Wednesday, 27 October 2010

Recent Publication by Tim Besley: The Logic of Political Violence

This paper (joint with Torsten Persson) is forthcoming in The Quarterly Journal of Economics

This paper offers a unified approach for studying political violence whether it emerges as repression or civil war. We formulate a model where an incumbent or opposition can use violence to maintain or acquire power to study which political and economic factors drive one-sided or two-sided violence (repression or civil war). The model predicts a hierarchy of violence states from peace via repression to civil war, and suggests a natural empirical approach. Exploiting only within-country variation in the data, we show that violence is associated with shocks that can affect wages and aid. As in the theory, these effects are only present where political institutions are non-cohesive.

The paper can be found here

Thursday, 14 October 2010

Recent Publications by Henrik Kleven

A paper by Henrik Kleven entitled 'Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark' is forthcoming in Econometrica

This paper analyzes a tax enforcement field experiment in Denmark. In the base year, a stratified and representative sample of over 40,000 individual income tax filers was selected for the experiment. Half of the tax filers were randomly selected to be thoroughly audited, while the rest were deliberately not audited. The following year, threat-of-audit letters were randomly assigned and sent to tax filers in both groups. We present three main empirical findings. First, using baseline audit data, we find that the tax evasion rate is close to zero for income sub ject to third-party reporting, but substantial for self-reported income. Since most income is sub ject to third-party reporting, the overall evasion rate is modest. Second, using quasi-experimental variation created by large kinks in the income tax schedule, we find that marginal tax rates have a positive impact on tax evasion for self-reported income, but that this effect is small in comparison to legal avoidance and behavioral responses. Third, using the randomization of enforcement, we find that prior audits and threat-of-audit letters have significant effects on self-reported income, but no effect on third-party reported income. All these empirical results can be explained by extending the standard model of (rational) tax evasion to allow for the key distinction between self-reported and third-party reported income.

The paper can be found here

A paper by Henrik Kleven entitled 'Transfer Program Complexity and
the Take Up of Social Benefits' is forthcoming in the American Economic Journal: Economic Policy

This paper models complexity in social programs as a byproduct of efforts to screen between deserving and undeserving applicants. While a more rigorous screening technology may have desirable effects on targeting efficiency, the associated complexity introduces transaction costs into the application process and may induce incomplete take up. The paper integrates the study of take up with the study of classification errors of type I and type II, and argues that incomplete take up can be seen as a form of type I error. We consider a government interested in ensuring a minimum income level for as many deserving individuals as possible, and characterize optimal programs when policy makers can choose the rigor of screening (and associated complexity) along with a benefit level and an eligibility criterion. It is shown that optimal program parameters reflect a trade-off at the margin between type I errors (including non-takeup) and type II errors. Optimal programs that are not universal always feature a high degree of complexity. Although it is generally possible to eliminate take up by the undeserving (type II errors), policies usually involve eligibility criteria that make them eligible and rely on complexity to restrict their participation. Even though the government is interested only in ensuring a minimum benefit level, the optimal policy may feature benefits that are higher than this target minimum. This is because benefits generically screen better than either eligibility criteria or complexity.

The paper can be found here

Recent Publication by Maitreesh Ghatak: Thanks for Nothing? Not-for-Profits and Motivated Agents.

This paper (joint with Hannes Mueller) has been published in the Journal of Public Economics.

We re-examine the labor donation theory of not-for-profits and show that these organizations may exist not necessarily because motivated workers prefer to work in them, or that they dominate for-profits in terms of welfare, but because the excess supply of motivated workers makes the non-profit form more attractive to managers. We show that if Firms had to compete for motivated workers then not-for-profit would be competed out by for-profit Firms. Therefore, in the choice between not-for-profit and for-profit provision, other than incentive problems, the distribution of rents between management and workers, and consequently, the relative scarcity of motivated workers may play an important role.

The paper can be found here

Tuesday, 15 June 2010

EOPP Special Event: Summer School on Empirical Methods for Economic Development (23-26 June 2010)

Oriana Bandiera is organizing the Second AMID Summer School on Empirical Methods for Economic Development on June 23-26 at the LSE.

The school is intended for PhD students, post-docs and junior faculty members. The aim is to provide young researchers with a detailed overview of the main methods used in empirical development research. Participants will also have the opportunity to discuss their own research projects with leading researchers in a relaxed and open atmosphere.

Lectures will be delivered by Esther Duflo (MIT), Greg Fischer (LSE), Radha Iyengar (LSE), and Eliana La Ferrara (Bocconi) on topics including difference in difference estimators, event studies, instrumental variables, randomised control trials and regression discontinuity approaches. Selected projects by participants will be presented and discussed during the day.

For more details, visit the website at

EOPP Special Event: CEPR Public Policy Symposium 2010 (18-19 June 2010)

Oriana Bandiera and Henrik Kleven, along with Thomas Piketty (Paris School of Economics and CEPR) and Emmanuel Saez (University of California, Berkeley and CEPR) are organizing a symposium on public economics to bring together economists in the field from across Europe and key researchers from outside the region.

The symposium will feature a keynote lecture entitled "Public Finance and Development" to be given by Professor Timothy Besley.

The conference hopes to provide a unique opportunity for researchers from different universities and countries to discuss their work in a relaxed atmosphere and to develop long-term collaborative relationships. It also aspires to provide young researchers with the opportunity to meet and discuss their work with senior economists.

For more details on the conference program and other information, visit the website at

Monday, 14 June 2010

Conference on The Formation of Family and its Intergenerational Consequences (14-15 June 2010)

The Conference on the Formation of Family and its Intergenerational Consequences was organised by the Departments of Economics and Management and sponsored by STICERD. The key organizers were Leonardo Felli, Ignacio Palacios-Huerta, Maitreesh Ghatak, and Yona Rubinstein. Distinguished speakers included Gary Becker, Pierre-Andre Chiappori, Bernard Salanie, among others.

For further informaiton on the conference programme and to view the papers presented visit the conference page the conference page

Friday, 4 June 2010

Johannes Spinnewijn wins CESifo Affiliate Award

Johannes Spinnewijn has won the Distinguished CESifo Affiliate Award during this year's CESifo Annual Area Conferences.

Each year, the award is presented to a young economist for the " scientific originality, policy relevance and quality of exposition of their paper presented at the conference." in his or her specialist research area.

Johannes Spinnewijn's winning paper for the Employment and Social Protection Research Area was entitled Unemployed but Optimistic: Optimal Insurance Design with Biased Beliefs

Further information about the award can be found on the CESifo website.

Monday, 29 March 2010

EOPP: Recent Publications Gerard Padro-i-Miquel: Conflict and Deterrence under Strategic Risk

A paper by Gerard Padro-i-Miquel (joint with Sylvain Chassang) entitled 'Conflict and Deterrence under Strategic Risk' will be published in Quarterly Journal of Economics.

The authors examine the determinants of cooperation and the effectiveness of deterrence when fear is a motive for conflict. They contrast results obtained in a complete information setting to those obtained in a setting with strategic risk, where players have different information about their environment. These two strategic settings allow them to identify and distinguish the role of predatory and pre-emptive incentives as determinants of cooperation and conflict. In their model, weapons unambiguously facilitate peace under complete information. In contrast, under strategic risk, the authors show that increases in weapon stocks can have a non-monotonic effect on the sustainability of cooperation. They also show that under strategic risk, asymmetry in military strength can facilitate peace, and that anticipated peace-keeping interventions may improve incentives for peaceful behaviour.

Tuesday, 16 March 2010

EOPP: Recent Publications by Tim Besley, Daniel Sturm, Robin Burgess and Oriana Bandiera

The following papers, by EOPP members, will be published:

Robin Burgess, joint with Dave Donaldson (MIT): Can Openness Mitigate the Effects of Weather Shocks? Evidence from India's Famine Era, is forthcoming in the American Economic Review Papers and Proceedings.

Oriana Bandiera, joint with Valentino Larcinese (LSE) and Imran Rasul (UCL): Heterogeneous Class Size Effects: New Evidence from a Panel of University Students, is forthcoming in the Economic Journal.

Oriana Bandiera, Robin Burgess, Selim Gulesci and Munshi Sulaiman, joint with Markus Goldstein (World Bank) and Imran Rasul (UCL): Participation in Adolescent Training Programs, is forthcoming in the Journal of the European Economic Association, Papers and Proceedings.

Tim Besley, Daniel Sturm and Torsten Persson (IIES): Political Competition, Policy and Growth: Theory and Evidence from the United States, is forthcoming in the Review of Economic Studies.

For further information and to read abstracts see

Wednesday, 17 February 2010

Tim Besley receives the John von Neumann Award 2010

The 2010 John von Neumann Award has been given to Prof. Tim Besley for his research on political institutions by the Rajk László College for Advanced Studies at Corvinus University of Budapest. The award was established in 1995 and is presented annually to leading scholars whose influential works have had a substantial impact on the studies and intellectual activity of the students at the College.

Previous award holders include John Harsanyi (UC Berkeley), Hal Varian (University of Michigan), Janos Kornai (Harvard University and Budapest College), Jean Tirole (University of Toulouse), Oliver Williamson (UC Berkeley) Jon Elster (Columbia University), Avinash K. Dixit (Princeton University), Maurice Obstfeld (UC Berkeley), Gary S. Becker (University of Chicago), Glenn C. Loury (Brown University), Matthew Rabin (UC Berkeley), Daron Acemoglu (MIT), Kevin Murphy (University of Chicago) and Philippe Aghion (Harvard University).

Further information on Prof. Besley's research can be found on Tim Besley's website. For more information on the John von Neumann Award see the Rajk László College for Advanced Studies website.

Thursday, 28 January 2010

Maitreesh Ghatak: "What crisis has taught economics", The Financial Express, 09 Jan 2010

Maitreesh Ghatak examines the legacy of Paul Samuelson, who pioneered the use of formal models in economics.

Read the full article in The Financial Express at