Periodic Reporting for period 1 - DEPP (Designing Effective Public Policies)
Reporting period: 2016-06-01 to 2017-11-30
The project was divided into two themes. The first theme focused on the housing market and was divided into three subprojects. The first project investigated the effects of mortgage interest rates on leverage and house prices, and it developed a new quasiexperimental method for estimating the elasticity of intertemporal substitution in consumption, a crucial parameter for many public policies. The second and third projects investigated housing market responses to different tax policies, focusing on how such responses are magnified by liquidity constraints and leverage.
The second theme focused on the labor market and was divided into two subprojects. The first project studied secular changes in gender inequality and the underlying sources of those changes, focusing mainly on the effects of child rearing on gender
inequality. The project explored the underlying mechanisms driving child-related inequality, including gender identity norms and family policies. The second project intended to propose a new way of estimating macro labor supply elasticities that integrates taxes and public expenditures, and it develops a theoretical framework to draw policy implications from those estimations.
Theme 1: Public Policies in the Housing Market
“The Effect of House Prices on Household Borrowing: A New Approach” (with James Cloyne, Kilian Huber, and Ethan Ilzetzki), Working Paper, Revised January 2018. Under review at the American Economic Review.
“Do People Respond to the Mortgage Interest Deduction? Quasi-Experimental Evidence from Denmark” (with Amalie Sofie Jensen and Jonathan Gruber), Working Paper, July 2017. R&R at the American Economic Journal: Economic Policy.
“Estimating the Elasticity of Intertemporal Substitution Using Mortgage Notches” (with Michael Best, James Cloyne, and Ethan Ilzetzki), Working Paper, Revised November 2017. Under review at the Review of Economic Studies.
“Housing Market Responses to Transaction Taxes: Evidence from Notches and Stimulus in the UK” (with Michael Best), forthcoming in the Review of Economic Studies.
I note that the last paper on this list was started before the ERC grant (and was discussed in the research proposal). I include it here because we revised and expanded this paper considerably in order to address some of the questions set out in the proposal.
Theme 2: Children and Gender Inequality in the Labor Market
“Children and Gender Inequality: Evidence from Denmark” (with Camille Landais and Jakob Søgaard), Working Paper, Revised February 2017. Under review at the American Economic Journal: Applied Economics.
“Gender Inequality and Economic Development: Fertility, Education, and Norms” (with Camille Landais), Economica 84, 180–209, 2017.
The listed papers contribute several new approaches and methodologies. Let me highlight a few. In “The Effect of House Prices on Household Borrowing: A New Approach”, we develop a completely new approach to identifying the impact of house prices on borrowing. This includes a new way of estimating the collateral channel. In “Estimating the Elasticity of Intertemporal Substitution Using Mortgage Notches” we push the “bunching approach” in new directions. This includes a new way of obtaining counterfactuals, and it includes combining the bunching design with structural estimation. In “Children and Gender Inequality: Evidence from Denmark” we develop an event study design that can be used to identify the causal effect of having children on the labor market outcomes for women and men (and the implied effects on gender inequality). While the event study design is not new in and of itself, we develop the design in new directions and demonstrate precisely how it can be used to obtain causal effects.