We present the first evidence of the positive causal impacts of research and development (R&D) tax incentives on a firm’s own innovation and that of its technological neighbors (spillovers). Exploiting a change in the assets-based size thresholds that determine eligibility for R&D tax relief, we implement a Regression Discontinuity (RD) Design using administrative data. We find statistically and economically significant effects of tax relief on R&D,(quality-adjusted) patenting and ultimately firm size that persist up to seven years after the change. We can rule out R&D tax price elasticities of under 1.1 at the 5% level and argue that our large effects are likely because the treated group are smaller firms that are more likely to be financially constrained. Using our RD Design, we also find causal impacts on technologically close peer firms, implying significant under-investment in R&D from a social perspective. 

We study patronage politics in authoritarian Vietnam, using an exhaustive panel of ranking officials from 2000 to 2010 to estimate their promotions’ impact on infrastructure in their hometowns of patrilineal ancestry. Native officials’ promotions lead to a broad range of hometown infrastructure improvement. Hometown favoritism is pervasive across all ranks, even among officials without budget authority, except among elected legislators. Favors are narrowly targeted toward small communes that have no political power, and are strengthened with bad local governance and strong local family values. The evidence suggests a likely motive of social preferences for hometown. 

This paper shows that CEO’s trust enhances innovation within firms, a novel micro-foundation for the well-known trust-growth relationship. I build a new matched CEO-firm-patent dataset covering 5,753 CEOs in 3,598 US public firms and 700,000 patents during 2000-2011. I exploit variations in generalized trust across CEOs’ ethnic origins, inferred from their last names using de-anonymized historical censuses. Following CEO turnovers, a one standard deviation increase in CEO’s generalized trust is associated with 6% more future patents and 4-6% higher average patent quality, driven entirely by higher-quality patents. Text analysis of employee reviews shows that CEO’s trust enhances a firm’s trust culture. These results are consistent with qualitative interviews’ insights that CEO’s trust and firm’s trust culture encourage researchers to undertake high-risk explorative R&D. In addition, changes in CEO’s bilateral trust towards inventors in different countries have comparable effects on inventors’ patenting, controlling for CEO and other fixed effects.

This paper demonstrates the prevalence, pervasiveness, persistence, and resilience of a system of non-Big God religious beliefs, in absence of religious organizations and moralizing prescriptions, thanks to a self-fulfilling mechanism based on social insurance. We focus on the Vietnamese’s beliefs in marriage fortune predictions by the Taoist astrological system Tử Vi. First, we estimate a structural model of assortative marriage matching and show that such beliefs’ importance in marriage formation amounts to 6.5% of that of the entire age and education profile. Second, we estimate the effect of auspiciousness on couples’ outcomes while controlling for selection into marriage using the structural model’s predictions. Auspicious couples receive 11% more social transfers from their extended family, and up to 28% under hardship, because they are believed to be more harmonious and lucky. They further enjoy more consumption, income, and other welfare measures. We link the system’s long-term persistence and resilience to its potential role as a commitment device between families.

Does higher office always lead to more favoritism? We argue that firms may lose their benefit from a connected politician’s ascent to higher office, if it entails stricter scrutiny that may reduce favoritism. Around close Congress elections, we find RDD-based evidence of this adverse effect that a politician’s win reduces his former classmates’ firms stock value by 3.2% after a week. Exploiting the entry of Craigslist across the U.S., we find that state-level scrutiny drives this effect. It further varies with politician’s power, firm size and governance, and connection strength, and diminishes as a politician’s career concern fades over time.

This paper examines the influence of managers from countries with different gender norms on workplace culture and gender disparities within organizations. Using data from a multinational firm operating in over 100 countries, we exploit cross-country manager rotations that are orthogonal to workers to estimate the impact of male managers’ gender norms on the work outcomes of male and female workers within the same team. Managers from countries with one standard deviation more progressive gender attitudes narrow the gender pay gap by 5 percentage points (18%), primarily by promoting women at higher rates. The effects last beyond the manager’s rotation and are concentrated in countries with more conservative gender attitudes. Moreover, workers in the destination office change their own attitudes, as evidenced by those workers in turn being more gender-equal with their subordinates. Our evidence points to individual managers as critical in shaping corporate culture.