Fixed Effects and the Generalized Mundlak Estimator 4 September 2023 Dmitry Arkhangelsky and Guido ImbensWe develop a new approach for estimating average treatment effects in observational studies with unobserved group-level heterogeneity. We consider a general model with group-level unconfoundedness and provide conditions under which aggregate balancing statistics – group-level averages of functions of treatments and covariates – are sufficient to eliminate differences between groups.
Market Power in Coal Shipping and Implications for U.S. Climate Policy 4 September 2023 Louis PreonasEconomists have widely endorsed pricing CO2 emissions to internalize climate change-related externalities. Doing so would significantly affect coal, the most carbon-intensive energy source. However, U.S. coal markets exhibit an additional distortion: the railroads that transport coal to power plants can exert market power. This paper estimates how coal-by-rail markups respond to changes in coal demand. I identify markups in a major intermediate goods market using both reduced-form and structural methods.
Minimum Wage Employment Effects and Labor Market Concentration 4 September 2023 José Azar, Emiliano Huet-Vaughn, Ioana Marinescu, Bledi Taska, and Till von WachterThis paper shows that more highly concentrated labor markets experience more positive employment effects of the minimum wage. In the most concentrated labor markets, employment rises following a minimum wage increase. The paper establishes its main findings studying the effects of local minimum wage increases on a key low-wage retail sector, and using data on labor market concentration that covers the entirety of the United States with fine spatial variation at the occupation level.
Discrimination in Hiring: Evidence from Retail Sales 28 August 2023 Alan M. Benson, Simon Board, and Moritz Meyer-ter-vehnWe propose a simple model of racial bias in hiring that encompasses three major theories: taste-based discrimination, screening discrimination, and complementary production. We derive a test that can distinguish these theories based on the mean and variance of workers’ productivity under managers of different pairs of races. We apply this test to study discrimination at a major U.S. retailer using data from 48,755 newly-hired commission-based salespeople.
Negative Nominal Interest Rates and the Bank Lending Channel 21 August 2023 Gauti B. Eggertsson, Ragnar E. Juelsrud, Lawrence H. Summers, and Ella Getz WoldWe investigate the bank lending channel of negative nominal policy rates from an empirical and theoretical perspective. For the empirical results we rely on Swedish data, including daily banklevel lending rates. We find that retail household deposit rates are subject to a lower bound (DLB).
The Brexit Vote, Productivity Growth and Macroeconomic Adjustments in the United Kingdom 21 August 2023 Ben Broadbent, Federico Di Pace, Thomas Drechsel, Richard Harrison, and Silvana TenreyroThe UK economy experienced significant macroeconomic adjustments following the 2016 referendum on its withdrawal from the European Union. To understand these adjustments, this paper presents empirical facts using novel UK macroeconomic data and estimates a small open economy model with tradable and non-tradable sectors.
Taxes and Growth: New Narrative Evidence from Interwar Britain 15 August 2023 James Cloyne, Nicholas Dimsdale, and Natacha Postel-VinayThe impact of fiscal policy on economic activity is still a matter of great debate. And, ever since Keynes first commented on it, interwar Britain, 1918-1939, has remained a particularly interesting and contentious case — not least because of its high debt environment and turbulent business cycle. This debate has often focused on the effects of government spending, but little is known about the effects of tax changes.
Strategic Exploration: Preemption and Prioritization 15 August 2023 Qingmin Liu and Yu Fu WongThis paper analyzes a model of strategic exploration in which competing players independently explore a set of alternatives. The model features a multiple-player multiple-armed bandit problem and captures a strategic trade-off between preemption—covert exploration of alternatives that the opponent will explore in the future—and prioritization—exploration of the most promising alternatives. Our results explain how the strategic trade-off shapes equilibrium behaviors and outcomes, e.g., in technology races between superpowers and R&D competitions between firms.
