals that the decline in wage inequality experienced in the U.S. economy in the last thirty years cannot be attributed to changes in the equilibrium selection.

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andrea moro research page

[published or accepted for publication] [work in progress]

working paper

additional info

published or accepted for publication

additional info

work in progress

other papers

paper abstracts