Holiday reading (and listening!) 2021

Researchers in the Barcelona School of Economics community have written several widely-read articles on CEPR’s policy portals, VoxEU and VoxDev. In case you missed them, here is a roundup of articles from the second half of the year (through December 15, 2021).

Articles are listed in chronological order starting with the most recent. Work previously featured on the BSE Voice is not included.

How teacher wage policies help reduce urban-rural achievement gaps: Evidence from Peru

Matteo Bobba (TSE), Tim Ederer (TSE), Gianmarco León-Ciliotta (UPF and BSE), Christopher Neilson (Princeton University), Marco Nieddu (University of Cagliari)

This paper studies how increasing teacher compensation at hard-to-staff schools can reduce inequality in access to qualified teachers. Leveraging an unconditional change in the teacher compensation structure in Peru, we first show causal evidence that increasing salaries at less desirable locations attracts better quality applicants and improves student test scores. We then estimate a model of teacher preferences over local amenities, school characteristics, and wages using geocoded job postings and rich application data from the nationwide centralized teacher assignment system. Our estimated model suggests that the current policy is helpful but both inefficient and not large enough to effectively undo the inequality of initial conditions that hard-to-staff schools and their communities face. Counterfactual analyses that incorporate equilibrium sorting effects characterize alternative wage schedules and quantify the cost of reducing structural inequality in the allocation of teacher talent across schools. Overall our results show that a policy that sets compensation at each job posting using the information generated by the matching platform is more efficient and can help reduce structural inequality in access to learning opportunities. In comparison, a rigid system that ignores teacher preferences will indirectly reinforce such inequalities.

Inequality is an urban affair, and it’s due to new tech

Jan Eeckhout (ICREA-UPF and BSE), Christoph Hedtrich (Uppsala University), Roberto Pinheiro (Federal Reserve Bank of Cleveland)

The adoption of information technology can cause polarisation in the labour market via the displacement of routine cognitive jobs. This column uses data on over 200,000 firms in the US from 1990 to 2015 to show that the labour savings from IT are largest in big cities and metropolitan areas, where wages are higher, so urban firms have the biggest incentives to invest in these technologies. This in turn leads to the polarisation of occupations across geography and accounts for the rise in wage inequality within cities.

Competition from online platforms and the impoverishment of newspapers

Milena Djourelova (Post-doc, University of Chicago), Ruben Durante (ICREA-UPF and BSE), and Gregory J. Martin (Stanford Graduate School of Business)

Newspapers advertising revenues have declined steadily over the past decades due to competition from online platforms. But what are the implications of this trend for the organisation and content of newspapers and for information local readers are exposed to? To shed light on these questions this column looks at the staggered introduction of Craigslist – the world’s largest platform for classified ads – in the US. It finds that the entry of Craigslist in a market led to considerable staff cuts by local newspapers, a decline in news coverage of politics, and a drop in readership. These changes also had electoral consequences, favouring partisan voting and ideologically extreme candidates.

Listen to a VoxTalk with Ruben Durante about this topic: