RESEARCH PROJECTS

& PRESENTATIONS

WORKING PAPERS

* DENOTES NBER WORKING PAPER

JOB MARKET SIGNALING THROUGH OCCUPATIONAL LICENSING

WITH BOBBY CHUNG |  NBER WORKING PAPER | NBER LABOR STUDIES PRESENTATION

As a condition for legal employment, US state governments require occupational licenses of 25% of their workforce. We show that occupational licensing reduces the wage gap between black men and white men (by 43%), and the wage gap between women and white men (by 36%-40%). Black men benefit from licenses that signal non-felony status, whereas white women benefit from licenses with a human capital requirement, e.g., continuous education. Certification, a less distortionary alternative to licensing,  generates an equivalent wage premium to occupational licensing for white men, but lower wage premiums than licensing for women and black men.

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HOW MUCH OF A BARRIER TO ENTRY IS OCCUPATIONAL LICENSING?

We exploit state variation in licensing laws to study the effect of licensing on occupational choice using a boundary discontinuity design. We find that licensing reduces equilibrium labor supply by an average of 17%-27%. The negative labor supply effects of licensing appear to be strongest for white workers and comparatively weaker for black workers.

DISENTANGLING PEER EFFECTS AND ECONOMIC INCENTIVES

IN CUSTOMER ACQUISITION

WITH CLARENCE LEE | CORNELL UNIVERSITY

We study the role of peer effects and economic incentives on customer adoption decisions using an unique panel from an university alumni reunion. The data consist of the alumni sign-up date, complete offline social graph (formed a decade prior), time-series airfare prices, demographics, and social media advertising efforts. We leverage the plausibly exogenous social graph and airfare prices faced by customers to separate the influence of peer decisions from the effect of economic costs on customer adoption. Our results have implications for the broader study and interaction of digital advertising with traditional pricing methods of new products and events.

THE EFFECT OF UN(IMPOSED) LABOR MARKET FLEXIBILITY ON

GENDER WAGE GAPS

WITH BEN POSMANICK |  2019 NBER LABOR STUDIES PAPER 

In this paper we document a new empirical fact about the U.S. labor market: over the past four decades, the gender wage gap among part-time workers was 10–30 percentage points smaller than the gender wage gap among full-time workers. This is a new empirical fact is predicted by the theory that increased labor market flexibility reduces gender wage gaps (Goldin, 2014). We refine this prediction by providing evidence that flexibility that is demanded endogenously, as is the case with pursuing part-time work, reduces gender wage gaps; by contrast flexibility that is supplied exogenously, specifically through state-mandated family leave policies like the Family and Medical Leave Act (1993) and its antecedents, are capitalized into slower wage growth for women when compared to men. Using an event-study design, we show that mandated family leave laws were partially responsible for the stagnation of women's wages in the mid 1990’s, bring resolution to an important puzzle in labor economics.

THE LABOR MARKET CONSEQUENCES OF EX-OFFENDER LICENSING LAWS

WITH MORRIS M. KLEINER & JASON HICKS |  UNIVERSITY OF MINNESOTA | UPJOHN INSTITUTE AND EQUITABLE GROWTH

This project will create a publicly available database of statutory and administrative laws governing the ability of ex-offenders to be granted an occupational license for all universally licensed occupations in the United States. The newly created time-series will be linked with Census microdata, including data from the American Community Survey, Current Population Survey, and Survey of Income and Program Participation. The research team will then use the changes in these ex-offender occupational licensing laws over time and across states to estimate the impact of these laws on the labor market outcomes of workers, with particular attention to the labor market outcomes of minorities. There are very few high-quality studies of the impacts of such licensing laws on employment and earnings among individuals with felonies. This research creates a new, detailed, and valuable dataset of state occupational licensing laws, which will allow both this research team and future researchers to study the impact of these laws on wage and employment outcomes.

WHY DON'T ELITE COLLEGES EXPAND SUPPLY? 

WITH KENT SMETTERS | WHARTON SCHOOL AT UNIVERSITY OF PENNSYLVANIA

As a condition for legal employment, US state governments require occupational licenses of 25% of their workforce. We show that occupational licensing reduces the wage gap between black men and white men (by 43%), and the wage gap between women and white men (by 36%-40%). Black men benefit from licenses that signal non-felony status, whereas white women benefit from licenses with a human capital requirement, e.g., continuous education. Certification, a less distortionary alternative to licensing,  generates an equivalent wage premium to occupational licensing for white men, but lower wage premiums than licensing for women and black men.

WITH ELIJAH NEILSON | CLEMSON UNIVERSITY

Exploiting state variation in the adoption of unilateral divorce laws, we show that both women and men are less likely to report having a bachelor's degree in states that adopted unilateral divorce laws. This reduction in human capital investment occurs in states with community property laws, where the law requires an even split of the couple's assets in the event of a divorce and is most pronounced for white women and men. We find no distortionary effects of unilateral divorce laws on the human capital decisions of black men or black women, even in states with community property laws.

THE EFFECT OF SELECTIVE PROPERTY RIGHTS ON ECONOMIC DEVELOPMENT

PETER Q. BLAIR | WHARTON SCHOOL AT UNIVERSITY OF PENNSYLVANIA 

I estimate that per capita GDP in the Bahamas grew by an additional 2%-3% per year, for 12 years, in response to a law that limited the ability of non-natives to buy and sell land in the Bahamas. Using an instrumental variables approach and a variety of robustness checks, I show that this growth occurred in spite of a downturn in net foreign direct investment due to the passage of this law, which weakened the property rights of nonnative investors relative to those of native Bahamians. The results of this study highlight the economic importance of distinguishing between the protection of private property for natives and non-natives as separate channels through which institutions cause economic growth.

 
 
 
 
 
 
 
 
 
 
 

WITH PAT BAYER AND KENNY WHALEY | NBER PUBLIC ECONOMICS PAPER 

Despite the tremendous amount of money spent on education in the US, it remains an open question whether the level of education spending is adequate, too little or too much? To answer this question, we estimate how much parents value school expenditure and their willingness to finance it through higher taxes. We accomplish this by exploiting plausibly exogenous variation in school expenditures and local taxes arising from School Finance Reforms. We find that school expenditures are positively capitalized into house prices -- especially in urban areas; while taxes are negatively capitalized into house prices -- particularly in suburban and rural areas. We find evidence that education is efficiently funded, as such a 1% increase in taxes to fund education increases house prices by an economically small and statistically insignificant 0.06%. This provides empirical support for a core prediction of the Tiebout hypothesis that decentralized jurisdictions can efficiently provide local public goods like education.

OUTSIDE OPTIONS (NOW) MORE IMPORTANT THAN RACE IN EXPLAINING TIPPING POINTS IN US NEIGHBORHOODS 

SOLO-AUTHORED | PETER BLAIR | HCEO WORKING PAPER

I develop a revealed-preference method for estimating neighborhood tipping points. I find that census tract tipping points have increased from 15%(1970) to 42%(2010). The corresponding MSA tipping points have also increased from 13%(1970) to 35%(2010). While tipping points are traditionally associated with the racial attitudes of white households, I find that cross-sectional differences in MSA tipping points, going from 1970-2010, depend less on differences in the racial attitudes of white households and more on the outside options faced by white households. These results support a continued role for place-based policies in mitigating residential segregation.

  • The Effect of Decentralized Racial Preferences on Segregation with Peter Blair and Patrick Bayer  

  • Estimating the Causal Effect of School Funding on the Neighborhood Choices of Households with Peter Blair and Kenneth Whaley

  • Using the Moving To Opportunity Experiment to Assess the Validity of Non-experimental Instruments for House Prices.

  • Why are Distinctively Black Names Associated with Positive Outcomes for Blacks in the Pre-Civil Rights Era and associated with negative outcomes for Blacks in the Post-Civil Rights Era? with Peter Blair and Jhacova Williams

  • The Effect of Merit-based Aid on Student Outcomes in India with Peter Blair and Smriti Bhargava

  • Federal Funding Premia for Elite Universities with Peter Blair and Michael Dinerstein

  • The Effect of Financial Incentives on Research Output of Faculty: Evidence from India

 
 
 

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