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on Network Economics |
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Issue of 2017‒02‒05
five papers chosen by Pedro CL Souza Pontifícia Universidade Católica do Rio de Janeiro |
| By: | Sandra E. Black; Sanni Breining; David N. Figlio; Jonathan Guryan; Krzysztof Karbownik; Helena Skyt Nielsen; Jeffrey Roth; Marianne Simonsen |
| Abstract: | It is notoriously difficult to identify peer effects within the family, because of the common shocks and reflection problems. We make use of a novel identification strategy and unique data in order to gain some purchase on this problem. We employ data from the universe of children born in Florida between 1994 and 2002 and in Denmark between 1990 and 2001, which we match to school and medical records. To address the identification problem, we examine the effects of having a sibling with a disability. Utilizing three-plus-child families, we employ a differences-in-differences research design which makes use of the fact that birth order influences the amount of time which a child spends in early childhood with their siblings, disabled or not. We observe consistent evidence in both locations that the second child in a family is differentially affected when the third child is disabled. We also provide evidence which suggests that the sibling spillovers are working at least in part through the relative exposure to parental time and financial resources. |
| JEL: | I0 J13 |
| Date: | 2017–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:23062&r=net |
| By: | Davis, Morris A. (Rutgers University); Gregory, Jess (University of Wisconsin - Madison); Hartley, Daniel (Federal Reserve Bank of Chicago); Tan, Kegon T. K. (University of Wisconsin - Madison) |
| Abstract: | We study how households choose neighborhoods, how neighborhoods affect child ability, and how housing vouchers influence neighborhood choices and child outcomes. We use two new panel data sets with tract-level detail for Los Angeles county to estimate a dynamic model of optimal tract-level location choice for renting households and, separately, the impact of living in a given tract on child test scores (which we call “child ability" throughout). We simulate optimal location choices and changes in child ability of the poorest households in our sample under various housing-voucher policies. We demonstrate that a Moving-to-Opportunity type voucher, in which people residing in high poverty tracts are given a voucher to move to low-poverty tracts, does not affect child ability as households use the voucher to move to relatively inexpensive, low-impact neighborhoods. When vouchers are restricted such that they can only be applied in tracts with large effects on children, we demonstrate the total benefits of any voucher less than $700 per month exceed the costs and the voucher that maximizes total social surplus is $300 per month. |
| Keywords: | Demographics; Neighborhood Choice; Neighborhood Effects; Moving to Opportunity; Poverty; Vouchers |
| JEL: | I31 I38 J13 R23 R38 |
| Date: | 2017–01–11 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2017-02&r=net |
| By: | Nguyen, Huu Chi (University of Paris 13); Nordman, Christophe Jalil (IRD, DIAL, Paris-Dauphine) |
| Abstract: | Using a unique panel of household businesses for Vietnam, this paper sheds light on the links between households' and entrepreneurs' social networks and business performance. We address two related questions. One first question asks if we can find evidence of a differentiated effect of employment of members of the family versus hired workers on the business performance. A second question tackles the respective effects of various dimensions of social networks on the business technical efficiency. The hypothesis is that, beyond the channel of labour productivity, entrepreneurs that are confronted with an unfavourable social environment may produce less efficiently and realize a lower output than what could be possible with the same amount of resources. We find evidence of a marginal productivity differential between family and hired labour and highlight results consistent with the presence of adverse social network effects faced by households running a business, in particular ethnic minorities. We stress the importance of professional networks for successful entrepreneurship. |
| Keywords: | family labour, kinship and ethnic ties, sharing norms, social network capital, Informality, household business, panel, Vietnam |
| JEL: | D13 D61 O12 |
| Date: | 2017–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp10482&r=net |
| By: | Marco Di Maggio (Harvard Business School and National Bureau of Economic Research (NBER)); Francesco A. Franzoni (University of Lugano and Swiss Finance Institute); Amir Kermani (University of California and National Bureau of Economic Research (NBER)); Carlo Sommavilla (University of Lugano and Swiss Finance Institute) |
| Abstract: | This paper shows that the network of relationships between brokers and institutional investors shapes the information diffusion in the stock market. We exploit trade-level data to show that trades channeled through central brokers earn significantly positive abnormal returns. This result is not due to differences in the investors that trade through central brokers or to stocks characteristics, as we control for this heterogeneity; nor is it the result of better trading execution. We find that a key driver of these excess returns is the information that central brokers gather by executing informed trades, which is then leaked to their best clients. We show that after large informed trades, a significantly higher volume of other investors execute similar trades through the same central broker, allowing them to capture higher returns in the first few days after the initial trade. The best clients of the broker executing the informed trade, and the asset managers affiliated with the broker, are among the first to benefit from the information about order flow. This evidence also suggests that an important source of alpha for fund managers is the access to better connections rather than superior skill. |
| Keywords: | broker networks, institutional investors, asset prices, information |
| JEL: | G12 G14 G24 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp1663&r=net |
| By: | Thomas Demuynck; Jean-Jacques Herings; Riccardo Saulle; Christian Seel |
| Abstract: | We introduce a new solution concept for models of coalition formation, called the myopic stable set. The myopic stable set is defined for a very general class of social environments and allows for an infinite state space. We show that the myopic stable set exists and is non-empty. Under minor continuity conditions, we also demonstrate uniqueness. Furthermore, the myopic stable set is a superset of the core and of the set of pure strategy Nash equilibria in noncooperative games. Additionally, the myopic stable set generalizes and unifies various results from more specific environments. In particular, the myopic stable set coincides with the coalition structure core in coalition function form games if the coalition structure core is non-empty; with the set of stable matchings in the standard one-to-one matching model; with the set of pairwise stable networks and closed cycles in models of network formation; and with the set of pure strategy Nash equilibria infinite supermodular games, finite potential games, and aggregative games. We illustrate the versatility of our concept by characterizing the myopic stable set in a model of Bertrand competition with asymmetric costs, for which the literature so far has not been able to fully characterize the set of all (mixed) Nash equilibria. |
| Keywords: | social environments; group formation; stability; Nash equilibrium |
| JEL: | C70 C71 |
| Date: | 2017–01 |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/244778&r=net |