Research

WORKING PAPERS

"Impact of Institutional Owners on Housing Markets"

Since the Great Recession, the rise of single-family rental companies has changed the investor ownership landscape in the U.S. Using housing transaction data, we document the rise of Long Term Rental (LTR) companies by constructing a panel of national single-family housing portfolios. We show that LTR growth outstripped all other investor types and that these companies geographically concentrate their holdings, expanding their local market shares over time. We construct a novel instrument predicting LTR entry, leveraging differential revealed preferences in product characteristics across landlord types, interacting with a proxy for falling property management costs over time. We use this instrument for LTR market entry to estimate the causal impact of LTR market share on local house prices. We find that a 1-standard deviation above the mean increase in LTR share growth leads to an annual additional house price growth of 2.11pp. Finally, we discuss how the reallocation of homeownership across small and large landlords, as well as owner-occupants and investors, contribute to these price increases.

Presented at: Baruch College (Zicklin) (scheduled), University of Colorado Boulder (Leeds) (scheduled), The Federal Reserve Board of Governors (scheduled), 2024 Stanford SITE for Housing and Urban Economics (scheduled), 2024 Cornell Real Estate Symposium (scheduled), 2024 Pre-WFA Summer Real Estate Research Symposium, 2nd Annual Conference on Market-Based Solutions for Reducing Wealth Inequality, CICF 2024, ITAM Finance Conference 2024, RERI Annual Conference 2024, UT Austin Finance Brownbag

Funding: Real Estate Research Institute (RERI) funding, McCombs Research Excellence Grants

"Entrepreneur Experience and Success: Causal Evidence from Immigration Wait Lines"

with Abhinav Gupta and Yifan Sun

This paper investigates the causal impact of entrepreneurs' prior experience on startup success. Employing within-country changes in Green Card wait lines to instrument for immigrant first-time entrepreneurs' experience, we uncover that startups led by more experienced founders demonstrate superior funding, patenting, and employee growth. Specifically, each additional year of founder experience leads to a 0.6 p.p. (1 p.p.) increase in the likelihood of a startup undergoing an IPO (growing to over 1000 employees), over the subsequent decade. The larger initial team size, facilitated by the improved ability to recruit former colleagues, explains the observed startup success. Our findings imply that each extra year of experience is worth $170,000, underscoring a critical consideration for policymakers in the design of startup incubators.

Presented at: University of Cincinnati (Lindner) (scheduled), AFA (scheduled), NFA (scheduled), 17th Annual Meeting of the Academy of Behavioral Finance & Economics (scheduled), 2024 Summer Research Conference in Finance at Indian School of Business (scheduled)

"The Effects of High-skilled Firm Entry on Incumbent Residents" Revision requested by American Economic Review

with Rose Tan

Claire and Ralph Landau Prize for the Best Student SIEPR Discussion Paper 2021

Best Student Paper (Honorable Mention) at Urban Economics Association North American Meeting 2020

Using 391 high-skilled firm entries in the U.S. from 1990–2010, we estimate the effects of the firm entry on incumbent residents’ consumption, finances, and mobility. We compare outcomes for residents living close to the entry location with those living far away while controlling for their proximity to potential high-skilled firm entry sites. We find high-skilled incumbents, especially homeowners, benefit. Low-skilled incumbents on average benefit less. For a representative firm entry with 1000 new employees entering a metropolitan area with a population of 1.1 million, the aggregate welfare benefit across all incumbents is an annual equivalent of $25 million. Lowskilled renters living within 10 minutes from the entry bear the largest costs.

Presented at: The Pennsylvania State University (Smeal), USC (Price), University of Utah (David Eccles), University of Pennsylvania (Wharton), University of Notre Dame, UNC (Kenan–Flagler), USC (Marshall), California State University–Fullerton, National University of Singapore (Real Estate), UCLA (Anderson), NYU (Furman), Washington University in St. Louis, University of Hong Kong, City University of Hong Kong, National University of Singapore (Business School), UNC Working Group on Economic Development, MFA 2023, AREUEA National Conference 2022, AREUEA-ASSA Annual Conference 2022, Quantitative Spatial Economics Junior Workshop 2021, NBER Summer Institute: Urban/Real Estate 2021, UEA North American Meeting 2020

Funding: Shultz Graduate Student Fellowship in Economic Policy, Stanford Center for Computational Social Science Research Award

Media: Kenan Institute UNC Affordable Housing Symposium Discussion with Matthew Kahn

"Do Rounding-Off Heuristics Matter? Evidence from Bilateral Bargaining in the U.S. Housing Market"

with Haaris Mateen, Ye Zhang, and Tianxiang Zheng

Using confidential offer-level data from the US housing market, this paper analyzes the impact of various listing and counteroffer pricing strategies in the housing bilateral bargaining process. We observe that sellers tend to cluster their list prices around “charm” numbers (e.g. 349,999) and round numbers (i.e., 350,000), while buyers' counteroffers mainly cluster around round numbers. Through the repeated sales approach, we demonstrate that these pricing strategies significantly influence housing transaction outcomes. Round and charm listing prices are advantageous during bidding wars, leading to higher sales prices and faster transactions, while also attracting more buyer offers. However, in colder markets, round listing prices may result in lower sales prices due to the anchoring effect. Regarding the effects of buyer counteroffer pricing strategies, our findings indicate that round counteroffer prices often lead to lower purchase prices and quicker transactions compared to precise counteroffer prices, despite increasing the risk of impasse. Additionally, we discover a mimicry effect: when buyers mimic the precision of sellers' charm and precise listing prices, the risk of impasse significantly decreases despite the potential for higher purchase prices and slower transactions. Overall, this paper provides novel insights into the effectiveness of different pricing strategies in housing bargaining.

Presented at: Duke (Fuqua), University of Colorado Boulder (Leeds), Atlanta Fed, 17th Annual Meeting of the Academy of Behavioral Finance & Economics (scheduled), Yale Junior Finance Conference 2023, AREUEA-ASSA Annual Conference 2024, Stockholm School of Economics Finance Brownbag, University of Houston Finance Brownbag, Columbia Experimental Design Workshop 2023.

"Identifying Agglomeration Spillovers: Evidence from Grocery Store Openings"

with Qianyang Zhang and Xiang Zhang

We estimate the strengths of agglomeration spillovers in the local non-tradable service sector using 413 grocery store openings in the U.S. in 2018-2019. We combine deep learning tools with propensity score estimation to find counterfactual opening sites and compare business outcomes surrounding actual and counterfactual sites. We find openings of grocery stores lead to significant growth in foot traffic to their opening locations and a 39 percent increase in foot traffic to businesses within 0.1 miles. The spillovers of demand are strongest between new grocery stores and businesses in wholesale and retail and hospitality services. We also find that grocery store openings lead to a 6.9 percentage point higher growth in the number of businesses within 0.1 miles of the openings 0-3 years later.

Presented at: UEA European Meeting 2024, Online Spatial & Urban Seminar 2024, NBER Summer Institute: Real Estate 2023, AREUEA-ASSA Annual Conference 2023, Eastern-FA 2023, RERI Annual Conference 2023, AREUEA National Conference 2023, CICF 2023, UEA North American Meeting 2023

Funding: Real Estate Research Institute (RERI) funding

"The Microstructure of the U.S. Housing Market: Evidence from Millions of Bargaining Interactions"

with Haaris Mateen and Ye Zhang

We study the microstructure of the U.S. housing market using a novel data set comprising housing search and bargaining behaviors for hundreds of thousands of interactions between sellers and buyers. We first establish a number of stylized facts, the most prominent being a nearly 50–50 split between houses that sold below the final listing price and those that sold above the final listing price. Second, we compare observed behavior with predictions from a large theoreticalhousing literature. Many predictions on the relationship between sales price, time on the market, listing price, and atypicality are borne out in the data. However, existing models do not adequately explain the spread of the sales price around the final listing price. Using a modeling strategy that treats listing price changes as revisions of expectations about the sales price, we find sellers under-react to information shocks in estimating the sales price. Last, we find that the bargaining outcomes are influenced by previously undocumented buyers’ bid characteristics,e.g., financing contingencies and escalation clauses, that signal a buyer’s ability to complete or expedite the transaction. This suggests an important role for buyer bid characteristics, which are not explained by existing theories, in affecting bargaining power and surplus allocation in bilateral bargaining in housing transactions.

"Do CEOs Know Best? Evidence from China"

with Nicholas Bloom, Hong Cheng, Mark Duggan, Hongbin Li

We analyze a new management survey for around 1,000 firms and 10,000 employees across two large provinces in China. The unique aspect of this survey is it collected management data from the CEO, a random sample of senior managers and workers. We document four main results. First, management scores, much like productivity, have a wide spread with a long left-tail of poorly managed firms. This distribution of management scores is similar for CEOs, senior managers, and workers management, and appears broadly reasonable compared to US scores for similar questions. Moreover, for all groups these scores correlate with firm performance, suggesting all employees within the firm are (at least partly) aware of their firms’ managerial abilities. Second, the scores across the groups are significantly cross-correlated, but far from completely. This suggests that while different levels of the firm have similar views on the firms’ management capabilities, they do not fully agree. Third, we find that the CEO’s management scores are the most predictive of firm performance, followed by the senior managers and then the workers. Hence, CEOs do appear to know best about their firms' management strengths and weaknesses. Fourth, within-firm management score dispersion is negatively correlated with investment and R&D intensity, suggesting long-run planning is linked with greater consistency in management across levels in firms.

Status: Updated results with the second wave of CEES available upon request. Third wave of survey pending

Research Briefs: VoxChina

PUBLICATIONS

"The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco"

with Rebecca Diamond and Tim McQuade

American Economic Review, Vol.109, No.9 (September 2019)

Published version, Final draft (March 2019)

Media: WSJ NYT Bloomberg Economist Stanford GSB NPR Freakonomics Radio

Research Briefs: Brookings Cato

"Which Landlords Pay for Rent Control? Heterogeneous Landlord Response to San Francisco’s Rent Control Expansion"

with Rebecca Diamond and Tim McQuade

AEA Papers and Proceedings, Vol.109, (May 2019)

[Published version] [Final draft (February 2019)] [Appendix]

SELECTED WORK IN PROGRESS

"The impact of suburbanization on urban residents"

with Marco Giacoletti and Matthijs Korevaar

"House Visitor Budgets, Information Arrivals, and Price Revisions"

with Ding Jing, Rongbing Huang, Lei Jiang

"Distributional Effects of Adverse Economic Shocks Through Firm Production Networks"

with Turk Al-Sabah

"Who Benefits from Rent Control? The Equilibrium Consequences of San Francisco’s Rent Control Expansion"

with Rebecca Diamond and Tim McQuade

Subsumes the structural model analysis from our original NBER WP No. 24181