Emiliano Huet-Vaughn

RESEARCH CV TEACHING

RESEARCH

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

Abstract: Why is the employment effect of the minimum wage frequently found to be close to zero? Theory tells us that when wages are below marginal productivity, as with monopsony, employers are able to increase wages without laying off workers, but systematic evidence directly supporting this explanation is lacking. In this paper, we provide empirical support for the monopsony explanation by studying 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. We find that more concentrated labor markets - where wages are more likely to be below marginal productivity - experience significantly more positive employment effects from the minimum wage. While increases in the minimum wage are found to significantly decrease employment of workers in low concentration markets, minimum wage-induced employment changes become less negative as labor concentration increases, and are even estimated to be positive in the most highly concentrated markets. Our findings provide direct empirical evidence supporting the monopsony model as an explanation for the near-zero minimum wage employment effect documented in prior work. They suggest the aggregate minimum wage employment effects estimated thus far in the literature may mask heterogeneity across different levels of labor market concentration.

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 [conditional acceptance at  American Economic Journal: Microeconomics]  with Ethan McClure and Juan Carlos Suarez Serrato (updated manuscript posted soon)

Abstract: Individuals face non-linear budget constraints in myriad situations. We test a fundamental assumption of economic analysis in such settings: that individuals display stable preferences when facing linear and non-linear incentives. 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 not consistent with a unified decision rule. 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

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    

Do Social Comparisons Motivate Workers? A Field Experiment on Relative Earnings, Labor Supply and the Inhibitory Effect of Pay Inequality

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

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

Work in Progress (Slides Available Upon Request)

Ideology and Military Benefit Utilization with Youssef Benzarti

Abstract: We study the role of political ideology and mass media on the acquisition of government benefits. Making use of the early roll out of Fox News in local cable markets, shown to be largely idiosyncratic conditional on a set of controls by DellaVigna and Kaplan (2007), we provide evidence that the network's "support our troops messaging" may have increased service members' claimed entitlements. Specifically, we find a significant and positive effect of the introduction of Fox News on utilized military medical insurance benefits. Such results are consistent with a de-stigmatizaiton of welfare programs for those deemed to be deserving in a media context where government spending may be otherwise stigmatized. 

Additional Ongoing Work

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