Research Papers – Page 2 – Economics for Policy

One Money, Many Markets

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We study heterogeneity in the transmission of monetary shocks across euro-area (EA) countries using a dynamic factor model and high-frequency identification. Deploying a novel methodology to asses the degree of heterogeneity, we find it to be low in financial variables and output but significant in consumption, consumer prices, and variables related to local housing and labour markets.

Residual-augmented IVX Predictive Regression

Paulo Rodrigues

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Bias correction in predictive regressions is known to reduce the empirical size problems of OLS-based predictability tests with persistent predictors. This paper shows that bias correction is also achieved in the context of the extended instrumental variable (IVX) predictability testing framework introduced by Kostakis et al. (2015).

The Persistence of Wages

Paulo Rodrigues

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This paper documents the extent to which wage persistence can be explained by permanent worker, employer, and match heterogeneity. Standard methods used to perform such decompositions for industry or racial wage gaps are inappropriate for decomposing wage persistence in dynamic panel data models because of the incidental parameter problem. (…)

Measuring Labor Supply and Demand Shocks during COVID-19

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We measure labor demand and supply shocks at the sector level around the COVID-19 outbreak by estimating a Bayesian structural vector autoregression on monthly statistics of hours worked and real wages.

Regional and Sectorial Impacts of the Covid-19 Crisis: Evidence from Electronic Payments

Susana Peralta

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Bruno Pessoa Carvalho

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João Pereira dos Santos

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We use novel and comprehensive monthly data on electronic payments, by municipality and sector, together with cash withdrawals, to study the impact of Covid-19 in Portugal. Our difference-in-differences event study identifies a causal decrease of 17 and 40 percentage points on the year-on-year growth rate of overall purchases in March and April 2020. (…)

30,000 Minimum Wages: The Economic Effects of Collective Bargaining Extensions

Pedro Martins

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Many governments extend the coverage of collective agreements to workers and employers that were not involved in their bargaining. These extensions may address co-ordination issues but may also distort competition by imposing sector-specific minimum wages and other work conditions that are not suitable for some firms and workers. In this article, we analyse the impact of such extensions along several economic margins. Drawing on the worker- and firm-level monthly data for Portugal, a country where extensions have been widespread, and the scattered timing of the extensions, we find that, while continuing workers experience wage increases following an extension, formal employment in the relevant sectors falls, on average, by 2 per cent.

Employee Training and Firm Performance: Evidence from ESF Grant Applications

Pedro Martins

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As work changes, firm-provided training may be particularly relevant. However, there is little causal evidence about the effects of training on firms. This paper studies a large training grants programme supported by the European Social Fund, contrasting firms in Portugal that received the grants and others that also applied but were unsuccessful. (…)

Can ATMs get out the vote? Evidence from a nationwide field experiment

José Tavares

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João Pereira dos Santos

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We report on a large-scale (randomized) field experiment we designed and conducted to assess ATMs’ (automatic teller machines) capacity to “get out the vote”. This is a heretofore unexploited method of voter mobilization. Our experimental design used the full universe of functioning ATMs in Portugal, which benefits from a sophisticated world class system, with wide national coverage.

Working to get fired? Unemployment benefits and employment duration

Pedro Martins

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In many countries, jobseekers are entitled to unemployment benefits (UBs) only if they have previously worked a minimum period of time. This institutional feature creates a sharp change in the disutility from unemployment at UB eligibility and may distort the duration of jobs. In this paper, we evaluate this eligibility effect using a regression discontinuity approach.