The falling labor share of income in the US has renewed interest in employer market power. I examine an important case of such power: no-poach agreements through which technology companies agreed not to compete for each other's workers. Exploiting the plausibly exogenous timing of a Department of Justice investigation, I estimate the effects of these agreements using double- and triple-difference designs. Data from Glassdoor.com permit the inclusion of rich employer- and job-level controls. Estimates indicate each agreement cost affected workers 2.6 to 4.0 percent of annual salary. Stock bonuses and worker mobility were also negatively affected.
(w/Zachary Breig & Jeffrey Shrader) A large body of research has shown that procrastination can have significant adverse effects on individuals, including lower savings and poorer health. Such procrastination is typically modeled as the result of present bias. In this paper we study an alternative: excessively optimistic beliefs about future demands on an individual's time. Our experimental results refute the hypothesis that present bias is the sole source of dynamic inconsistency, but they are consistent with optimism. These findings offer an explanation for low takeup of commitment and suggest that personalized information on past choices can mitigate procrastination.
(w/Jamie Mullins & Alison Hill) Applying a difference-in-differences framework to a census of residential property transactions in New York City 2003-2017, we estimate the price effects of three flood risk signals: 1) the Biggert-Waters Flood Insurance Reform Act, which increased premiums; 2) Hurricane Sandy; and 3) new floodplain maps reflecting three decades of climate change. Estimates are negative for all three signals and some are large: properties included in the new floodplain after escaping flooding by Sandy experienced 18 percent price reductions. We investigate possible mechanisms, including selection of properties into the market and residential sorting. Finding no evidence for these, we develop a parsimonious theoretical model to study changes in flood beliefs. The model allows decomposition of our reduced-form estimates into the effects of insurance premium changes and belief updating. Results suggest that the new maps induced substantially larger belief changes than insurance reform.
Press: Pacific Standard
ACCEPTED, FORTHCOMING & PUBLISHED
Environmental regulations may cause firms to re-optimize over pollution inputs. By regulating air emissions in particular counties, the Clean Air Act (CAA) gives firms incentives to substitute: 1) toward polluting other media, like waterways; and 2) toward pollution from plants in other counties. I test these hypotheses using the EPA Toxic Release Inventory (TRI). Regulated plants increase their ratio of water to air emissions by 177 percent (102 log points) and their level of water emissions by 105 percent (72 log points). Regulation of an average plant increases air emissions at unregulated plants within the same firm by 11 percent. (Accepted, The Review of Economics and Statistics)
(w/Jeffrey Shrader) We investigate how the single largest use of time—sleep—affects labor productivity. Motivated by a theoretical model, we provide empirical evidence that sleep is complementary to work in the short run and complementary to home production for non-employed individuals in both the short and long run. Using time use diaries from the United States, we show that later sunset time reduces worker sleep and earnings. After investigating these relationships and ruling out alternative hypotheses, we implement an instrumental variables specification that provides the first causal estimates of the impact of sleep on earnings. A one-hour increase in location-average weekly sleep increases earnings by 1.1% in the short run and 5% in the long run. (The Review of Economics and Statistics)
Press: WSJ | Huffington Post | Freakonomics | Marketplace | The World Bank | Australian Broadcasting Corporation | LA Times | NY Magazine | Marginal Revolution | Washington Post | Daily Mail | Guardian
(w/Prashant Bharadwaj, Joshua Graff Zivin & Christopher Neilson) This paper examines the impact of fetal exposure to air pollution on 4th grade test scores in Santiago, Chile. We rely on comparisons across siblings which address concerns about locational sorting (for non-movers) and all other time-invariant family characteristics that can lead to endogenous exposure to poor environmental quality. We also exploit data on air quality alerts to help address concerns related to short-run time-varying avoidance behavior, which has been shown to be important in a number of other contexts. We find a strong negative effect from fetal exposure to carbon monoxide (CO) and correlated pollutants (like PM10) on math and language skills measured in 4th grade. These effects are economically significant and our back of the envelope calculations suggest that the 50% reduction in CO in Santiago between 1990 and 2005 increased lifetime earnings by approximately 100 million USD per birth cohort. (Journal of the Association of Environmental and Resource Economists)
(w/Maria Carnovale) Exploiting the natural experiment created by an unanticipated court injunction, we evaluate driver responses to road pricing. We find evidence of intertemporal substitution toward unpriced times and spatial substitution toward unpriced roads. The effect on traffic varies with public transit availability. Net of these responses, Milan's pricing policy reduces air pollution substantially, generating large welfare gains. In addition, we use long-run policy changes to estimate price elasticities. (Journal of Urban Economics)