Economics

We study identification of differentiated product demand from market-level data when product characteristics can be endogenous. Past work suggests nonparametric identification may be impossible: that is, in addition to standard price instruments, exogenous characteristic-based instruments are essentially necessary to identify sufficiently flexible demand models with standard index restrictions. We show, however, that price counterfactuals are nonparametrically identified using recentered instruments—which combine exogenous price instruments with possibly endogenous product characteristics—under a weaker index restriction and a new condition we term faithfulness. We argue that faithfulnes..

This paper defines pro-worker technologies, including Artificial Intelligence, as technologies that make human skills and expertise more valuable by expanding worker capabilities. Our conceptual framework distinguishes among five categories of technological change: labor-augmenting, capital-augmenting, automating, expertise-leveling, and new task-creating. Only the last category is unambiguously pro-worker, generating demand for novel human expertise rather than commodifying it. We illustrate these distinctions through hypothetical and real-world examples spanning aviation maintenance, electrical services, custodial work, education, patent examination, and gig delivery. While AI’s capacity..

We estimate the mortality impact of local labor market exposure to the 1994 North American Free Trade Agreement (NAFTA) as well as to other local area shocks, and provide a parsimonious empirical explanation for differently-signed mortality estimates across different sources of local labor market contractions. Leveraging spatial variation in exposure to Mexican important competition from NAFTA, we find that more exposed areas experienced larger increases in mortality. In the 15 years post-NAFTA, an area with average NAFTA exposure experienced an increase in annual, age-adjusted mortality of 0.68 percent (standard error = 0.19), an increase that more than erases prior estimates of the welfare..

Does government funding influence the choice of research topics? Novel grant-making modalities such as the Advanced Research Projects Agency-Energy (ARPA-E) program aim to encourage scientists to take on difficult-to-solve, wicked societal problems such as clean energy. Yet little causal evidence exists linking funding and research direction, with most existing studies focusing on health sciences. We provide new evidence on the effect of funding on clean energy research, addressing two questions: (1) Do scientists change the focus of their research in response to targeted government funding opportunities? (2) If so, what types of calls for funding best attract new researchers? Using data on ..

How does the expectation of aid change behavior? We propose a simple approach to separate expectations effects from the direct effects of relaxing resource constraints: compare the promise of a program to the program itself. We test this approach in a four-arm randomized controlled trial of cash transfers in Uganda. Both those who received cash and those promised-to-receive cash increase their labor supply and investment. Immediate transfers also increase household expenditures and savings. Our results are not consistent with standard life-cycle models; they are better explained by a model in which the transfer increases individual labor productivity.

Food insecurity is an existential threat for Africa (a continent facing rapid population growth and dire climate impacts) and addressing it a global imperative. Over 30% of caloric intake comes from maize, but crop yields are low partly because high costs make synthetic fertilizers uneconomical. A field experiment with Kenyan smallholder farmers explores the promise of genetically modified (microbial) biofertilizers to deliver nitrogen and increase yields at affordable costs. We see significant increases in yields (up to 110% for some farmers) and lower environmental impact than synthetic products. This suggests that biofertilizers could dramatically improve food security and child nutrition..

Production is a sequence of steps that can be executed (1) manually, (2) augmented with AI, or (3) fully automated within contiguous AI-executed steps called “chains.” Firms optimally bundle steps into tasks and then jobs, trading off specialization gains against coordination costs. We characterize the optimal assignment of humans and AI to steps and the firm’s resulting job structure, showing that comparative advantage logic can fail with AI chaining. The model implies non-linear productivity gains from AI quality improvements and admits a CES representation at the macro level. Empirical evidence supports the model’s key predictions that (1) AI-executed steps co-occur in chains, (2)..

We use Texas administrative data to assess the long-standing claim that teacher certification exams discriminate against underrepresented minority (URM) candidates. In a regression discontinuity design, we find that failing a certification exam delays entry into teaching and costs the average candidate $10,000 in forgone earnings. These costs fall disproportionately on URM candidates both because they are more likely to fail and because their earnings losses from failing are 50 percent larger on average. To examine whether these disparities are justified by racial/ethnic differences in teaching quality, we develop a new measure of disparate impact and estimate it using a policy change that i..

The standard approach to portfolio selection involves two stages: forecast the asset returns and then plug them into an optimizer. We argue that this separation is deeply problematic. The first stage treats cross-sectional prediction errors as equally important across all securities. However, given that final portfolios might differ given distinct risk preferences and investment restrictions, the standard approach fails to recognize that the investor is not just concerned with the average forecast error - but the precision of the forecasts for the specific assets that are most important for their portfolio. Hence, it is crucial to integrate the two stages. We propose a novel implementation u..

We study whether policy can shift gendered beliefs, norms, and labor market outcomes by exploiting a major expansion of earmarked paternity leave in Denmark. The reform generated large first-stage effects, substantially reallocating leave from mothers to fathers. Using a regression discontinuity design combined with new survey data linked to administrative records, we show that the reform makes parents more supportive of paternity leave, shifts gender-role beliefs in a progressive direction, and reduces perceived differences in childcare ability. The reform also narrows gender gaps in earnings and hours worked. The earnings gap falls by 33pp in the first year following childbirth (during lea..

Geopolitical tensions, supply-chain concerns and policy risk have moved to the forefront of the pharmaceutical industry. This paper develops a real options valuation model of drug R&D that captures sequential clinical investment with technical failure, stochastic costs, uncertain cash flows, and optimal abandonment. We incorporate two regulatory shocks: a reduction in effective exclusivity period and a price-control shock that reduces net cash flows. Calibrating to an incremental CNS program, we find that project value at initiation is highly right-skewed: the mean is USD 69.6m but the median is negative, so expected value is driven by rare high-upside outcomes. Regulatory risk mainly compre..

This paper examines Black immigrant occupational integration. We create an Index of Revealed Advantage in Migration, which captures international differences in selectivity. Except for Caribbean-English and Other Immigrants, first generation Black immigrants have lower occupational achievement than native-born Non-Hispanic African Americans, that is, “Native born Blacks.” However, second generation Black immigrants have greater occupational achievement Native born Blacks. Except for Caribbean-English and Other Immigrants, first generation Black immigrants have lower occupational achievement than native-born Non-Hispanic white-only Americans that is, “Native born Whites.” Second gener..

We study competition between monies that provide separate payment and non-payment (e.g., store-of-value) functions. Our central insight is that payment adoption is governed not by absolute payment superiority, but by comparative advantage between payment and non-payment roles. A money that is “too good” as a store of value may circulate less as a payment instrument, even if it is technologically superior, because agents prefer to hoard it rather than spend it. The model delivers equilibria in which monies either specialize into distinct roles or coexist as payment instruments with one emerging as dominant. These mechanisms provide a unified microfoundation for classic monetary phenomena ..

Modern smartphones present new threats to road safety beyond talking and texting, but the real-world effects are difficult to study. One way to causally assess the impact of smartphones on road safety is to identify arbitrarily timed events during which smartphone-related distraction may exogenously increase – i.e., a situation that relies not on plausibly random variation in who uses smartphones while driving, but when smartphones are used. We investigated the impact of smartphones on road safety by examining traffic fatalities on days when smartphone use likely surges: the release of major music albums. Using event study analysis, we show that music streaming – an indicator for smartph..

The positive correlation between high temperatures and crime is well established. I consider how random, within-month daily high temperature and precipitation affects arrests rather than incidents. I analyze jail records of a Prohibition Era southern city with mean summer daily high temperatures of 85�F without modern air conditioning, so outdoor temperatures are salient. I find that each 1�F increase in daily high temperatures leads to a 0.5% to 1.9% increase in all-offense arrests, with the largest effect on violence. I also find that severe droughts have no meaningful effect on violent or public order offenses but lead to a 17.2% increase in the daily number of arrests for fraud, forg..

We assemble the first comprehensive sample of venture fraud cases involving 614 U.S. venture capital (VC)-backed startups founded since 2000. We find that VC-backed firms are 54% more likely to face fraud charges than comparable non-VC-backed firms within a subsample of newly public firms where detection likelihood is high and homogeneous. We then examine the role of governance in explaining venture fraud, focusing on two features that have risen in recent years—founder-friendly structures and cap table complexity. In a panel prediction model examining all venture fraud cases, we find that fraud is more likely in startups with stronger founder control rights, more convex founder cash flow ..

Inequality in education has declined substantially in South Africa since the end of apartheid, with inequality in years of completed education declining by all standard measures of inequality. At the same time, inequality in earnings has not shown significant declines, and has increased by some measures. Given the strong positive relationship between earnings and years of education, why hasn’t the decline in education inequality led to declines in earnings inequality? This paper explores this puzzle from both a theoretical and empirical perspective. We analyse how earnings inequality is affected by changes in returns to schooling when returns increase at some levels of schooling and decrea..

We document significant variation in interest rates among similar commercial and industrial loans using confidential supervisory data on the largest US banks. This dispersion does not appear to be due to risk. We rationalize the data using a search cost model and find that search costs are highest for smaller and riskier borrowers and lower for public firms, consistent with predictable differences in the costs of screening and monitoring. We find that search costs are substantial. Over a third of firms behave as if they do not comparison shop; half of all firms appear to only obtain two quotes before picking a lender, while the remaining firms behave as if they search widely.

Range anxiety, the fear of depleting battery before reaching a charging station, is often cited as a major barrier to electric vehicle (EV) adoption, yet there has been limited formal economic analysis to quantify its magnitude and examine the policy implications. We develop a continuous-time dynamic model of EV usage and charging decisions to micro-found range anxiety as the utility loss from feasible yet unrealized trips due to perceived range constraints. Using high-frequency data of 188,000 EV trips and 26,000 charging events among 8,000 EVs in Shanghai, we recover model parameters governing consumer driving and charging decisions. The estimates imply that, across EV models with varying ..