2019年下半年的 Workshop 文章开始认领。我们将继续在劳动（包括健康、政策评估）、区域和城市、政治经济学、社会经济学、发展经济学等领域内选择论文。时间：每周二下午4点至6点，地点在复旦大学经济学院 710 或 714。请参与者积极认领，并与陈乔伊（joychen93@163.com）和刘志阔（lzhikuo@163.com）和联系。我们的微信号（flcds2014），也将在第一时间推送最新信息和相关评论，欢迎大家关注。
最优产业政策
Itskhoki, Oleg, and Benjamin Moll. "Optimal Development Policies With Financial Frictions." Econometrica 87.1 (2019): 139-173.
Abstract: Is there a role for governments in emerging countries to accelerate economic development by intervening in product and factor markets? To address this question, we study optimal dynamic Ramsey policies in a standard growth model with financial frictions. The optimal policy intervention involves pro‐business policies like suppressed wages in early stages of the transition, resulting in higher entrepreneurial profits and faster wealth accumulation. This, in turn, relaxes borrowing constraints in the future, leading to higher labor productivity and wages. In the long run, optimal policy reverses sign and becomes pro‐worker. In a multi‐sector extension, optimal policy subsidizes sectors with a latent comparative advantage and, under certain circumstances, involves a depreciated real exchange rate. Our results provide an efficiency rationale, but also identify caveats, for many of the development policies actively pursued by dynamic emerging economies.
电子商务的影响
Paul Dolfen, Liran Einav, Peter J. Klenow, Benjamin Klopack, Jonathan D. Levin, Laurence Levin, Wayne Best (2019). Assessing the Gains from E-Commerce. NBER Working Paper.
Abstract: E-Commerce represents a rapidly growing share of consumer spending in the U.S. We use transactions-level data on credit and debit cards from Visa, Inc. between 2007 and 2017 to quantify the resulting consumer surplus. We estimate that E-Commerce spending reached 8% of consumption by 2017, yielding consumers the equivalent of a 1% permanent boost to their consumption, or over $1,000 per household. While some of the gains arose from saving travel costs of buying from local merchants, most of the gains stemmed from substituting to online merchants. Higher income cardholders gained more, as did consumers in more densely populated counties.
兰小欢老师5星推荐，值得认领！
Dobkin, Carlos, Amy Finkelstein, Raymond Kluender, and Matthew J. Notowidigdo. 2018. "The Economic Consequences of Hospital Admissions." American Economic Review, 108 (2): 308-52.
Abstract: We use an event study approach to examine the economic consequences of hospital admissions for adults in two datasets: survey data from the Health and Retirement Study, and hospitalization data linked to credit reports. For non-elderly adults with health insurance, hospital admissions increase out-of-pocket medical spending, unpaid medical bills, and bankruptcy, and reduce earnings, income, access to credit, and consumer borrowing. The earnings decline is substantial compared to the out-of-pocket spending increase, and is minimally insured prior to age-eligibility for Social Security Retirement Income. Relative to the insured non-elderly, the uninsured non-elderly experience much larger increases in unpaid medical bills and bankruptcy rates following a hospital admission. Hospital admissions trigger fewer than 5 percent of all bankruptcies in our sample.
企业家：能力or资本
Smith, M., Yagan, D., Zidar, O. M., & Zwick, E. (2019). Capitalists in the Twenty-first Century . Quarterly Journal of Economics (Forthcoming).
Abstract: How important is human capital at the top of the U.S. income distribution? A primary source of top income is private "pass-through" business profit, which can include entrepreneurial labor income for tax reasons. This paper asks whether top pass-through profit mostly reflects human capital, defined as all inalienable factors embodied in business owners, rather than financial capital. Tax data linking 11 million firms to their owners show that top pass-through profit accrues to working-age owners of closely-held, mid-market firms in skill-intensive industries. Pass-through profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of pass-through profit as human capital income, we find that the typical top earner derives most of her income from human capital, not financial capital. Growth in pass- through profit is explained by both rising productivity and a rising share of value added accruing to owners.
方法类，如何正确做动态DID
Freyaldenhoven, S., Hansen, C., & Shapiro, J. M. (2018). Pre-event trends in the panel event-study design (No. w24565). American Economic Review
Abstract : We consider a linear panel event-study design in which unobserved confounds may be related both to the outcome and to the policy variable of interest. We provide sufficient conditions to identify the causal effect of the policy by exploiting covariates related to the policy only through the confounds. Our model implies a set of moment equations that are linear in parameters. The effect of the policy can be estimated by 2SLS, and causal inference is valid even when endogeneity leads to pre-event trends (“pre-trends”) in the outcome. Alternative approaches perform poorly in our simulations.
银行网络和企业网络，两篇一起报告，2个小时
Anderson, H., Paddrik, M., & Wang, J. J. (2018). Bank Networks and Systemic Risk: Evidence from the National Banking Acts. American Economic Review.
Abstract : The National Banking Acts (NBAs) of 1863–1864 established rules governing the amounts and locations of interbank deposits, thereby reshaping the bank networks. Using unique data on bank balance sheets and detailed interbank deposits in 1862 and 1867 in Pennsylvania, we study how the NBAs changed the network structure and quantify the effect on financial stability in an interbank network model. We find that the NBAs induced a concentration of interbank deposits at both the city and bank levels, creating systemically important banks. Although the concentration facilitated diversification, contagion would have become more likely when financial center banks faced large shocks.
Mueller, H., & Giroud, X. Firms' Internal Networks and Local Economic Shocks. American Economic Review.
Abstract: Using confidential establishment-level data from the US Census Bureau’s Longitudinal Business Database, this paper documents how local shocks propagate across US regions through firms’ internal networks of establishments. Consistent with a model of optimal within-firm resource allocation, we find that establishment-level employment is sensitive to shocks in distant regions in which the establishment’s parent firm is operating, and that the elasticity with respect to such shocks increases with the firm’s financial constraint. At the aggregate regional level, we find that aggregate county-level employment is sensitive to shocks in distant counties linked through firms’ internal networks.
知识溢出，两篇文章可以任选一篇为主，一起报告，2个小时
Akcigit, U., Caicedo, S., Miguelez, E., Stantcheva, S., & Sterzi, V. (2019). Dancing with the stars: Innovation through interactions . Revise and Resubmit, Econometrica.
Abstract: An inventor's own knowledge is a key input in the innovation process. This knowledge can be built by interacting with and learning from others. This paper uses a new large-scale panel dataset on European inventors matched to their employers and patents. We document key empirical facts on inventors' productivity over the life cycle, inventors' research teams, and interactions with other inventors. Among others, most patents are the result of collaborative work. Interactions with better inventors are very strongly correlated with higher subsequent productivity. These facts motivate the main ingredients of our new innovation-led endogenous growth model, in which innovations are produced by heterogeneous research teams of inventors using inventor knowledge. The evolution of an inventor's knowledge is explained through the lens of a diffusion model in which inventors can learn in two ways: By interacting with others at an endogenously chosen rate; and from an external, age-dependent source that captures alternative learning channels, such as learning-by-doing. Thus, our knowledge diffusion model nests inside the innovation-based endogenous growth model. We estimate the model, which fits the data very closely, and use it to perform several policy exercises, such as quantifying the large importance of interactions for growth, studying the effects of reducing interaction costs (e.g., through IT or infrastructure), and comparing the learning and innovation processes of different countries.
Zacchia, Paolo. "Knowledge Spillovers through Networks of Scientists." (2019). The Review of Economic Studies
Abstract: In this paper I directly test the hypothesis that interactions between inventors of different firms drive knowledge spillovers. I construct a network of publicly traded companies in which each link is a function of the relative proportion of two firms’ inventors who have former patent collaborators in both organizations. I use this measure to weigh the impact of R&D performed by each firm on the productivity and innovation outcomes of its network linkages. An empirical concern is that the resulting estimates may reflect unobserved, simultaneous determinants of firm performance, network connections and external R&D. I address this problem with an innovative IV strategy, motivated by a game-theoretic model of firm interaction. I instrument the R&D of one firm’s connections with that of other firms that are sufficiently distant in network space. With the resulting spillover estimates, I calculate that among firms connected to the network the marginal social return of R&D amounts to approximately 112% of the marginal private return.
经济增长理论的综述文章，两篇一起报告，2个小时
Economic Growth: The Past, the Present, and the Future Commemorative Essay in "The Past, Present, and Future of Economics: A Celebration of the 125 Year Anniversary of the JPE and Chicago Economics," Edited by John List and Harald Uhlig. Journal of Political Economy, 2017, 125(6): 1736-47.
Abstract: What are the roles of human capital, fertility, ideas, basic science, and public policy for growth? These are just some of the important questions that were posed by many highly influential studies featured in the issues of the Journal of Political Economy over the years. In this paper, I revisit some of those seminal J.P.E. papers in the field of economic growth, briefly describe some of the more recent contributions, and end with some thoughts about the future direction of the field.
Ufuk Akcigit and Tom Nicholas , History, Micro Data, and Endogenous Growth, Annual Review of Economics, forthcoming
Abstract: Economic growth is concerned with long-run changes, and therefore historical data should be especially influential in informing the development of new theories. In this paper we draw on the recent literature to highlight areas in which history has played a particularly prominent role in improving our understanding of growth dynamics. Research at the intersection of historical data, theory and empirics has the potential to re-frame how we think about economic growth in much the same way that historical perspectives helped to shape the first generation of endogenous growth theories.
空间经济学
Davis, D. R., & Dingel, J. I. (2019). A spatial knowledge economy. American Economic Review, 109(1), 153-70.
Abstract: Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. The model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities and how variation in these premia emerges from symmetric fundamentals.
最低工资，两篇一起，2个小时
Cengiz, D., Dube, A., Lindner, A., & Zipperer, B. (2019). The effect of minimum wages on low-wage jobs. The Quarterly Journal of Economics, 134(3), 1405-1454.
Abstract: We estimate the effect of minimum wages on low-wage jobs using 138 prominent state-level minimum wage changes between 1979 and 2016 in the United States using a difference-in-differences approach. We first estimate the effect of the minimum wage increase on employment changes by wage bins throughout the hourly wage distribution. We then focus on the bottom part of the wage distribution and compare the number of excess jobs paying at or slightly above the new minimum wage to the missing jobs paying below it to infer the employment effect. We find that the overall number of low-wage jobs remained essentially unchanged over the five years following the increase. At the same time, the direct effect of the minimum wage on average earnings was amplified by modest wage spillovers at the bottom of the wage distribution. Our estimates by detailed demographic groups show that the lack of job loss is not explained by labor-labor substitution at the bottom of the wage distribution. We also find no evidence of disemployment when we consider higher levels of minimum wages. However, we do find some evidence of reduced employment in tradeable sectors. We also show how decomposing the overall employment effect by wage bins allows a transparent way of assessing the plausibility of estimates.
Harasztosi, P., & Lindner, A. (2017). Who Pays for the Minimum Wage? American Economic Review, Forthcoming
Abstract: This paper provides a comprehensive assessment of the margins along which firms responded to a large and persistent minimum wage increase in Hungary. We show that employment elasticities are negative but small even four years after the reform; that around 75 percent of the minimum wage increase was paid by consumers and 25 percent by firm owners; that firms responded to the minimum wage by substituting labor with capital; and that dis-employment effects were greater in industries where passing the wage costs to consumers is more difficult. We estimate a model with monopolistic competition to explain these findings.
Stephan Heblich, Marlon Seror, Hao Xu, & Stephan Yanos Zylberberg (2019). Industrial clusters in the long run: Evidence from Million-Rouble plants in China. Working Paper
Abstract: This paper exploits a short-lived cooperation program between the U.S.S.R. and China, which led to the construction of 156 "Million-Rouble plants" in the 1950s. We isolate exogenous variation in location decisions due to the relative position of allied and enemy airbases and study the long-run impact of these factories on local economic activity. While the "156" program accelerated industrialization in treated counties until the end of the command-economy era, this significant productivity advantage fully eroded in the subsequent period. We explore the nature of local spillovers responsible for this pattern, and provide evidence that treated counties are overspecialized and far less innovative. There is a large concentration of establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries.
Wolfgang Dauth, Sebastian Findeisen, Enrico Moretti, & Jens Suedekum (2018). Matching in Cities. NBER Working Paper.
Abstract: In most countries, average wages tend to be higher in larger cities. In this paper, we focus on the role played by the matching of workers to firms in explaining geographical wage differences. Using rich administrative German data for 1985-2014, we show that wages in large cities are higher not only because large cities attract more high-quality workers, but also because high-quality workers are significantly more likely to be matched to high-quality plants. In particular, we find that assortative matching—measured by the correlation of worker fixed effects and plant fixed effects—is significantly stronger in large cities. The elasticity of assortative matching with respect to population has increased by around 75% in the last 30 years. We estimate that in a hypothetical scenario in which we keep the quality and location of German workers and plants unchanged, and equalize within-city assortative matching geographical wage inequality in Germany would decrease significantly. Overall, assortative matching magnifies wage differences caused by worker sorting and is a key factor in explaining the growth of wage disparities between communities over the last three decades. If high-quality workers and firms are complements in production, moreover, increased assortative matching will increase aggregate earnings. We estimate that the increase in within-city assortative matching observed between 1985 and 2014 increased aggregate labor earnings in Germany by 2.1%, or 31.32 billion euros. We conclude that assortative matching increases earnings inequality across communities, but it also generates important efficiency gains for the German economy as a whole.
Panle Jia Barwick, Myrto Kalouptsidi, & Nahim Bin Zahur (2019). China's Industrial Policy: an Empirical Evaluation. NBER Working Paper.
Abstract: Despite the historic prevalence of industrial policy and its current popularity, few empirical studies directly evaluate its welfare consequences. This paper examines an important industrial policy in China in the 2000s, aiming to propel the country's shipbuilding industry to the largest globally. Using comprehensive data on shipyards worldwide and a dynamic model of firm entry, exit, investment, and production, we find that the scale of the policy was massive and boosted China's domestic investment, entry, and world market share dramatically. On the other hand, it created sizable distortions and led to increased industry fragmentation and idleness. The effectiveness of different policy instruments is mixed: production and investment subsidies can be justified by market share considerations, but entry subsidies are wasteful. Finally, the distortions could have been significantly reduced by implementing counter-cyclical policies and by targeting subsidies towards more productive firms.
Holmes, T. J., McGrattan, E. R., & Prescott, E. C. (2015). Quid Pro Quo: Technology Capital Transfers for Market Access in China. The Review of Economic Studies, 82(3), 1154-1193.
Abstract: By the 1970s, quid pro quo policy, which requires multinational firms to transfer technology in return for market access, had become a common practice in many developing countries. While many countries have subsequently liberalized quid pro quo requirements, China continues to follow the policy. In this article, we incorporate quid pro quo policy into a multicountry dynamic general equilibrium model, using microevidence from Chinese patents to motivate key assumptions about the terms of the technology transfer deals and macroevidence on China's inward foreign direct investment (FDI) to estimate key model parameters. We then use the model to quantify the impact of China's quid pro quo policy and show that it has had a significant impact on global innovation and welfare.
Ramondo, N., Rodríguez-Clare, A., & Saborío-Rodríguez, M. (2016). Trade, Domestic Frictions, and Scale Effects. American Economic Review, 106(10), 3159-3184.
Abstract: Because of scale effects, idea-based growth models imply that larger countries should be much richer than smaller ones. New trade models share the same counterfactual feature. In fact, new trade models exhibit other counterfactual implications associated with scale effects: import shares decrease and relative income levels increase too steeply with country size. We argue that these implications are largely a result of the standard assumption that countries are fully integrated domestically. We depart from this assumption by treating countries as collections of regions that face positive costs to trade among themselves. The resulting model is largely consistent with the data.
Chang-Tai Hsieh, Erik Hurst, Charles I. Jones, & Peter J. Klenow (2019).The Allocation of Talent and U.S. Economic Growth. NBER Working Paper.
Abstract: In 1960, 94 percent of doctors and lawyers were white men. By 2010, the fraction was just 62 percent. Similar changes in other highly-skilled occupations have occurred throughout the U.S. economy during the last fifty years. Given that the innate talent for these professions is not likely to have changed differently across groups, the change in the occupational distribution since 1960 suggests that a substantial pool of innately talented blacks and women in 1960were not pursuing their comparative advantage. We examine the effect on aggregate productivity of the convergence in the occupational distribution between 1960 and 2010 through the prism of a Roy model. Across our various specifications, between one-fifth and two-fifths of growth in aggregate market output per person can be explained by the improved allocation of talent.
Stephan Heblich, Stephen J. Redding, & Daniel M. Sturm (2018). The Making of the Modern Metropolis: Evidence from London. NBER Working Paper.
Abstract: Modern metropolitan areas involve large concentrations of economic activity and the transport of millions of people each day between their residence and workplace. We use the revolution in transport technology from the invention of steam railways, newly-constructed spatially-disaggregated data for London from 1801-1921, and a quantitative urban model to provide evidence on the role of these commuting flows in supporting such concentrations of economic activity. Steam railways dramatically reduced travel times and permitted the first large-scale separation of workplace and residence. We show that our model is able to account for the observed changes in the organization of economic activity, both qualitatively and quantitatively. In counterfactuals, we find that removing the entire railway network reduces the population and the value of land and buildings in Greater London by 20 percent or more, and brings down commuting into the City of London from more than 370,000 to less than 60,000 workers.
Kleinberg, J., Lakkaraju, H., Leskovec, J., Ludwig, J., & Mullainathan, S. (2017). Human Decisions and Machine Predictions*. The Quarterly Journal of Economics, 133(1), 237-293.
Abstract: Can machine learning improve human decision making? Bail decisions provide a good test case. Millions of times each year, judges make jail-or-release decisions that hinge on a prediction of what a defendant would do if released. The concreteness of the prediction task combined with the volume of data available makes this a promising machine-learning application. Yet comparing the algorithm to judges proves complicated. First, the available data are generated by prior judge decisions. We only observe crime outcomes for released defendants, not for those judges detained. This makes it hard to evaluate counterfactual decision rules based on algorithmic predictions. Second, judges may have a broader set of preferences than the variable the algorithm predicts; for instance, judges may care specifically about violent crimes or about racial inequities. We deal with these problems using different econometric strategies, such as quasi-random assignment of cases to judges. Even accounting for these concerns, our results suggest potentially large welfare gains: one policy simulation shows crime reductions up to 24.7% with no change in jailing rates, or jailing rate reductions up to 41.9% with no increase in crime rates. Moreover, all categories of crime, including violent crimes, show reductions; these gains can be achieved while simultaneously reducing racial disparities. These results suggest that while machine learning can be valuable, realizing this value requires integrating these tools into an economic framework: being clear about the link between predictions and decisions; specifying the scope of payoff functions; and constructing unbiased decision counterfactuals.
Cemal Eren Arbatlı, Quamrul H. Ashraf, Oded Galor, & Marc Klemp (2019). Diversity and Conflict. Econometrica Forthcoming.
Abstract: This research advances the hypothesis and establishes empirically that interpersonal population diversity has contributed significantly to the emergence, prevalence, recurrence, and severity of intrasocietal conflicts. Exploiting an exogenous source of variations in population diversity across nations and ethnic groups, it demonstrates that population diversity, as determined predominantly during the exodus of humans from Africa tens of thousands of years ago, has contributed significantly to the risk and intensity of historical and contemporary civil conflicts. The findings arguably reflect the adverse effect of population diversity on interpersonal trust, its contribution to divergence in preferences for public goods and redistributive policies, and its impact on the degree of fractionalization and polarization across ethnic, linguistic, and religious groups.
David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, & John Van Reenen (2019). The Fall of the Labor Share and the Rise of Superstar Firms. NBER Working Papers.
Abstract: The fall of labor's share of GDP in the United States and many other countries in recent decades is well documented but its causes remain uncertain. Existing empirical assessments typically rely on industry or macro data, obscuring heterogeneity among firms. In this paper, we analyze micro panel data from the U.S. Economic Census since 1982 and document empirical patterns to assess a new interpretation of the fall in the labor share based on the rise of "superstar firms." If globalization or technological changes push sales towards the most productive firms in each industry, product market concentration will rise as industries become increasingly dominated by superstar firms. Since these firms have high markups and a low labor share of value-added and sales, a reallocation of output toward superstar firms depresses the aggregate labor share. We empirically assess seven predictions of this hypothesis: (i) industry sales will increasingly concentrate in a small number of firms; (ii) industries where concentration rises most will have the largest declines in the labor share; (iii) the fall in the labor share will be driven largely by reallocation rather than a fall in the unweighted mean labor share across all firms; (iv) the between-firm reallocation component of the fall in the labor share will be greatest in the sectors with the largest increases in market concentration; (v) the industries that are becoming more concentrated will exhibit faster growth of productivity; (vi) the aggregate markup will rise more than the typical firm's markup; and (vii) these patterns should be observed not only in U.S. firms, but also internationally. We find support for all of these predictions.
David Autor, David Dorn, Gordon Hanson, & Kaveh Majlesi (2017). Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure. NBER Working Papers.
Abstract: Has rising import competition contributed to the polarization of U.S. politics? Analyzing outcomes from the 2002 and 2010 congressional elections and the 2000, 2008, and 2016 presidential elections, we detect an ideological realignment that is centered in trade-exposed local labor markets and that commences prior to the divisive 2016 U.S. presidential election. Exploiting the exogenous component of rising trade with China and classifying legislator ideologies by congressional voting records, we find strong evidence that congressional districts exposed to larger increases in import penetration disproportionately removed moderate representatives from office in the 2000s. Trade-exposed districts with an initial majority white population or initially in Republican hands became substantially more likely to elect a conservative Republican, while trade-exposed districts with an initial majority-minority population or initially in Democratic hands also become more likely to elect a liberal Democrat. In presidential elections, counties with greater trade exposure shifted towards the Republican candidate. We interpret these results as supporting a political economy literature that connects adverse economic conditions to support for nativist or extreme politicians.
Kline, P., Petkova, N., Williams, H., & Zidar, O. (2019). Who Profits from Patents? Rent-Sharing at Innovative Firms*. The Quarterly Journal of Economics, 134(3), 1343-1404.
Abstract: This article analyzes how patent-induced shocks to labor productivity propagate into worker compensation using a new linkage of U.S. patent applications to U.S. business and worker tax records. We infer the causal effects of patent allowances by comparing firms whose patent applications were initially allowed to those whose patent applications were initially rejected. To identify patents that are ex ante valuable, we extrapolate the excess stock return estimates of Kogan et al. (2017) to the full set of accepted and rejected patent applications based on predetermined firm and patent application characteristics. An initial allowance of an ex ante valuable patent generates substantial increases in firm productivity and worker compensation. By contrast, initial allowances of lower ex ante value patents yield no detectable effects on firm outcomes. Patent allowances lead firms to increase employment, but entry wages and workforce composition are insensitive to patent decisions. On average, workers capture roughly 30 cents of every dollar of patent-induced surplus in higher earnings. This share is roughly twice as high among workers present since the year of application. These earnings effects are concentrated among men and workers in the top half of the earnings distribution and are paired with corresponding improvements in worker retention among these groups. We interpret these earnings responses as reflecting the capture of economic rents by senior workers, who are most costly for innovative firms to replace.
Card, D., Cardoso, A. R., Heining, J., & Kline, P. (2017). Firms and Labor Market Inequality: Evidence and Some Theory. Journal of Labor Economics, 36(S1), S13-S70.
Abstract: We synthesize two related literatures on firm-level drivers of wage inequality. Studies of rent sharing that use matched worker-firm data find elasticities of wages with respect to value added per worker in the range of 0.05–0.15. Studies of wage determination with worker and firm fixed effects typically find that firm-specific premiums explain 20% of overall wage variation. To interpret these findings, we develop a model of wage setting in which workers have idiosyncratic tastes for different workplaces. Simple versions of this model can rationalize standard fixed effects specifications and also match the typical rent-sharing elasticities in the literature.
Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, & Danny Yagan (2019). Income Segregation and Intergenerational Mobility Across Colleges in the United States. Working Paper.
Abstract: We construct publicly available statistics on parents' incomes and students' earnings outcomes for each college in the U.S. using de-identfied data from tax records. These statistics reveal that the degree of parental income segregation across colleges is very high, similar to that across neighborhoods where children grow up. Differences in post-college earnings between children from low- and high-income families are much smaller among students who attend the same college than across colleges. Colleges with the best earnings outcomes predominantly enroll students from high-income families, although a few mid-tier public colleges have both low parent income levels and high student earnings. Linking these income data to SAT and ACT scores, we analyze how changes in the college admissions process would affect segregation and intergenerational mobility. Equalizing application, admission, and matriculation rates across parental income groups conditional on test scores would increase the fraction of middle-class students at the most selective colleges substantially but leave the fraction of low-income students unchanged - suggesting that there is a "missing middle" at the most selective colleges. Income segregation across colleges would be fully eliminated by a "need-affirmative" policy that gives lower-income applicants a boost in test scores similar to that implicitly given to legacy students at elite private colleges. Assuming that differences in students' earnings conditional on test scores and parent income reflect colleges' causal effects - an assumption consistent with prior estimates - such a policy would reduce intergenerational income persistence among college students by one-third. We conclude that feasible changes in the allocation of students to colleges could substantially reduce segregation and increase intergenerational mobility, even without changes to colleges' educational programs.
Matthew Smith, Danny Yagan, Owen M. Zidar, & Eric Zwick (2019). Capitalists in the Twenty-First Century. NBER Working Papers.
Abstract: How important is human capital at the top of the U.S. income distribution? A primary source of top income is private “pass-through” business profit, which can include entrepreneurial labor income for tax reasons. This paper asks whether top pass-through profit mostly reflects human capital, defined as all inalienable factors embodied in business owners, rather than financial capital. Tax data linking 11 million firms to their owners show that top pass-through profit accrues to working-age owners of closely-held, mid-market firms in skill-intensive industries. Pass-through profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of pass-through profit as human capital income, we find that the typical top earner derives most of her income from human capital, not financial capital. Growth in pass-through profit is explained by both rising productivity and a rising share of value added accruing to owners.
Esteban Rossi-Hansberg, Pierre-Daniel Sarte, & Nicholas Trachter (2019). Diverging Trends in National and Local Concentration. NBER Working Papers.
Abstract: Using U.S. NETS data, we present evidence that the positive trend observed in national product market concentration between 1990 and 2014 becomes a negative trend when we focus on measures of local concentration. We document diverging trends for several geographic definitions of local markets. SIC 8 industries with diverging trends are pervasive across sectors. In these industries, top firms have contributed to the amplification of both trends. When a top firm opens a plant, local concentration declines and remains lower for at least 7 years. Our findings, therefore, reconcile the increasing national role of large firms with falling local concentration, and a likely more competitive local environment.
Chang-Tai Hsieh, & Esteban Rossi-Hansberg (2019). The Industrial Revolution in Services. NBER Working Papers.
Abstract: The rise in national industry concentration in the US between 1977 and 2013 is driven by a new industrial revolution in three broad non-traded sectors: services, retail, and wholesale. Sectors where national concentration is rising have increased their share of employment, and the expansion is entirely driven by the number of local markets served by firms. Firm employment per market has either increased slightly at the MSA level, or decreased substantially at the county or establishment levels. In industries with increasing concentration, the expansion into more markets is more pronounced for the top 10% firms, but is present for the bottom 90% as well. These trends have not been accompanied by economy-wide concentration. Top U.S. firms are increasingly specialized in sectors with rising industry concentration, but their aggregate employment share has remained roughly stable. We argue that these facts are consistent with the availability of a new set of fixed-cost technologies that enable adopters to produce at lower marginal costs in all markets. We present a simple model of firm size and market entry to describe the menu of new technologies and trace its implications.
