Working papers:
Is the Customer Always Right? Customer Taste-Based Discrimination and Competition Revise & Resubmit The Review of Economic Studies
Awarded finalist for the MinE Best Paper Award
Does competition always mitigate the impact of discrimination on racial wage gaps? This paper examines the impact of product market competition on customer-driven taste-based discrimination in a service economy characterized by homophily. I develop a novel equilibrium model of both product and labor markets in which heightened product market competition tends to exacerbate labor market discrimination in customer-facing occupations. Intensified competition compels firms to reduce prices while also prioritizing the preferences of wealthier demographic groups when the service product is a normal good. This results in widening wage and employment gaps between the privileged demographic groups and others in the service sector. I validate the predictions of the model in the context of intensified competition in the US banking sector, triggered by bank deregulation. I find that wage and employment gaps between Black and White workers in the banking sector widened post-deregulation precisely in client-facing occupations and in states with higher levels of racial animosity.
I study how insurers price and ration coverage in unregulated selection markets. Using proprietary records from a large auto insurer together with competitor quotes, I document a sharp asymmetry: premiums respond modestly to expected costs, while denials are frequent and cost sensitive. I develop a model with imperfect competition and administrative costs in which demand rises less than proportionally with risk, compressing markups as costs increase, shifting adjustment to the extensive margin. Netting out demand-driven markups restores near-unit cost pass-through into premiums, while denials reflect fixed costs and overweighting of noisy loss signals. This rationing disproportionately harms high-cost, small clients.
Insurance for durable goods is typically modeled as a purely financial transfer that smooths consumption following a loss. This paper shows that this framework breaks down when post-loss compensation is based on secondary-market valuation in the presence of asymmetric information. I develop a theory in which replacement of a lost asset occurs in an adversely selected resale market, so that full monetary indemnification fails to restore the insured asset. This generates a lemons gap: an uncompensated quality loss borne by insured households. The lemons gap raises willingness to pay to lower deductibles, rationalizing over-insurance of possessions relative to financially equivalent income risks. As adverse selection in resale markets attenuates over the asset life cycle, the lemons gap declines with age, coverage selection becomes increasingly adverse, and moral-hazard incentives weaken. In addition, imperfect replacement distorts real usage decisions, generating misallocation across assets and potentially increasing exposure to loss risk.
Papers in progress:
Origins of Market Power: A Unified Model of Product and Labor Market Competition
This paper develops a unified model of competition in product and labor markets. The central result is that the effect on wages depends on the source of product-market competition. When entry barriers fall, both consumers and workers benefit as markups and markdowns decline. By contrast, when technology reduces consumer transaction costs, markups fall but markdowns rise. Firms exit, competition for labor weakens, and surplus shifts from workers to consumers. I test these predictions using U.S. banking deregulations that lowered geographic barriers and local protectionism. Combining branch balance-sheet data with worker-level employment and earnings, I show that deregulation reduced the number of banks, increased concentration, lowered employment, and raised markdowns for bank-specific occupations. The evidence is consistent with transaction-cost reductions as the driving force.
Railway to Hell: The Impact of Rail Transportation on the Nazi “Final Solution”
Economic theory highlights the central role of transport costs: distance to markets is a major barrier to exchange, and one of the most effective impediments to trade. This paper asks whether distance similarly acted as a barrier in the implementation of mass murder during the Holocaust. I develop a simple framework to conceptualize, identify, and empirically evaluate the causal impact of railway proximity and transport facilities on Jewish mortality following the Nazis’ “Final Solution.” Drawing on microdata from more than 300 Jewish communities across six European countries—covering approximately 1.5 million victims— matched with data on the 1940s European railway network. Railway proximity significantly increased mortality: distance and station access account for about one-third of cross-community variation in survival.