ASSA 2023 Round-up: Day 3
Yesterday was the third and final day of the 2023 annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The 3-day conference, held in person in New Orleans this year, features hundreds of sessions covering a wide variety of economics and other social science research. This year, Equitable Growth’s grantee network, Steering Committee, and Research Advisory Board and their research were well-represented throughout the program, featured in more than 80 different sessions of the conference.
Below are abstracts from some of the papers and presentations that caught the attention of Equitable Growth staff during the third day of this year’s conference and which relate to the research interests laid out in our current Request for Proposals. We also include links to the sessions in which the papers were presented.
Click here to review the highlights from day one, and here for highlights from day two.
Tania Babina, Columbia University; Simcha Barkai, Boston College, Equitable Growth grantee; Jessica Jeffers, University of Chicago; Ezra Karger, Federal Reserve Bank of Chicago, Equitable Growth grantee; Ekaterina Volkova, University of Melbourne
Abstract: We construct a comprehensive dataset of antitrust lawsuits led by the U.S. Department of Justice between 1980 and 2018 that includes the geographic scope and industries of the targeted companies. We find a continued secular decline in the number of antitrust lawsuits led by the department relative to the early 1980s, with wide variation across industries. We use this new dataset to study the systematic effect of antitrust lawsuits on industry dynamics such as employment growth and firm entry. We compare outcomes in a nontradable industry located in a particular state that is the target of a DOJ lawsuit with the same nontradable industry located in other states. In an event-study framework, we find that employment is stable in the years leading up to an antitrust lawsuit but increases in the years immediately following the lawsuit. The effect is stronger for local lawsuits and lawsuits remedying older violations. Our results suggest that antitrust enforcement has an important role in curbing anticompetitive behavior by firms and has a positive effect on aggregate outcomes.
“The Welfare Consequences of Regulating Amazon”
German Gutierrez, New York University, Equitable Growth grantee
Abstract: Amazon acts as both a platform operator and seller on its platform, designing rich fee policies and offering some products direct to consumers. This flexibility may improve welfare by increasing fee discrimination and reducing double marginalization but may decrease welfare due to incentives to foreclose rivals and raise their costs. This paper develops and estimates an equilibrium model of Amazon’s retail platform to study these offsetting effects and their implications for regulation. The analysis yields four main results: (i) Optimal regulation is product- and platform-specific. Interventions that increase welfare in some categories, decrease welfare in others. (ii) Fee instruments are substitutes from the perspective of the platform. Interventions that ban individual instruments may be offset by the endogenous response of (existing and potentially new) instruments. (iii) Regulatory interventions have important distributional effects across platform participants. (iv) Consumers value both the Prime program and product variety. Interventions that eliminate either of the two decrease consumer, as well as total, welfare. By contrast, interventions that preserve Prime and product variety but increase competition—such as increasing competition in fulfillment services—may increase welfare.
Note: This research was funded in part by Equitable Growth.
“The 2021 Child Tax Credit: Who Received It and How Did They Spend It?”
Katherine Michelmore, University of Michigan, Equitable Growth grantee; Natasha Pilkauskas,University of Michigan, Equitable Growth grantee
Abstract: This paper examines the 2021 temporary expansion of the Child Tax Credit that provided monthly payments to families with children from July 2021 to December 2021. We investigate trends in who received the monthly benefit, who did not, and how they spent the credit. Finally, using a parameterized difference-in-differences approach, we examine the effect of the monthly credit on material hardship among a sample of parents with very low incomes. Overall, approximately two-thirds of eligible families with low incomes reported receiving the monthly Child Tax Credit. Employed individuals and individuals with at least $500 of earnings were more likely to report receiving the monthly benefit, while Hispanic families and those who did not file taxes were least likely to receive the benefit. Overall, families report spending the credit to pay down bills, purchase school supplies, and purchase other necessities. These purchases led to lower reports of material hardship, particularly food insecurity.
Note: This research was funded in part by Equitable Growth.
“Disaggregated Economic Accounts: Measurement and Implications for Fiscal Policy”
Asger Andersen, University of Copenhagen; Emil Toft Hansen, University of Copenhagen; Kilian Huber, University of Chicago, Equitable Growth grantee; Niels Johannesen, University of Copenhagen; Ludwig Straub, Harvard University, Equitable Growth grantee
Abstract: We develop a system of disaggregated economic accounts, capturing the complex network of income and consumption linkages between spatially and sectorally differentiated units of households and firms. We measure disaggregated accounts on the basis of 2,400 household cells and 2,000 firm cells using administrative register data matched with detailed bank transactions data from Denmark. Mapping the disaggregated accounts into a Keynesian business cycle model with many agents and firms, we study (a) the origins of the Great Recession in Denmark; (b) the geography and sectoral breakdown of fiscal multipliers and their dependence on the nature of the shock; (c) employment-maximizing and welfare-maximizing policies.
Note: This research was funded in part by Equitable Growth.
Erik Hurst, University of Chicago; Yona Rubinstein, London School of Economics; Kazuatsu Shimizu, Massachusetts Institute of Technology
Abstract: In this paper, we develop a task-based model of occupational choice to identify and quantify the effect of discrimination and aggregate task prices on the Black-White wage gap over time. At the heart of our framework is the idea that the size and nature of racial barriers faced by Black workers varies by the task requirements of each job. We define a new task that measures the extent to which individuals interact with others as part of their job. Using both the structure of our model, detailed micro data from the Census/ACS and the NLSY, and regional variation in survey-based discrimination measures, we highlight that the racial gap in this new task measure is a good proxy for the extent of taste-based discrimination in the economy. Our structurally estimated model and reduced form evidence attribute the fast decline in the observed Black-White gap in wages between 1960 and 1990 to a notable drop in labor market taste-based discrimination and attributes the stagnation in the Black-White gap in pay since then to the notable increase in the wage premium to abstract tasks.
“Buyer Power in the Beef Packing Industry”
Francisco Garrido, Autonomous Technological Institute of Mexico, Equitable Growth grantee; Nathan Miller, Georgetown University, Equitable Growth grantee; Matthew Carl Weinberg, Ohio State University, Equitable Growth grantee
Abstract: This paper explores the pricing behavior of beef packers in the United States. We seek to understand an increase in the gap between the prices packers pay to upstream feedlots and the prices they receive from retailers from 2015–2019. We focus on the role of alternative market arrangements, or AMAs, that are increasingly used to facilitate transactions between feedlots and packers. These are agreements that packers buy a pre-specified number of cattle at a particular date, with prices tied to the average cash market price near the delivery date. This linkage may depress the price paid for cattle. We provide a spatial differentiation model of price setting that features third degree price discrimination and AMAs, and use it to quantify the role of AMAs and multiplant ownership in determining the packer spread.
Gordon B. Dahl, University of California, San Diego, Equitable Growth Working Paper contributor; Matthew Knepper, University of Georgia, Equitable Growth Working Paper contributor
Abstract: Why is workplace sexual harassment chronically underreported? We hypothesize that employers coerce victims into silence through the threat of a retaliatory firing. To test this, we estimate how two external shocks that reduce workers’ outside options—unemployment rate increases and a sharp cut to Unemployment Insurance benefits—affect the selectivity of sexual harassment charges filed with the Equal Employment Opportunity Commission. We find that both shocks increase selectivity, which implies an increase in underreporting. Bolstering these findings, anonymous Google searches for “sexual harassment in the workplace” (total prevalence) spike relative to charges filed (reported prevalence) during the Great Recession.
“The Effects of Federal “Redlining” Maps: A Novel Estimation Strategy”
Luca Perdoni, Yale University, Equitable Growth grantee; Disa M. Hynsjö, Yale University, Equitable Growth grantee
Abstract: This paper investigates the causal effects of the Home Owners’ Loan Corporation, or HOLC, maps and the neighborhood grades they assigned to summarize lending risk in the second half of the 1930s. In particular, we estimate the effects of different grades on homeownership rates, property values, and shares of African Americans between 1940 and 2010. To measure the short and long-term effects of the HOLC mapping intervention, we propose a new estimation strategy. Spatial discontinuity designs, often used in the literature on this topic, suffer from endogeneity concerns: Multiple authors documented socioeconomic differences on opposite sides of boundaries traced by the agency, indicating that the HOLC did not assign border locations and grades randomly.
Instead, we exploit an exogenous population threshold that determined which cities were mapped and a machine learning algorithm drawing HOLC maps in control cities. Using the grades predicted by the machine learning model, we apply a grouped difference-in-differences design to measure the causal effects of the HOLC intervention. The causal effects are identified by differences between neighborhoods in treated cities and areas in control cities that would have received the same grade but were not mapped. This empirical strategy is possible thanks to a new spatial dataset we constructed geocoding full-count Census records between 1910 and 1940.
For the year 1940, we find a substantial reduction in property values and homeownership rates in areas with the lowest grade, along with an increase in the share of African American residents. We also find sizable house value reductions in the second-to-lowest grade areas.
Such negative effects on property values persisted until the early 1980s. Our results illustrate that institutional practices can coordinate individual discriminatory choices and amplify their consequences.
Note: This research was funded in part by Equitable Growth.
“Are Hospital Acquisitions of Physician Practices Anticompetitive?”
Ashley Swanson, University of Wisconsin-Madison, National Bureau of Economic Research;
Zack Cooper, Yale University, National Bureau of Economic Research; Stuart Craig, Yale University; Matthew Grennan, University of California, Berkeley; Joseph Martinez, University of Pennsylvania; Fiona Scott Morton, Yale University, Equitable Growth grantee and contributing author
Abstract: In recent decades, vertical integration between hospital systems and physicians has transformed U.S. provider markets. During 2008–2016, the fraction of physicians employed by hospitals increased from 27 percent to 47 percent. Nearly all hospital-physician mergers were below antitrust reporting thresholds and were likely completed without regulatory scrutiny. We combine a new comprehensive measure of vertical integration with administrative claims data from a large U.S. commercial health insurer. Our results for orthopedic surgeons indicate that post-vertical integration, the average physician increased surgeries performed at acquiring hospitals by nearly 20 percentage points. Moreover, physician and facility prices increased by about 5 percent to 8 percent. We also find positive correlations between hospital price effects and the magnitudes of shifts in patient flows to hospitals, consistent with newly vertically integrated entities foreclosing rivals. Finally, we find positive correlations between physician price effects and pre-merger hospital market shares, consistent with newly vertically integrated entities benefiting from an improved bargaining position.
“Have Mergers Raised Prices? Evidence from US Retail”
Vivek Bhattacharya, Northwestern University, Equitable Growth grantee; Gaston Illanes, Northwestern University, Equitable Growth grantee; David Stillerman, American University
Abstract: Households often fail to refinance mortgages. We document the price and quantity effects of all U.S. retail mergers from 2006–2017 associated with deals larger than $340 million. Prices increase by 0.49 percent on average for merging parties, with an interquartile range of almost 5 percent. Nonmerging parties exhibit slightly smaller price changes on average. Price changes are correlated with changes in concentration but not final concentration, and they tend to be concentrated in the year following the merger. Mergers that were unsuccessfully challenged exhibit larger price increases. Through the lens of a simple model, we estimate that agency preferences are such that they aim to block mergers where prices are expected to increase by more than 3.7 percent and 5.6 percent overall, or about 8.1 percent to 8.8 percent for merging parties.
“The Welfare Impact of Market Power. The OPEC Cartel”
John Asker, University of California, Los Angeles; Allan Collard-Wexler, Duke University; Jan de Loecker, KU Leuven
Abstract: We provide an empirical framework to measure the welfare impact of market power that materializes through coordination of production (i.e., cartel) in the global crude oil market. We leverage unique microdata on cost and production to quantify the dead weight loss and productivity inefficiency due to the OPEC cartel. We introduce a framework that recognizes the likely intertemporal trade-off that producers face when setting production levels. We rely on an estimated demand system for oil, and we consider a range of counterfactual oil supply functions to quantify the welfare loss due to market power. The counterfactual supply curves imply counterfactual price paths that suggest a sizeable impact of market power on the global oil market. This, together with the information on field-level costs, allows for a model-consistent notion of lost gains from trade due to market power. We find that the welfare impact is large, implying a worldwide revenue tax (on every aspect of economic activity) of about 0.15 percent, or put differently about $5 trillion (in 2014).
