Emiliano Huet-Vaughn

RESEARCH CV TEACHING

RESEARCH

Minimum Wage Employment Effects and Labor Market Concentration [Review of Economic Studies; formerly NBER Working Paper No. 26101] with Jose Azar, Ioana Marinescu, Bledi Taska, Till von Wachter 

Abstract: This paper shows that more highly concentrated labor markets experience more positive employment effects of the minimum wage. In the most concentrated labor markets, employment rises following a minimum wage increase. The paper establishes its main findings studying the effects of local minimum wage increases on a key low-wage retail sector, and using data on labor market concentration that covers the entirety of the United States with fine spatial variation at the occupation level. The results carry over to the fast-food sector and the entire low-wage labor market, and are robust to using proxies of labor market concentration available for a broader range of industries, such as the number of establishments and population density. A model of oligopsonistic competition can explain these effects: there is more room to increase wages in high concentration areas where wages tend to be further below marginal productivity. These findings provide evidence supporting monopsonistic wage setting as an explanation for the near-zero minimum wage employment effect documented in prior work.

Coverage: Forbes, Bloomberg,  Financial Times,  Wall Street Journal,  Economic Report of the President, David Card's Nobel Committee write up

A Kinky Consistency: Experimental Evidence of Behavior under Linear and Non-Linear Budget Constraints [American Economic Journal: Microeconomics]  with Ethan McClure and Juan Carlos Suarez Serrato

Abstract: We test a central assumption of economic analysis: that individuals display stable preferences across settings. Motivated by the fact that individuals face non-linear budget constraints in myriad situations, we use a laboratory experiment to characterize how revealed preferences are affected by changes in the complexity of the budget set environment. We find that choices under kinked (piece-wise linear and convex) budgets exhibit a similar degree of rationality as choices under linear budgets—with very high levels of internally consistent behavior in each setting. However, for about half the subjects, individual choices across settings are inconsistent with the maximization of a stable SARP-satisfying preference. Relative to those who act consistently across settings, subjects displaying such arbitrary consistency exhibit large and significant changes in utility parameters, risk premiums, and price elasticities across settings. Finally, we show that subjects with initially more sophisticated decision rules are most susceptible to changes in complexity.

Choice Architecture to Improve Financial Decision Making [Review of Economics and Statistics, 2021] with Jeff Carpenter, Peter Matthews, Andrea Robbett, Dustin Beckett, and Julian Jamison (Ungated)

Abstract: We exploit the principles of choice architecture to evaluate interventions in the market for reloadable prepaid cards. Participants are randomized into three card menu presentation treatments - the market status quo, a regulation-inspired reform, or an enhanced reform designed to minimize attribute overload - and offered choices based on prior structural estimation of individual preferences. Consumers routinely choose incorrectly under the status quo, with tentative evidence the regulation-inspired presentation may increase best card choice, and clear evidence the enhanced reform reduces worst card choice. Welfare analysis suggests the regulation-inspired presentation offers modest gains, while minimizing attribute overload generates substantial benefits.

A Taste for Taxes: Minimizing Distortions Using Political Preferences  [Journal of Public Economics, 2019]  with Andrea Robbett and  Matthew Spitzer 

Abstract: We conduct an experiment with online workers to assess whether the distortionary effect of a tax is sensitive to the ideological match between taxpayer and tax expenditures. We find that, among self-identified political moderates, the labor supply elasticity with respect to the net of tax wage is significantly smaller when individuals pay taxes to a favored government agency as compared to an unfavored one. While the tax has a significant distortionary effect in the latter case, with a point estimate for the labor supply elasticity of approximately 0.75, the elasticity point estimate is virtually zero when taxes go to a favored agency. There is also an increase in total output for the matched population. There is no evidence of similar effects for those on the ends of the ideological spectrum.

Stimulating the Vote: ARRA Road Spending and Vote Share  [American Economic Journal: Economic Policy, 2019]

Abstract: This paper estimates the impact of public good spending on voting behavior in the United States, using a quasi-experimental design and the distribution of American Recovery and Reinvestment Act (ARRA) road improvement projects across the state of New Jersey. I find an approximate 1.5 percentage point increase in the presidential vote share for the Democratic party - largely responsible for ARRA’s passage and widely perceived to be the more “tax-and-spend” friendly party - in areas close to highway and bridge improvement expenditures. I find no evidence of an effect on turnout. Results are consistent with two alternative mechanisms: one, a salience mechanism whereby spending and associated “funded-by” signage affect voter underlying political preferences; the other, a possible political multiplier effect through which stimulus spending improves local economic outcomes, making voters more willing to support incumbents. I present evidence at odds with the later explanation. 

Real Effort Tasks  [Handbook of Research Methods and Applications in Experimental Economics, 2019]  with Jeff Carpenter

Abstract: Many experimenters prefer to use actual (‘real effort’) tasks instead of hypothetical choices with induced value. It is an open question whether the two methods have distinct behavioral effects. Moreover, a large variety of real effort tasks has been used and little is known about how they compare. This chapter provides a taxonomy of available real effort tasks, discusses methods of implementation and compares the results.

Gender Differences in Interpersonal and Intrapersonal Competitive Behavior [Journal of Behavioral and Experimental Economics, 2018; formerly IZA Discussion Paper No. 10626] with Jeff Carpenter and Rachel Frank

Abstract: Gender differences in competitive behavior have been well documented by economists and other social scientists; however, the bulk of the research addresses competition with others and excludes other economically relevant competition that may contribute to the gender pay gap. In this paper, we ask: How does gender affect how individuals react to competition against themselves? In a laboratory experiment in which some subjects compete against others and some compete against themselves, we find women select into intrapersonal competition at significantly higher rates than interpersonal competition, the first such finding. We find grit to be a poor predictor of interpersonal competition selection, but find familial effects such as parent’s education and number of brothers to be correlated with competition selection.    

Coverage: New York Magazine

Do Social Comparisons Motivate Workers? A Field Experiment on Relative Earnings, Labor Supply and the Inhibitory Effect of Pay Inequality [Revise and Resubmit at Experimental Economics]

Abstract: In a field experiment where presentation of co-worker earnings and the shape of the earnings distribution are exogenously controlled, I test whether relative earnings information itself influences effective labor supply. Piece-rate workers who are shown their earnings position in comparison to their peers provide significantly more labor effort than those without such information, demonstrating a new peer effects result with absent and anonymous peers. However, the productivity boost from peer earnings disclosure disappears when inequalities in the underlying piece rates exist. Additionally, women and men respond differently upon learning of high or low relative standing, with only the former ever motivating significant productivity gains in men. Utilizing randomized piece rates, I also estimate the labor supply elasticity with respect to the net of tax wage, yielding one of the first field experimental estimates; I find the elasticity unchanged by the relative standing information. These results suggest social comparisons can be used to grow the tax base and firm output - but not to affect optimal labor income tax rates - and that underlying inequalities in compensation schemes may inhibit the ability of social comparisons to incentivize work.   

(An early version of this paper circulated in 2013 as Striving for Status: A Field Experiment on Relative Earnings and Labor Supply)

Coverage: The New York Times,  The Wall Street Journal,  CNN,  LA Times,  The Atlantic,  The Independent,  Harvard Business Review, Marketplace, Ted: Ideas Worth Spreading (Ted Talk), Business Insider, Brad DeLong at The Equitablog for Washington Center for Equitable Growth

NEW Minimum Wages and Voting: Assessing the Political Returns to Redistribution Outside the Tax System [IZA Discussion Paper No. 16416] 

Abstract: The positive political returns to providing cash transfers have been well documented. However, redistribution through the tax and transfer system, while direct, is not the only means by which governments seek to change the income distribution: regulation of private market transactions may have a similar, if indirect, effect, implicitly redistributing via so-called "pre-distribution" policies. Wage floors, in particular, are implemented with the explicit goal of redistributing pre-tax firm income to low-wage workers. In the United States, polls consistently indicate minimum wage increases are broadly popular, and, also clearly associated with the Democratic party. This paper provides the first test of whether large minimum wage increases actually yield electoral gains for Democrats. For both federal and state races, I find no evidence that this is generally true using an event-study design and sub-national variation in minimum wages from the early 1990s to recent years. A null result is further confirmed when using a beneficiary-level political sentiment measure and difference-in-difference design. Various explanations for the finding are explored and dispelled while newly collected survey evidence supports a salience, or inattention, mechanism. Specifically, voters are found to attend much less to a minimum wage increase than to an equivalently-valued direct cash transfer from the government. This suggests putting money in people's hands may not be enough to receive political credit and that the directness of a transfer may itself matter. 

Coverage: IZA Newsroom

NEW The Asymmetric Effect of Wage Floors:  A Natural Experiment with a Rising and Falling Minimum Wage with Jon Piqueras

Abstract: Exploiting a unique natural experiment, we show the asymmetric effects of a large increase and an equivalent subsequent decrease to a binding minimum wage. Wages in a leading low-wage industry increase as the minimum wage rises, but do not fall when it is lowered. This boost for low-wage workers' earnings is apparently permanent five years after the policy is revoked, providing novel evidence of hysteresis in wage setting from temporary labor policy. In the first year post repeal this is consistent with downward nominal wage rigidity. But, the elevated earnings persist even in high inflation times, contrary to the prediction from existing work that real wage reductions under high inflation should erode the nominal wage gap relative to unaffected firms. Our findings thus challenge the conventional view that inflation ``greases the wheels'' of the labor market in the face of downward nominal wage rigidity, and, demonstrate the value of even transitory labor market policy in achieving permanent gains for workers (play it while you got it). 

Modern US Workers' Compensation and Work-Related Injury: No Evidence of Moral Hazard [NBER Working Paper No. 28187] with Youssef Benzarti

Abstract: We exploit recent decades of US state-level reforms to the generosity of workers' compensation programs to estimate the associated moral hazard, utilizing an event-study design and analyzing 9 separate reform categories. The reforms vary - some affecting benefit size, some the probability of receiving benefits; some paid in cash, some in kind; some constituting increases, some decreases, in generosity. Across the board, we find no evidence of resulting changes in workplace injuries, and, generally, can rule out even moderate moral hazard responses for severe and less severe injuries, suggesting a key moral hazard cost of workers' compensation benefits is negligible.

Live Streaming Pollution: A New Form of Emissions Disclosure and a Catalyst for Citizen Engagement? [NBER Working Paper No. 24664] with Nicholas Z. Muller and Yen-Chia Hsu

Abstract: Most environmental policy assumes the form of standards and enforcement. Scarce public budgets motivate the use of disclosure laws. This study explores a new form of pollution disclosure: real-time visual evidence of emissions provided on a free, public website. The paper tests whether the disclosure of visual evidence of emissions affects the nature and frequency of phone calls to the local air quality regulator. First, we test whether the presence of the camera affects the frequency of calls to the local air quality regulator about the facility monitored by the camera. Second, we test the relationship between the camera being active and the number of complaints about facilities other than the plant recorded by the camera. Our empirical results suggest that the camera did not affect the frequency of calls to the regulator about the monitored facility. However, the count of complaints pertaining to another prominent industrial polluter in the area, steel manufacturing plants, is positively associated with the camera being active. We propose two behavioral reasons for this finding: the prior knowledge hypothesis and affect heuristics. This study argues that visual evidence is a feasible approach to environmental oversight even during periods with diminished regulatory capacity.

Coverage: Stigler Center at U Chicago    

Quiet Riot: Estimating A Causal Effect of Protest Violence  [This Version: May 15, 2020; original version: Sept 2013]

Abstract: Estimating the effect of violent forms of political protest on protest success is complicated by endogeneity and omitted variable bias. To overcome this, I utilize temperature, precipitation, and school holiday instruments in conjunction with rich French protest data. I find a significant and negative relationship between property destruction associated with protests and the chance of near-term success in obtaining policy concessions. IV estimates are larger than OLS estimates and robust to a variety of alternative specifications. Such findings are predicted by several posited endogeneity channels, and,  suggest that political violence may not, in fact, pay off.

Coverage:  The Washington Post,  New Republic,  Chris Blattman

Additional Work in Progress (Slides Available Upon Request)

The Price of Moral Values with Minh Pham, Josh Tasoff and Eva Vivalt 

Ideology and Military Benefit Utilization with Youssef Benzarti