The Blair Economics Lab (BE-Lab) is an Economics research group based at Clemson University in the John E. Walker Department of Economics. Our research in applied micro-theory focuses on labor market discrimination, residential segregation, and supply-side questions in higher education,
Dr. Peter Q. Blair (Assistant Professor of Economics, Clemson University)
Shubhashitra Basu, Bobby Chung, Roksana Ghanbariamin, Benjamin Posmanick, Kenneth Whaley, Shirong Zhao.
In addition to researchers at Clemson University, we work collaboratively with faculty and students from the Wharton School, Duke University, the University of Chicago and Cornell University.
Projects on Supply-side questions in Higher Education
Projects on the Role of Property Rights on Economic Development
Abstract: Close to 30% of U.S. workers require occupational licenses in order to work legally. We show that occupational licensing closes the racial wage gap between African-American men and Caucasian men, and reduces the gender wage gap by 42%. For African-American men, occupational licensing signals the absence of a felony record, while women benefit from the human capital that is bundled with occupational licenses. Using a two-sector general equilibrium model of firms and workers, where licensing has both a signaling and a human capital component, we provided conditions for when the socially efficient level of licensing is non-zero.
Abstract: The skills premium and college enrollment has increased substantially over time. Elite colleges, however, have not increased their supply, instead choosing to reduce their acceptance rates. Straightforward explanations of supply constraints can't explain this behavior. We propose a model in which colleges compete on relative selectivity, a key variable in media citations and official school rankings. A "prestige externality" leads to a Pareto inferior equilibrium where schools and students are worse off. Increased demand reduces the acceptance rate if the concern for relative prestige is above a critical value, consistent with elite schools; the acceptance rate increases with demand if the concern for relative prestige is below this critical value, consistent with less elite schools. We take the model to data using recent admissions statistics for Harvard, Yale, Princeton and Stanford (1990-2015), the four schools that routinely rank as the nation's best. Our model is able to out-of-sample closely match declines in admission rates (which fell by almost two thirds over that period) and sharp tuition increases (which increased by over three times). We calculate welfare losses relative to an equilibrium where schools could coordinate on their admissions, which is currently illegal, while still maintaining their substantial market power. Potential annual social welfare gains from coordination in 2015 are equal to $120M (Princeton), $191M (Harvard), $195M (Yale) and $296M (Stanford). These values are equal to about half of total tuition at these schools evaluated at the school's sticker price. Moreover, these values are twice as large as the dead-weight loss from moving from their (coordinated) position with market power relative to competitive quantities, which is the standard dead-weight loss measured in the industrial organization literature.