ASSA Round-up: Day 1

Today was the first day of the three-day annual meeting of the Allied Social Science Associations, which is organized by the American Economic Association. The conference, held in San Diego this year, features hundreds of sessions covering a wide variety of economics and other social science research. Below are some of the papers and presentations that caught the attention of Equitable Growth staff during the first day. Included below are the abstracts from those papers as well as links to the sessions at which they were presented. Come back tomorrow evening for more highlights.

 

“Female Inventors and Inventions”

Rembrand Koning, Harvard Business School, Sampsa Samila, IESE Business School, and John-Paul Ferguson, McGill University

Abstract: Does increasing the number of female medical researchers produce greater medical advances for women? In this paper, we investigate if the gender of inventors shapes their types of inventions. Using data on the universe of US biomedical patents, we find that patents with women inventors are significantly more likely to focus on female diseases and conditions. Consistent with the idea of women researchers choosing to innovate for women, we find stronger effects when the lead inventor on the patent is a woman. Women-led research teams are 22 percent more likely to focus on female health outcomes. This link between the gender focus of the scientist and the type of invention, in combination with the rise of women inventors, appears to have shifted the direction of innovation towards female conditions and diseases over the last four decades. Our findings suggest that the demography of inventors matters not just for who invents but also for what is invented.

 

“From Here to Equality: A Framework for Restitution for Black Descendants of American Slavery”

William Darity Jr., Duke University, and Kirsten Mullen, Artefactual

Abstract: This paper chronicles the story of the “unmet black reparations” that got its start with the legitimate expectations of the formerly enslaved that they would receive tracts of land and farm implements (“40 acres and a mule”) in the immediate aftermath of the Civil War. The reasons for the cyclical swings in the attention given to reparations by black Americans and America as a whole are examined, with a particular emphasis on the most recent developments. The paper also details how an actual reparations plan might be designed and enacted, in light of the evolution of thought about restitution for black Americans over the past 150 years, details which include an assessment of the potential of H.R.40 and S.1083 to meet the expectations of blacks for reparations. Consequently, a critical analysis is undertaken on the form and role of the proposed “Commission to Study and Develop Reparation Proposals for African Americans” and how an actual reparations program could be advanced in the Commission’s report. The analysis includes: how the size of the “reparations bill” might be determined; how the program might be administered; how the goals and guideposts for the success of the program can be established; how the funds from the reparations program might be allocated; and how the reparations bill might be financed. An argument is made that the reparations of black Americans are entirely feasible, at least in principle.

 

“The Impact of Parental Wealth on College Enrollment & Degree Attainment: Evidence from the Housing Boom & Bust”

Rucker Johnson, University of California, Berkeley

Abstract: This study provides new evidence on the impact of parental wealth on educational attainment. In order to address the endogeneity of parental wealth, the empirical strategy analyzes parental housing wealth changes induced by local housing booms of the late 1990s and early 2000s, and the subsequent housing bust of the 2007-2009 period. Using geocoded data from the Panel Study of Income Dynamics (1968-2017) linked to MSA housing price data from the Federal Housing Finance Agency, I examine how changes in parental housing equity in the four years prior to their child being college-age affect the likelihood that the child attends college and where they attend (public vs private; in-state vs out-of-state). This provides a test of the role of credit constraints in influencing post-secondary decisions, including if, when, and where individuals attend and complete college. I find a stronger link between parental SES (as measured by wealth, income, education) and children’s subsequent educational attainment for more recent cohorts (i.e., more important in the 2000s than the early 1980s). Ignoring housing wealth will cause one to mismeasure the extent of family resources. Moreover, the combined effects of parental income and wealth are significantly greater than the effects of income alone.

 

“Intimate Partner Violence and Economic Well-Being in Later Life: Longitudinal Evidence from the United States”

Jacqueline Strenio, Southern Oregon University

Abstract: More than 37% of females and 30% of males in the United States report experiencing intimate partner violence (IPV) during their lifetimes, the majority of whom first experience it before the age of 24. However, little research has looked at the long-run economic consequences of IPV. Using the National Longitudinal Study of Adolescent to Adult Health, a nationally representative longitudinal dataset, this study extends the literature by incorporating a dual measure of intimate partner violence, accounting for both prevalence and intensity. Additionally, it analyzes outcomes separately for male and female victims using regression analysis and propensity score matching. Results imply significant economic penalties associated with IPV for both male and female victims along multiple dimensions including educational attainment, perceived socioeconomic status, and economic hardship in later life. Despite comparable consequences, victimization is more prevalent among females indicating that the adverse economic effects may be more widespread in this population.

 

“Labor in the Boardroom”

Simon Jäger, Massachusetts Institute of Technology, Benjamin Schoefer, University of California, Berkeley, and Joerg Heining, Institute for Employment Research-Nuremberg (IAB)

Abstract: We estimate the effects of a mandate allocating a third of corporate board seats to workers (shared governance). We study a reform in Germany that abruptly abolished this mandate for certain firms incorporated after August 1994 but locked it in for the older cohorts. In sharp contrast to the canonical hold-up hypothesis — that increasing labor’s power reduces owners’ capital investment — we find that granting formal control rights to workers raises capital formation. The capital stock, the capital-labor ratio, and the capital share all increase. Shared governance does not raise wage premia or rent sharing. It lowers outsourcing, while moderately shifting employment to skilled labor. Shared governance has no clear effect on profitability, leverage, or costs of debt. Overall, the evidence is consistent with richer models of industrial relations whereby shared governance raises capital by permitting workers to bargain over investment or by institutionalizing communication and repeated interactions between labor and capital.

 

“Low Wage Workers and the Enforceability of Covenants Not to Compete”

Evan Starr, University of Maryland, and Michael Lipsitz, Miami University

Abstract: We exploit the 2008 Oregon ban on non-compete agreements (NCAs) for hourly-paid workers to provide the first evidence on the impact of NCAs on low-wage workers. We find that banning NCAs for hourly workers increased hourly wages by 2-3% on average. Since only a subset of workers sign NCAs, scaling this estimate by the prevalence of NCA use in the hourly-paid population suggests that the effect on employees actually bound by NCAs may be as great as 14-21%, though the true effect is likely lower due to labor market spillovers onto those not bound by NCAs. While the positive wage effects are found across the age, education and wage distributions, they are stronger for female workers and in occupations where NCAs are more common. The Oregon low-wage NCA ban also improved average occupational status in Oregon, raised job-to-job mobility, and increased the proportion of salaried workers without affecting hours worked.

 

“Market Size and Market Power: Evidence from the Texas Electricity Market”

Matt Woerman, University of Massachusetts Amherst

Abstract: Economic theory tells us that market structure is the primary determinant of a firm’s ability to exercise market power. However, it is challenging to empirically estimate the causal effect of market structure on market power because a firm rarely experiences exogenous variation in its market’s structure. In this paper, I exploit a novel source of exogenous variation in market size within the Texas electricity market—congestion of electricity transmission lines due to ambient temperature shocks—to estimate the causal effect of market size on the exercise of market power. When transmission lines congest, this statewide market splits into smaller localized markets. I find that a 10% reduction in market size causes firms to more than double markups. The direction of this effect is consistent with a model of oligopoly competition in which firms set markups in response to residual demand, which is less elastic in a smaller market. My results imply that the markups induced by transmission congestion at high temperatures generate $7.1–21.5 million of deadweight loss annually. These markups also create large transfers—$2.1 billion per year—from consumers to producers, which raise important equity concerns.

 

“Measuring the Macroeconomic Impact of Carbon Taxes”

Gilbert Metcalf, Tufts University and NBER, and James Stock, Harvard University

Abstract: This paper carries out an empirical analysis of carbon taxes in Europe to estimate their impact on GDP growth rates and employment. The results here show some evidence of transitional dynamics. We find that typically the carbon tax has positive effects on GDP growth and, initially, on employment. The positive effects are in some cases statistically significant but generally are not, so that the estimated growth effects are consistent with no effect of the tax on the growth rates of GDP or employment. We find no robust evidence of a negative effect of the tax on employment or GDP growth. For the European experience, at least, we find no support for the view that carbon taxes have adverse growth or employment impacts.

 

“Measuring Technology Adoption in Enterprise-Level Surveys: The Annual Business Survey”

David Beede, U.S. Census Bureau, Erik Brynjolfsson, Massachusetts Institute of Technology, Cathy Buffington, U.S. Census Bureau, Emin Dinlersoz, U.S. Census Bureau, Lucia Foster, U.S. Census Bureau, Nathan Goldschlag, U.S. Census Bureau, Kristina McElheran, University of Toronto, and Nikolas Zolas, U.S. Census Bureau

Abstract: The Annual Business Survey (ABS) started in 2017 and, in its first collection year, will provide an economy-wide view of technology from its sample of almost 850,000 firms across almost all sectors of the economy. The ABS is conducted by the Census Bureau in partnership with National Center for Science Engineering Statistics (NCSES) and replaces the Survey of Business Owners (SBO), Annual Survey of Entrepreneurs (ASE) and the Business R&D and Innovation Survey for Microbusinesses (BRDI-M). In addition to regularly occurring questions, the 2017 ABS includes a module of questions on the adoption and use of new technologies. The technology module was developed by the Census Bureau and a group of external researchers who specialize in technology adoption by firms and its effects. This paper describes the development of this module and some of the challenges faced by Census, including which technologies to collect data on, how to define certain technologies, what types of measures (extensive versus intensive) and what time frame to use for the adoption and use of the technologies. We describe how the cognitive testing of the survey was performed and how companies interpreted questions posed by Census and the external collaborators. We also discuss how the module fits in with current Census data collection efforts to better measure technology in the Annual Survey of Manufactures (ASM), as well as Annual Capital Expenditures Survey (ACES). Future versions of the paper will provide results from this survey.

 

“Mergers, Product Prices, and Innovation: Evidence from the Pharmaceutical Industry”

Alice Bonaime, University of Arizona, and Ye Wang, University of Arizona

Abstract: Using novel data from the pharmaceutical industry, we study the impact of mergers on product prices and innovation. Product prices increase approximately 5% more within acquiring versus matched non-acquiring firms. These price increases are more pronounced for horizontal mergers and for acquisitions of large and publicly traded targets, i.e., deals resulting in greater market power consolidation. Consistent with causal identification of enhanced market power around mergers, price increases are significantly greater within drug classes with acquirer/target overlap and absent for drugs already shielded from competition through patents and exclusivity rights. We find no evidence of mergers facilitating or incentivizing innovation—a potential tradeoff to higher product prices.

 

“Older Workers Need Not Apply? Ageist Language in Job Ads and Age Discrimination in Hiring”

Ian Burn, Swedish Institute for Social Research, Patrick Button, Tulane University, Luis Felipe Munguia Corella, University of California, Irvine, and David Newmark, University of California, Irvine

Abstract: We study the relationships between ageist stereotypes – as reflected in the language used in job ads – and age discrimination in hiring, exploiting the text of job ads and differences in callbacks to older and younger job applicants from a previous resume (correspondence study) field experiment (Neumark, Burn, and Button, 2019). Our analysis uses methods from computational linguistics and machine learning to directly identify, in a field-experiment setting, ageist stereotypes that underlie age discrimination in hiring. We find evidence that language related to stereotypes of older workers sometimes predicts discrimination against older workers. For men, our evidence points most strongly to age stereotypes about physical ability, communication skills, and technology predicting age discrimination, and for women, age stereotypes about communication skills and technology. The method we develop provides a framework for applied researchers analyzing textual data, highlighting the usefulness of various computer science techniques for empirical economics research.

 

“Using Wage Boards to Raise Pay”

Arindrajit Dube, University of Massachusetts Amherst

Abstract: The weight of evidence suggests that we have moved from a labor market in the U.S. that was based on labor market negotiations via collective bargaining to one where employers increasingly have power to set wages subject to limited labor market discipline. This paper proposes, as an alternative to a single, high minimum wage, instituting a wage board that sets multiple minimum pay standards by sector and occupation. The standards would be potentially chosen using consultation with stakeholders, such as business and worker representatives and elected representatives. This would allow raising wages not just for those at the very bottom, but also for those at the middle. This is effectively done in countries where there are extensions of collective bargaining contracts, but can also be done by setting multiple minimum pay levels statutorily.

 

“What Explains Neighborhood Sorting by Income and Race?”

Dionissi Aliprantis, Federal Reserve Bank of Cleveland, Daniel Carroll, Federal Reserve Bank of Cleveland, and Eric Young, University of Virginia

Abstract: Why do high-income black households live in neighborhoods with characteristics similar to those of low-income white households? We find that neighborhood sorting by income and race cannot be explained by financial constraints: High-income, high-wealth black households live in similar-quality neighborhoods as low-income, low-wealth white households. Instead, we show that the racial composition of neighborhoods drives neighborhood sorting. Black households sorting into black neighborhoods explains the racial gap in neighborhood quality at all income levels. Absent high-quality black neighborhoods in their metro, black households sort into black neighborhoods rather than high-quality ones.

January 3, 2020

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