employer market power in silicon valley
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. Using difference-in-differences designs, I estimate that each agreement cost affected workers 2.6 to 4.0 percent of annual salary. Stock bonuses and worker mobility were also negatively affected.
Why do we Procrastinate? Present bias and optimism
If agents have optimistic beliefs about future time shocks, they will exhibit time- inconsistent choices over effort allocations that are observationally equivalent to those driven by β-δ preferences. Theory predicts these mechanisms can be distinguished using information on past time-inconsistent choices: optimistic agents will change al- locations but may not increase commitment demand, while β-δ agents will not change allocations but should increase commitment demand. We test these predictions experimentally. Information makes subjects less likely to be dynamically inconsistent in the future, consistent with optimism. It also increases subjects’ demand for commitment, consistent with present bias. Among time inconsistent subjects, roughly half are driven by preferences, one quarter by beliefs, and the last quarter by both preferences and beliefs. These results illustrate the importance of both beliefs and preferences to understanding dynamically inconsistent choices.
climate change and Flood Risk: Evidence from New York Real Estate
Applying a hedonic 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 FEMA floodplain maps. 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 resorting. 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. Resulting estimates suggest that new maps (an information signal) induced substantially larger belief changes than insurance reform (a price signal).
Press: Pacific Standard