Description: Department of Economics

Description: Johannes Spinnewijn

| CV |

| Published Papers |

| Other Publications |

| Working Papers|

| In Progress|

| Teaching|

| Miscellaneous|

| LSE Economics |

| Public Econ at LSE |

Johannes Spinnewijn

Position: Associate Professor of Economics (with tenure)

Research Interests: Public Economics, Behavioral Economics, Applied Theory

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Other Positions, Affiliations and Awards:

Job Opportunity: Pre-doctoral Full-time Research Assistants

  • The Public Finance Group of the Economics Dept at the LSE is hiring full-time pre-doctoral research assistants. Applicants should be completing (or have completed) a Bachelor's or Masters degree and have strong quantitative and programming skills. This position is suitable for people looking to obtain experience in economic research for 1 to 2 years before applying to graduate school in economics. If you would like more information, please visit our website here.

Published Papers

Other Publications

Working Papers

  • Job Seekers' Perceptions and Employment Prospects: Heterogeneity, Duration Dependence and Bias - NEW - (with Andreas Mueller and Giorgio Topa) - Slides; NBER Digest

  • Abstract: This paper analyses job seekers' perceptions and their relationship to unemployment outcomes to study heterogeneity and duration-dependence in both perceived and actual job finding. Using longitudinal data from two comprehensive surveys, we document (1) that reported beliefs have strong predictive power of actual job finding, (2) that job seekers are over-optimistic in their beliefs, particularly the long-term unemployed, and (3) that job seekers do not revise their beliefs downward when remaining unemployed. We then develop a reduced-form statistical framework where we exploit the joint observation of beliefs and ex-post realizations, to disentangle heterogeneity and duration-dependence in true job finding rates while allowing for elicitation errors and systematic biases in beliefs. We find a substantial amount of heterogeneity in true job finding rates, accounting for almost all of the observed decline in job finding rates over the spell of unemployment. Moreover, job seekers' beliefs are systematically biased and under-respond to these differences in job finding rates. Finally, we show theoretically and quantify in a calibrated model of job search how biased beliefs contribute to the slow exit out of unemployment. The biases can explain more than 10 percent of the incidence of long-term unemployment.

  • The Value of Unemployment Insurance - NEW - (with Camille Landais)

  • Abstract: In the absence of unemployment insurance (UI) choices, the standard approach to estimating the value of UI is to infer it from the observed consumption response to job loss in combination with some assumption on preferences. Exploiting the unique data and policy context in Sweden, we propose two alternative approaches, which we implement and compare to the standard consumption-based approach on the exact same sample of workers. Our empirical analysis reveals that the drop in consumption expenditures upon job loss is relatively small (~13 percent), but that the marginal propensity to consume (MPC), estimated using variation in local government transfers, is 30-40 percent higher when unemployed than when employed. This wedge in MPCs, the focus of our first approach, reveals a high relative price of smoothing consumption, which confirms direct evidence on the limited consumption smoothing means available during unemployment. The estimated relative price provides a lower-bound on the value of UI, which turns out to be substantially higher than the consumption-based estimate under standard preference assumptions. Exploiting the UI choices embedded in the Swedish UI system, we also propose a Revealed-Preference approach, which confirms that the average value of UI is large in our setting, but also reveals substantial dispersion in the value of UI, above and beyond the variation in consumption drops.

  • How to Improve Tax Compliance? Evidence from Population-wide Experiments in Belgium - NEW - (with Jan-Emmanuel De Neve, Clement Imbert, Teodora Tsankova and Maarten Luts)

  • Abstract: We study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran five experiments spanning the tax process which varied the communication of the tax administration with all income taxpayers in Belgium. A consistent picture emerges across experiments: (i) simplifying communication increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective. Even tax morale messages that improve knowledge and appreciation of public services do not raise compliance. In fact, heterogeneity analysis with causal forests shows that tax morale treatments backfire for most taxpayers. In contrast, simplification has large positive effects on compliance, which diminish over time due to follow-up enforcement. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare our letter treatments against standard enforcement measures. The simplification treatments are far more cost-effective, allowing for substantial savings on enforcement costs, and also improve compliance in the next tax cycle.

  • Risk-based Selection in Unemployment Insurance: Evidence and Implications (with Camille Landais, Arash Nekoei, Peter Nilsson and David Seim) - VoxEU
  • Revisions requested at the American Economic Review

    Abstract: This paper studies whether adverse selection can rationalize a universal mandate for unemployment insurance (UI). Building on a unique feature of the unemployment policy in Sweden, where workers can opt for supplemental UI coverage above a minimum mandate, we provide the first direct evidence for adverse selection in UI and derive its implications for UI design. We find that the unemployment risk is more than twice as high for workers who buy supplemental coverage, even when controlling for a rich set of observables. Exploiting variation in risk and prices to control for moral hazard, we show how this correlation is driven by substantial risk-based selection. Despite the severe adverse selection, we find that mandating the supplemental coverage is dominated by a design leaving the choice to workers. In this design, a large subsidy for supplemental coverage is optimal and complementary to the use of a minimum mandate. Our findings raise questions about the desirability of the universal mandate of generous UI in other countries, which has not been tested before.

  • Inferring Risk Perceptions and Preferences using Choice from Insurance Menus: Theory and Evidence (with Keith Ericson, Philipp Kircher and Amanda Starc)
  • Revisions requested at the Economic Journal

    Abstract: Demand for insurance can be driven by high risk aversion or high risk. We show how to separately identify risk preferences and risk types using only choices from menus of insurance plans. Our revealed preference approach does not rely on rational expectations, nor does it require access to claims data. We show what can be learned non-parametrically from variation in insurance plans, offered separately to random cross-sections or offered as part of the same menu to one cross-section. We prove that our approach allows for full identification in the textbook model with binary risks and extend our results to continuous risks. We illustrate our approach using the Massachusetts Health Insurance Exchange, where choices provide informative bounds on the type distributions, especially for risks, but do not allow us to reject homogeneity in preferences.

  • Studying Consumption Patterns using Registry Data: Lessons From Swedish Administrative Data (with Jonas Kolsrud and Camille Landais) - VoxEU
  • Revisions requested at the Journal of Public Economics

    Abstract: This paper measures consumption expenditures using registry data on income and asset holdings in Sweden and illustrates how a registry-based measure can alleviate some critical limitations of traditional survey measures in capturing changes in consumption inequality and consumption responses to shocks. In the construction of our measure, we build on previous work exploiting the identity coming from the household budget constraint between consumption expenditures and income net of savings. We try to improve this measure using more registry information to account for the contribution of both financial and real assets to consumption flows. We demonstrate the power of the registry-based measure to study the relationship between income and consumption inequality, especially at the top of the income distribution. We also exploit the longitudinal dimension to study consumption responses to important life-time events and the different means used to smooth consumption.

  • The Trade-off between Insurance and Incentives in Differentiated Unemployment Policies
  • In preparation for special issue of Fiscal Studies celebrating 50yrs of IFS

    Abstract: The article revisits the central trade-off between insurance and incentives in the design of UI policies. The generosity of UI benefits does not just differ across countries, but also across workers within countries. After illustrating some important dimensions of heterogeneity in a cross-country analysis, I extend the standard Baily-Chetty formula to identify the key empirical moments and elasticities required to evaluate the differentiated unemployment policy within a country. The article reviews some prior work and aims to provide guidance for future work trying to inform the design of unemployment policies.

Work in Progress

  • Designing Retirement Benefits: Theory and Evidence from Sweden (with J. Kolsrud, C. Landais and D. Reck)

  • The Consumption Effects of Unemployment Benefits (with C. Landais)

  • Deductible Choice in the Netherlands (with B. Handel, J. Kolstad and T. Minten)

  • A Pigouvian Approach to Social Insurance Design (with N. Hendren and C. Landais) - in preparation for Annual Review of Economics

Current Courses Taught

  • Public Economics (PhD, LSE course, ec534)
  • Public Economics (MSc, LSE course, ec426)
  • Public Economics (MPA, LSE course, ec410)

Press Coverage/Other Writings

  • "Consumption Data: New Frontiers" VoxEU (April 4, 2018) (link)
  • "Unemployment Insurance and Adverse Selection" VoxEU (February 3, 2018) (link)
  • "Designing Tax Policy in High-Evasion Economies" VoxEU (January 5, 2016) (link), Microeconomic Insights (April 27, 2016) (link)
  • "De mythe van de hangmat" Op-ed in De Standaard (May 15, 2014) (link)
  • "De ivoren toren van economen is een mythe" Op-ed in De Standaard (August 3, 2013) (link)
  • "En als we langdurig werklozen meer zouden betalen?" Op-ed in De Morgen (February 12, 2012) (link)
  • "The Role of Commitment" comment on "On the interaction between subsidiarity and interpersonal solidarity" by Jacques Dreze (link)
  • "Hard cash or a secure job - which is better?" featured in Financial Times (February 7, 2009) (link)

© 2018 London School of Economics. All rights reserved. Picture by Jef Boes.