This research will investigate whether out-migration is a successful response to local economic shocks. In the wake of the Great Recession and its uneven impact on communities in different parts of the United States, out-migration was considered to be a key way for Americans to escape the incidence of local economic shocks. Recent work, however, finds that actual out-migration provided little insurance against recent local shocks, and U.S. migration rates have fallen by about 15 percent since 1980. Yagan will study whether out-migration is, in fact, a channel via which people respond to and solve for local economic shocks by examining whether people move from low opportunity areas to areas with good job prospects, rather than to areas with similarly poor job prospects. A key condition for out-migration to be an actual solution to concentrated and intergenerational economic distress is whether there are better economic conditions in the new location.
Archives: Grant
Tax evasion by the wealthy: Measurement and implications
Measuring inequality is critical to understanding the nature of the challenge and its effects. This project aims to improve measurement of wealth inequality by understanding the extent to which tax evasion by the wealthy affects inequality measurements that rely on tax records. The authors combine administrative data on tax compliance, including audit results and the results of voluntary disclosure programs, and data leaked from financial and legal entities in recent years to explore the prevalence and scope of tax evasion by the wealthy. The researchers will use the improved estimates of tax evasion by the wealthy to construct revised estimates of income and wealth inequality in the United States.
The organizational bases of discrimination
This project will continue an important empirical line of research that uses innovative field-based experimental methods to understand the dynamics of discrimination. The researchers will combine an audit study with a survey of employers. The audit data has significant advantages over past audit studies: It examines a broader range of job openings by using BurningGlass data; examines a larger number of employers and responses to applications; examines a broader range of cities; and examines race by gender and by parental status simultaneously. The researchers will survey employers, focusing on three main areas: personnel policies such as affirmative action, parental leave, and flex time; hiring practices such as the use of technology, referrals, and standardized interview protocols; and the demographics, size, number of locations, and age of the company. This research will directly test several outstanding questions in the literature, particularly the connection between formalization procedures and discrimination, the effectiveness of diversity initiatives, and the role of technology. This project’s findings will provide a more precise assessment of how organizations perpetuate gendered, racial, and parental-status discrimination.
The impact of antitrust on competition
This project entails the collection of empirical metrics of merger outcomes in order to analyze effects beyond prices, taking into consideration other factors such as employment, innovation, and efficiencies. Scott Morton will collect empirical metrics of antitrust enforcement outcomes from publicly available data in company reports, earnings calls, Securities and Exchange Commission filings, and from other sources such as industry analysts and consulting services in order to create a novel dataset. Information will be collected before and after a merger. Data will then be compared to the outcomes predicted by the merging firms. A second component of the research will examine the purposes and outcomes of acquisitions in the high-tech sector to determine whether acquisitions are motivated by increased efficiencies or by the elimination of competitors, a question that is largely unexplored. This line of inquiry seeks to test whether recent acquisitions have stifled innovation. This project is poised to make a considerable contribution to our understanding of the effects of mergers and acquisitions. Little evidence currently exists, resulting in a high burden on the agencies to justify challenges to proposed mergers and acquisitions.
Parental resources and the career choices of young workers
This project will investigate how parental resources influence the career choices of young workers, with a specific focus on the impact of parental resources on entrepreneurship and job mobility. Staiger hypothesizes that parental resources shape behavior by providing insurance and relaxing credit constraints. Using U.S. administrative data, he will exploit mass layoffs to estimate the causal effect of parental resources at the time of the layoff on the labor market outcomes of young workers. This is the first project of its kind to use administrative data rather than survey data to investigate how parental resources may impact young workers’ labor market outcomes. Specific outcomes to be explored include the relationship between a young adult’s parents’ earnings at the time of layoff on long-run expected earnings, job mobility, and entrepreneurial activity. The research represents a creative look at the relationship between inequality, innovation, and business dynamism.
Consumer protection law and mortgage markets
This three-part project will empirically investigate the role of consumer protection laws on U.S. mortgage market outcomes and consumer welfare. Homeownership represents an important source of wealth for American families and is a primary source of wealth transfer across generations. But the housing crisis during the Great Recession disproportionately affected minorities and households at the lower end of the wealth distribution, precipitating calls for regulatory reform in mortgage markets to preserve the financial health of American households. Little evidence currently exists about the effect of particular legal regimes on the operation of the mortgage market. Specifically, this project asks whether laws providing new grounds for consumer or public enforcer lawsuits against mortgage providers can successfully improve consumer outcomes. Padi proposes to answer this question by looking at the effects of legislation and regulations passed in the states and assessing their impact by comparing results to those in neighboring states.
Do pass-through owners pass tax burdens through to their workers?
Pass-through businesses—businesses whose owners pay tax on profits on their individual returns and which are not subject to the corporate income tax—have grown rapidly in importance over the past two decades. Yet even as little is known with confidence about who pays the corporate income tax, even less is known about who pays taxes on the income of pass-through businesses. Risch will explore the incidence of taxes on the income of pass-through businesses by investigating whether and to what extent the compensation of employees of certain pass-through businesses changes in response to changes in the tax rates on the businesses’ owners. To do this, he will use a linked owner-firm-employee dataset created from administrative tax records.
What works and what workers try: Social mobility paths beyond the bachelor’s degree and the impact of racialized inequality
This project will look at what alternative approaches could allow those in low-income communities—the majority of which are communities of color—to negotiate an exit from poverty. As the middle of the jobs market has hollowed out and the college wage premium has increased, much of the conversation around policy solutions has focused on upskilling or encouraging more people to pursue higher education. Two-thirds of Americans, however, still lack a bachelor’s degree, a proportion that hasn’t changed much over the decades. This raises the question of what alternative policies could encourage mobility. Hill will explore how economic inequality shapes the perceptions and knowledge of opportunities and options among those in low-income communities of color. In light of deeply racialized American inequality, this project aims to shed light on mechanisms creating and prohibiting social mobility among “low-skilled” or noncollege-educated workers of color.
The labor market effects of minority political empowerment: Evidence from the Voting Rights Act
This project looks at how the political enfranchisement of a group affects economic outcomes of those within that group. There are several mechanisms through which this could occur: Politicians might favor a newly enfranchised group in policymaking to earn their votes; the newly enfranchised group might find public-sector employment; or members of the group might run for and win a seat in office. Aneja and Avenancio will examine how African American enfranchisement through the Voting Rights Act affected a variety of economic outcomes for blacks in southern states. They will use a differences-in-differences approach, looking at bordering counties in states that were and were not subject to Section 5 of the Voting Rights Act. Although this study focuses on Civil Rights-era outcomes, the results will be relevant today, as states pass laws that could depress voter turnout among minority groups.
Minimum wages and racial inequality
This project will research how effective basic and universal labor standards are at reducing group inequality by looking at a major amendment to the Fair Labor Standards Act in 1966, which extended federal minimum wage coverage to several new industries. The expansion occurred at a time when the federal minimum wage was 40 percent higher in real terms than it is today. The newly covered industries were concentrated in services, retail, and agriculture, sectors with disproportionately high shares of women and black workers. The project proposes to take advantage of the scale of the reform and the racial and gender composition of treated industries to test the effects of high minimum wages and their ability to close the gender and racial wage gaps. This research promises to increase our understanding of the effects of introducing a high wage floor and whether universal federal labor standards can effectively reduce the racial and gender wage gaps.