NewThe Dynamics of Verification when Searching for Quality 4 May 2026 Zihao Li and Jonathan LibgoberAn agent samples projects over time, observing quality for each, while a principal can select at most one. The principal values quality, whereas the agent only wants a project chosen. Transfers are unavailable, but the principal can verify quality by paying a cost. We fully characterize the dynamics of verification by determining optimal mechanisms for this problem.
NewRacial Disparities in Federal Sentencing: Evidence from Drug Mandatory Minimums 27 April 2026 Cody TuttleI study racial disparities in the criminal justice system by analyzing abnormal bunching in the distribution of crack-cocaine amounts used in federal sentencing. I compare cases sentenced before and after the Fair Sentencing Act, a 2010 law that changed the 10-year mandatory minimum threshold for crack-cocaine from 50g to 280g.
NewIdentification and estimation of dynamic random coefficient models 27 April 2026 Wooyong LeeI study linear panel data models with predetermined regressors (such as lagged dependent variables) where coefficients are individual-specific, allowing for heterogeneity in the effects of the regressors on the dependent variable. I show that the model is not point-identified in a short panel context but rather partially identified, and I characterize the identified sets for the mean, variance, and CDF of the coefficient distribution.
NewManager Pay Inequality and Market Power 22 April 2026 Renjie Bao, Jan De Loecker, and Jan EeckhoutManager pay has increased considerably since 1980, and so has inequality in manager pay. Over the same period, there has been a sharp rise in market power. We start from the premise that the role of managers is to increase firm productivity. When markets are imperfectly competitive, productivity not only helps firm grow in size, productivity also affects market power.
NewLocal Projection Based Inference under General Conditions 22 April 2026 Ke-Li XuThis paper develops the uniform asymptotic theory for local projection (LP) regression when the true lag order of the model is unknown and potentially infinite. The theory allows for varying degrees of persistence in the data, growing response horizons, and general conditionally heteroskedastic martingale-difference shocks. Based on the theory, we make two main contributions.
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NewMonopsony Makes Firms not only Small but also Unproductive: Why East Germany has not Converged 21 April 2026 Rüdiger Bachmann, Christian Bayer, Heiko Stüber, and Felix WellschmiedWhen employers face a trade-off between being large and paying low wages—and in this sense have monopsony power—some productive employers decide against building large business networks, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity.
