Economics

Declining U.S. college enrollments over the past 15 years have triggered questions about the health of the postsecondary sector. Using institution-level data, we make four points. First, such declines are driven not by the four-year sector but by two-year community colleges, which have apparently shrunk by over 30% since the peak of the Great Recession. Second, over one-third of this apparent decline is an artifact of some community colleges being reclassified as offering four-year degrees. Third, pre-Great Recession data shows a 1 percentage point increase in the local unemployment rate increases first-time community college enrollment by 2 percent, suggesting many students are on the margi..

We study how a monopolist’s use of consumer data for price discrimination affects welfare. To answer this question, we develop a model of market segmentation subject to residual uncertainty. We fully characterize when data usage monotonically increases or decreases welfare or when the effect is non-monotone. The characterization reduces the problem to one with only two demand curves, and gives a condition for the two-demand-curves case that highlights that information affects welfare in three distinct ways. In the non-monotone case, we provide tight bounds on the welfare effects of information and identify the best local direction for providing additional information.

This paper studies the connection between regional growth trends and labor market dynamics. New data on manufacturing worker flows for U.S. cities 1969-1981 show more new hires and more voluntary quits in growing cities, but more forced layoffs in shrinking cities. Recessions are special in growing cities in that hires and quits drop, whereas in shrinking cities layoffs rise. A quantitative business cycle model with migration and on-the-job search accounts for a large share of variation in growth and worker flows both over time and across space. Growing cities in the South and West had low job creation costs and only gradual in-migration, so tight labor markets encouraged more on-the-job sea..

Does ambiguity (Knightian uncertainty) or risk provide a greater discouragement to investment? There is general agreement in the financial press that uncertainty discourages investment, with uncertainty here meaning any situation where important future policy variables (such as tariffs or tax rates) are not known. And it seems intuitively plausible that situations of ambiguity are “more uncertain” than those of risk: under risk, although the outcome is not known, its expected value is, whereas under ambiguity we have a distribution of possible expected values. In this paper we show that under quite general circumstances it is the case that ambiguity deters investment more than an equival..

This paper characterizes the equity–efficiency tradeoff of corporate taxation using a stylized model that draws on the corporate investment and tax incidence literatures. We derive optimal corporate tax formulas in terms of estimable reduced-form elasticities and welfare weights on workers and firm owners. While much empirical work emphasizes investment responses, these elasticities do not feature in optimal tax formulas. The elasticity of taxable profits is a sufficient statistic for the efficiency costs of the corporate tax. Higher corporate tax rates are desirable when firm owners have low welfare weights, and less desirable when taxing profits reduces wages. These empirical objects rem..

We evaluate the effects of the nationwide transition in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) from paper vouchers to Electronic Benefit Transfer (EBT) cards on store decisions to seek authorization to accept WIC benefits. We combine novel administrative data from “The Integrity Profile” (USDA administrative data on stores participating in WIC and their WIC reimbursements) with new nationwide policy data on WIC EBT implementation. Using a staggered adoption difference-in-differences approach, we find that the transition had heterogeneous and occasionally unanticipated effects across states. The number of WIC authorized independent vendors declin..

Suicide rates among older adults have been rising over time in the United States. At the same time, more individuals have been suffering with chronic pain and illness, which are often underlying risk factors for suicide. As self-medication with marijuana has become common, we ask whether access to legal marijuana for medical and recreational purposes reduces suicides rates among older individuals. We find that suicide rates among older age groups decline following the opening of recreational marijuana dispensaries, especially among older Whites, and middle-aged White males and females with low levels of education.

Mutual funds create liquidity for investors by issuing demandable equity shares while holding illiquid securities. We study the implications of this liquidity creation by examining frequent trading suspensions in China, which temporarily eliminate market liquidity in affected stocks. These suspensions cause significant mispricing of mutual funds due to inaccurate valuations of their illiquid holdings. We find that investors actively acquire information about suspended stocks held by mutual funds, driving flows into underpriced funds. This information is subsequently incorporated into stock prices when trading resumes. Our findings suggest that mutual fund liquidity creation stimulates inform..

This paper examines the effect of nutrition—delivered during pregnancy via the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)—on infant health. We contribute to the literature by adding new data on WIC rollout from the National Archives, employing novel methods, investigating new mechanisms, and analyzing previously unexplored infant outcomes, including the distribution of birth weight. We find robust evidence that access to WIC in a woman’s county of residence by the start of their second trimester led to a reduction in the probability of an infant being of low birth weight and to a higher average birth weight, with larger in magnitude effects for infant..

We study the rapid expansion of Brazil's private online higher-education sector and its effects on market structure and college enrollment. Exploiting regional and field-specific variation in online education penetration, we find that online programs expand access for older students but divert younger students from higher-quality in-person programs. Greater competition lowers tuition prices but also reduces the supply of in-person degrees. Using an equilibrium model of college education, we show that in the absence of online programs, total enrollment would be 14 percent lower, while in-person enrollment would rise by 33 percent. On net, aggregate labor-market value added declines by 1.4 per..

How does the trauma associated with exposure to racial violence affect economic outcomes? We study this question in the context of lynchings of Black citizens in the American South between 1880 and 1940 and provide systematic evidence of long-run economic impacts of that violence for the broader community and the effects’ persistence across generations. First, using data on averted lynchings and matched placebos as counterfactuals, we show that children indirectly exposed to the racial trauma of lynchings (proxied by close proximity to the victim’s household location) exhibit a reduction in occupational income score and likelihood of holding a white collar occupation, in their prime earn..

Using transaction-level data on US congressional stock trades, we find that lawmakers who later ascend to leadership positions perform similarly to matched peers beforehand but outperform them by 47 percentage points annually after ascension. Leaders’ superior performance arises through two mechanisms. The political influence channel is reflected in higher returns when their party controls the chamber, sales of stocks preceding regulatory actions, and purchase of stocks whose firms receiving more government contracts and favorable party support on bills. The corporate access channel is reflected in stock trades that predict subsequent corporate news and greater returns on donor-owned or ho..

Climate change is already increasing temperatures and raising the frequency of natural disasters in the United States. In this paper, we examine several major vectors through which climate change affects US households, including cost increases associated with home insurance claims and increased cooling, as well as sources of increased mortality. Although we consider only a subset of climate costs over recent decades, we find an aggregate annual cost averaging between $400 and $900 per household; in 10 percent of counties, costs exceed $1,300 per household. Costs vary significantly by geography, with the largest costs occurring in some western regions of the United States, the Gulf Coast, and..