Lee Ohanian op-ed on Low Labor Productivity Growth
In this op-ed in The Hill, UCLA Professor Lee Ohanian argues that Washington should address historically low labor productivity growth.
Natalie Bau op-ed on Learning In Pakistani Schools
In this op-ed published in Dawn, Natalie Bau and Jishnu Das measure learning in Pakistani schools and provide new evidence that learning is fragile, with children forgetting much of what they know from year to year.
Simon Board becomes Editor of Theoretical Economics
On July 1st, Simon Board took over as lead Editor of Theoretical Economics after spending four years as Co-Editor. Theoretical Economics is the leading journal in economic theory. It is open access and is a journal of the Econometric Society.
Martin Hackmann wins the Warren C. Scoville Distinguished Teaching Award
Congratulations to Martin Hackmann, the winner of the Warren C. Scoville Distinguished Teaching Award for best undergraduate teaching in Spring 2021! Martin Hackmann won this award while teaching ECON 131: Economics of Health and Healthcare. This course provides an economic analysis of health and healthcare. It includes presentations of several detailed economic models, including models of addiction, demand for healthcare, demand for insurance, nonprofit behavior, and other models.
Warren C. Scoville was a faculty member for the UCLA Department of Economics for 28 years before his death in 1969. This award is given quarterly in his name to the ladder faculty member who receives the highest teaching evaluation scores from his or her course.
New Department Leadership
On July 1st, Jinyong Hahn took over as Chair of the Department of Economics, taking over from Dora Costa. During her time as Chair, Dora introduced innovations to all aspects of the department. At the undergraduate level, the department obtained a STEM classification of the Economics major, reformed the undergraduate econometrics sequence, introduced new two-unit basic investment courses (Econ 3A, 3B, 4), created an online course for principles, and introduced a new GE course (Econ 5). At the masters level, the department strengthened the Masters of Quantitative Economics (MQE) program by increasing the range of classes and started the MQE Distinguished Speaker Series. In addition, Dora established the pre-collegiate summer institute and expanded our Board of Visitors. We are grateful for her leadership.
Jinyong Hahn arrived at UCLA as a Professor of economics at UCLA in 2002. He held previous appointments at the Universities of Pennsylvania, Michigan and Brown. He is a theoretical econometrician, and has been Co-Editor of Econometric Theory and Associate Editor of Econometrica and the Journal of Econometrics. He worked as the Undergraduate Vice Chair in the past.
There are many other changes to our leadership in the department for the upcoming academic year. We are excited to see new faces taking up new leadership roles, as well as having many faculty returning to the roles they have served before. Please see below for all the updates!
New Leadership Roles:
Department Chair: Jinyong Hahn
Vice Chair for Personnel: Andres Santos
Webpage Coordinator: Maurizio Mazzocco
Leadership Roles Returning:
Graduate Vice Chair: Ichiro Obara
Undergraduate Studies Vice Chair: Kathleen McGarry
Business Economics Director: Andy Atkeson
MQE Director: Aaron Tornell
Development Director: Lee Ohanian
1st Year Advisor: Ariel Burstein
New Committees and Leadership:
In addition, we are excited to announce the formation of a few new committees that will help enhance our program for all of our students:
Faculty Director of the Pre-collegiate Programs: Dora Costa
Chair of Alumni Outreach Committee: Dora Costa
Diversity Committee Chair: Rosa Matzkin
Diversity Committee Members: Martha Bailey & Moritz Meyer-ter-Vehn
Arbitration in Wage Negotiations
Prof. Bernardo Silveira
Arbitration is a private bilateral conflict resolution procedure in which a third party, the arbitrator, makes a binding decision on the dispute. Compared to formal litigation through a court system, it is generally faster and cheaper. Arbitration has been extensively employed to resolve disputes including labor impasses, disagreements concerning commercial contracts, and tariff negotiations, among many others.
In “Risk and Information in Dispute Resolution: An Empirical Study of Arbitration,” Professor Bernardo Silveira and his coauthors (Yunmi Kong and Xun Tang, from Rice University) combine theory and empirics to address two related sets of questions concerning arbitration. First, they investigate the role of risk aversion. Risk attitudes matter in arbitration because there is substantial uncertainty concerning the arbitrator’s ruling. If one of the disputing parties is more risk-averse than the opponent, how does this imbalance in risk attitudes affect arbitration outcomes?
Second, the study compares two widely used arbitration designs – final-offer (FOA) and conventional (CA). In either design, the disputing parties submit to the arbitrator one offer each. But, whereas in FOA the arbitrator must select the offer of one side or the other, in CA the arbitrator is unconstrained. An arbitrator may attempt to learn from the offers any private information the parties have about the case in order to deliver a better-informed ruling. What is particularly interesting as a consequence of the different designs is that the offers in CA are cheap-talk, whereas in FOA they are not. The paper examines the differences between CA and FOA regarding the behavior of the parties, the arbitrator’s decisions and the amount of information revealed through the offers.
The authors address these questions in the context of wage negotiations between local governments and police/fire officer unions in New Jersey. In that state, unions must regularly renegotiate the officers’ contracts with their employers. If the parties cannot reach an agreement, state law requires the case to proceed to arbitration. The study employs data on disputes from 1978-2000 and exploits an empirical opportunity provided by the transition of the default arbitration method from FOA to CA in 1996.
To analyze these data, the authors develop and estimate a structural model of the strategic interaction between the union, the employer and the arbitrator. The model accounts for heterogeneous risk-attitudes between the disputing parties; the arbitrator’s ability to learn from the parties’ offers; and the possibility that the parties settle the dispute prior to arbitration.
The estimates indicate that unions are risk-averse whereas the employers are risk-neutral. With the model, the authors can isolate the effect of the unions’ risk-aversion on the resolution of cases. They find that risk-aversion raises the expected wage increases in cases decided by arbitration. Nevertheless, due to the risk associated with the arbitrator’s decision, the certainty-equivalent of going into arbitration is lower for the risk-averse party. Therefore, unions are willing to settle for relatively low wage increases pre-arbitration. Altogether, the unions’ risk aversion reduces overall expected wage increases by 0.2 percentage points per year, relative to a hypothetical scenario in which both parties were risk-neutral.
In comparing FOA and CA, the authors find that the dispersion in arbitrated awards is higher in the former. However, this greater dispersion has a small impact on the union’s certainty-equivalent of arbitration, so the effect of the arbitration design on the likelihood and terms of settlements is minimal. The results also indicate that the expected gap between the offers more than doubles – i.e., the parties take more exaggerated positions – under CA compared to FOA. This finding raises the question of whether the cheap-talk nature of CA leads parties to make relatively uninformative offers. Investigating this possibility, the authors find that FOA offers convey to the arbitrator information about the case that is roughly twice as precise as that transmitted in CA. There is a tradeoff, however, as the superior information transmission afforded by FOA comes at the cost of its one-offer-or-the-other constraint on the arbitrator’s ruling. On balance, the results suggest that CA does better in terms of delivering arbitration awards that are closer to the ideal or fair wage.
LIFE-M Launches Undergraduate Research Lab
The LIFE-M project, short for the Longitudinal, Intergenerational Family Electronic Microdata Project, is pleased to announce the creation of a new research lab. In June 2021, the LIFE-M Lab appointed two undergraduate Research Fellows, Li Zhijian and Zach Wrubel, to conduct research on intergenerational mobility and health and the long-run effects of early childhood interventions and changes in public policies.
Professor Martha Bailey, the PI of the project, notes that LIFE-M combines U.S. vital records (birth, marriage, and death certificates) with census information using cutting-edge supervised machine learning techniques. With funding from the National Science Foundation and National Institutes of Health, the project has created millions of high-quality longitudinal and intergenerational links for four generations of Americans, beginning in the late 19th and covering most of the 20th century.
Research Fellows work under the day-to-day leadership of economics PhD students, Alex Coblin and Joaquin Serrano, and post-doctoral fellow, Peter Lin. “The best part of working with this lab has been getting to work alongside PhD students and postdocs everyday. Having daily meetings to get feedback on our code, discuss our findings, and present our research has helped me learn so much in such a short period of time,” says Zach. Li notes, “Working with historical data can yield unexpected gems – the history nerd in me was quite excited to learn about anachronistic professions like “bootblacks” and “charwomen” when we were working with occupational codes in the 1940 Census.”
Zach and Li highly recommend this opportunity to anyone looking to apply their economics knowledge and gain valuable research experience in a team setting. Whether your interests lie in economics, history, data science, public policy, or somewhere in between, the LIFE-M Fellows program has something for everyone. The team expects this experience to continue in the fall term. To read more about participating in the Fellows program, click here. Interested students should apply by AUGUST 31, 2021 here.
Congratulations Graduates!
Congratulations to all the Undergraduate, Masters and PhD students who graduated this June from our Department. We are so proud of the hard work and dedication you showed during this unique time. While we were not able to have a traditional ceremony to celebrate all of your accomplishments, we are pleased to share with you the Undergraduate Program and Favorite UCLA Memories to highlight some of our amazing students.
Andy Atkeson: New Co-Editor at the JPE
The UCLA Department of Economics wants to congratulate Professor Andy Atkeson for recently being appointed co-editor of the Journal of Political Economy. Editors at the JPE are typically from the University of Chicago, so the appointment of Professor Atkeson is particularly unusual, and an acknowledgement of his standing in the profession and his editorial judgement.
One of the oldest and most prestigious journals in economics, the Journal of Political Economy presents significant and essential scholarship in economic theory and practice. The journal publishes highly selective and widely cited analytical, interpretive, and empirical studies in a number of areas, including monetary theory, fiscal policy, labor economics, development, microeconomic and macroeconomic theory, international trade and finance, industrial organization, and social economics.
Martha Bailey’s Research Featured in Anderson Review
UCLA’s Martha J. Bailey, along with Brenden D. Timpe & Shuqiao Sun, had their paper Prep School for Poor Kids: The Long-Run Impacts of Head Start on Human Capital and Economic Self-Sufficiency featured in the May 2021 issue of Anderson Review.
UCLA Anderson Review is a window into the cutting-edge research of expert faculty who are drawn to the school from around the globe. They examine crucial topics in business, the economy and the wider world of human existence. Each month, leading journalists report on UCLA Anderson faculty’s newly published research and most provocative working papers. The Review is produced with the support of UCLA Anderson’s Marketing & Communications team.
