Inefficient Automation 18 February 2024 Martin Beraja and Nathan ZorziHow should the government respond to automation? We study this question in a heterogeneous agent model that takes worker displacement seriously. We recognize that displaced workers face two frictions in practice: reallocation is slow and borrowing is limited. We analyze a second best problem where the government can tax automation but lacks redistributive tools to fully alleviate borrowing frictions. The equilibrium is (constrained) inefficient and automation is excessive.
Robust Implementation with Costly Information 11 February 2024 Harry Pei and Bruno StruloviciWe construct mechanisms that can robustly implement any desired social choice function when (i) agents may incur a cost to learn the state of the world, (ii) with small probability, agents’ preferences can be arbitrarily different from some baseline known to the mechanism designer, and (iii) the mechanism designer does not know agents’ beliefs and higher-order beliefs about one another’s preferences. The mechanisms we propose have a natural interpretation and do not require the mechanism designer to be able to verify the state ex post.
Labor Market Screening and the Design of Social Insurance: An Equilibrium Analysis of the Labor Market for the Disabled 11 February 2024 Naoki Aizawa, Soojin Kim, and Serena RheeThis paper studies how firms’ screening incentives in the labor market affect the optimal design of social insurance programs and quantitatively assesses the U.S. disability policies accounting for firms’ screening of the disabled. We develop an equilibrium search model where workers with different productivities have heterogeneous preferences over non-wage benefits and firms cannot offer an employment contract that explicitly depends on worker types.
Optimal Allocation via Waitlists: Simplicity through Information Design 30 January 2024 Itai Ashlagi, Faidra Monachou, and Afshin NikzadWe study nonmonetary markets where objects that arrive over time are allocated to unitdemand agents with private types, such as in the allocation of public housing or deceased-donor organs. An agent’s value for an object is supermodular in her type and the object quality, and her payoff is her value minus her waiting cost. The social planner’s objective is a weighted sum of allocative efficiency (i.e., the sum of values) and welfare (i.e., the sum of payoffs).
A Dynamic Model of Input-Output Networks 28 January 2024 Ernest Liu and Aleh TsyvinskiWe develop a dynamic model of input-output networks that incorporates adjustment costs of changing inputs. Our closed-form solution for the dynamics of the economy shows that temporary shocks to upstream sectors, whose output travels through long supply chains, have disproportionately significant welfare impact compared to affected sectors’ Domar weights.
The Work-From-Home Technology Boon and its Consequences 28 January 2024 Morris A. Davis, Andra C. Ghent, and Jesse GregoryWe study the impact of widespread adoption of work-from-home (WFH) technology using an equilibrium model where people choose where to live, how to allocate their time between working at home and at the office, and how much space to use in production. Motivated by cross-sectional evidence on WFH, we model WFH as a complement to work at the office.
The Climate in Climate Economics 21 January 2024 Doris Folini, Aleksandra Friedl, Felix Kübler, and Simon ScheideggerTo analyze climate change mitigation strategies, economists rely on simplified climate models — so-called climate emulators — that provide a realistic quantitative link between CO2 emissions and global warming at low computational costs. In this paper, we propose a generic and transparent calibration and evaluation strategy for these climate emulators that is based on freely and easily accessible state-of-the-art benchmark data from climate sciences. We demonstrate that the appropriate choice of the free model parameters can be of key relevance for the predicted social cost of carbon.
Marriage Market and Labor Market Sorting 21 January 2024 Paula Calvo, Ilse Lindenlaub, and Ana ReynosoWe develop a new equilibrium model in which households’ labor supply choices form the link between sorting on the marriage market and sorting on the labor market. We first show that in theory, the nature of home production—whether partners’ hours are complements or substitutes—shapes equilibrium labor supply as well as marriage and labor market sorting. We then estimate our model using German data to empirically assess the nature of home production, and find that spouses’ home hours are complements.
