Working Papers

Land Market Frictions in Developing Countries: Evidence from Manufacturing Firms in India

Abstract: This paper examines how land market frictions can hinder the growth of manufacturing firms in developing economies. Land market frictions are the result of increased land fragmentation, poor land records, and restrictive land use policies. Using manufacturing census from India with unique land data, I document that in regions with smaller land parcel size, firms acquire many small parcels slowly over time, expand building with 4% lower probability, and are 22% smaller in size. I build a dynamic structural model that flexibly captures firm land adjustment costs which vary with the size of adjustment and region. I find that land frictions reduce lifetime producer profits by 6.5%. In some regions, firms pay 119% in additional land aggregation costs over and above the dollar value of land. My results are also consistent with the hypothesis that government-affiliated firms face lower land frictions. I find that private firms pay three times more for land aggregation than government-affiliated firms. I use the model to analyze the effects of a proposed government land-pooling policy on producer profits, firm growth, and land misallocation; and to quantify the expected losses to firms from the 2015 eminent domain restrictions.

Heller-Hurwicz Institute Article [SSRN article]

Long Shadow of Racial Discrimination History: Evidence from Housing Covenants, with William Speagle and Kevin Ehrman-Solberg

Abstract: Racial covenants were clauses in property deeds that prohibited the sale or renting of a property to specific religious and ethnic minorities. This paper studies the effect of racially-restrictive covenants, prevalent during the early-to-mid 20th century, on present-day socioeconomic outcomes such as house prices and racial segregation. Using a newly created geographic data on over 120,000 historical property deeds with information on racial covenant use from Hennepin County, Minnesota, we exploit the unanticipated 1948 Supreme Court ruling that made racially-restrictive covenants unenforceable. We employ a regression discontinuity around the ruling to document the causal and time-persistent effects of racial covenants on present-day socioeconomic geography of Minneapolis and its suburbs. In particular, we document that houses that were covenanted have on average 7% higher present-day house values compared to properties which were not covenanted. We also find a 1% increase in covenanted houses in a census blocks reduces Black residents by 14% and reduces Black home ownership by 19%.

Mapping Prejudice Project PBS Documentary Philadelphia Inquirer [SSRN article]

Work in Progress

School District Wage Structure and Teacher Mobility: Assessing Teacher Preferences from Inter-School Mobility in Minnesota, with Elton Mykerezi, Mariana Laverde and Aaron Sojourner

Abstract: Teacher salaries are set at the school-district level. Thus, within a district, a teacher chooses a school largely based on non-monetary characteristics. This paper finds that effective teachers, over their careers, move away from schools with larger shares of students of color and poor students into wealthier schools with fewer minority children in Minnesota, U.S. For this project, we use confidential teacher mobility data from a school district in Minnesota. We build a structural dynamic school choice model with unobserved teacher ability to estimate teacher preferences for different school characteristics, focusing on non-pecuniary characteristics such as share of minority and poor students within a school. The novel aspect of this project is that we have rare micro administrative data on teacher’s first, second, and third school choices which helps us to better estimate teacher preference parameters. Using these parameters, we study the effect on teacher mobility across schools of a policy that would allow teacher salaries to vary within a school-district based on school characteristics.

The Effects of Discrimination in Housing Markets: Evidence from Historical Racial Covenants in Minneapolis, with Milena Almagro and Kevin Ehrman-Solberg

Abstract: Racially-restrictive covenants, which prevented the sale and rental of housing to several racial and ethnic minorities, were a common phenomenon in the first half of the 20th century in many northern cities in the U.S. In this paper, we study how these racially-restrictive covenants affected the socio-economic and geographic structure of urban areas and how their effects have persisted over time. In the first part of the paper, we leverage plausible exogenous variation in the changes of water bodies and soil quality to predict the presence of covenants. We find that racial covenants are negatively correlated with natural amenities, suggesting that they were used as substitutes of location characteristics that were potentially highly valued by city residents. In the second part of the paper, we will employ a location choice model to disentangle the various channels through which racial covenants shaped the geography of northern cities and measure the welfare of counterfactual housing policies.

Awarded Russell Sage Foundation and Gates Foundation Pipeline Grant.

How to Build Affordable Housing? The Role of Local Barriers to Building Multi-Unit Housing, with Amrita Kulka and Nick Chiumenti

Abstract: This paper studies how local regulation barriers and local town governance affect the trade-offs to build single-family, multi-family or affordable housing; and in turn affect rental and housing prices. Using lot level zoning regulation data and a boundary discontinuity design at regulation boundaries within school attendance areas in the Greater Boston Area as well as across town borders, we obtain causal estimates of households' preferences for different types of housing and neighborhood residential density as well as causal estimates of effects of regulations and town governance structures housing supply. In particular, we study the effects of multi-family by-right zoning, maximum building height restrictions, and dwelling units per acre (DUPAC) density restrictions, all of which limit multi-family housing. Either relaxing density (DUPAC) restrictions or both relaxing density restrictions and allowing for multi-family zoning would be most effective in increasing supply for multi-unit housing and reducing housing costs. Remarkably, while allowing multi-family housing increases supply of housing substantially, it does not have large negative effects on property values as is often feared. We also find that relaxing zoning regulations are most effective in increasing the supply of two- to three-unit multi-family housing rather than larger apartment complexes (four or more units), which likely face other costs such as local community opposition and long zoning process approval process. Furthermore, we find that the single-family residents’ willingness-to-pay for gentle density (two- to four-unit housing density) is positive and between 0.03-0.6 % for every one percent increase in the number of two- to four-unit buildings around their neighborhood. Given the last two findings, we suggest that the path of least resistance to building more multi-unit housing is by increasing the supply of gentle density.

Rise of the Superstar: Technology and Changing Star Power in the U.S. Film Industry, with Thomas J. Holmes and Joel Waldfogel (draft coming soon)

Abstract: This paper studies the rising compensation to actors in the U.S. film industry since 1970 where the star salary as a share of revenue increased sixfold. We build a structural equilibrium model for the film industry that explains the superstar effect and salary trends in the industry over time. The superstar effect posits that being the best, even by a little, triggers huge wage advantages. Using detailed micro movie and actor data from websites such as IMDb and Google Trends, this paper non-parametrically estimates film input elasticities, actor ability, and film role quality over time. Using the model and the self-collected micro-data, we quantify the effects of increased market size, lower costs of production, and introduction of online platforms such as Netflix on star salaries and number of movies produced over time.