This project investigates the relationship between two trends: the significant rise in regional inequality in the United States, with a small number of highly educated urban cities accounting for a growing share of national income, and the increasing dominance of large, multiregion services firms such as Amazon.com Inc., Walmart Inc., and Starbucks Corp., as reflected in measures of average firm size and market concentration. These “superstar” firms create high-paying, high-skill jobs in large cities and low-paying jobs in nonurban areas across the country, displacing local and regional competitors in the process and leading to increasingly unequal demand for skills across regions. Kleinman will utilize private data from Dun and Bradstreet and Burning Glass Technologies, as well as public data from the American Community Survey and the Panel Database on Incentives and Taxes. He will combine an empirical investigation of the relationship between firms’ spatial expansion and regional inequality with the development and quantification of a novel economic geography model that features expansion of multiregion firms to analyze the labor demand of firms across different markets and occupations.
Archives: Grant
Minimum Wages and Employment Composition
There is a large literature exploring the tension between increasing minimum wages in order to raise the hourly wages of workers and having these increases offset by reductions in overall employment or hours worked by low-wage employees. Understanding the distributional impacts of minimum wage increases is therefore essential. This project seeks to provide some of the first empirical evidence on how minimum wage reforms change firms’ occupational composition, distribution of hours, and scheduling practices. To do this, the authors will leverage shift-level microdata for the near-universe of employees and contract workers at U.S. nursing homes from the Payroll Based Journal program. The nursing home industry is an attractive setting for this research as it is a major employer of low-wage workers, especially certified nursing assistants, who provide the majority of patient care at nursing homes, are typically paid at or just above the minimum wage, and the majority of whom are immigrants and women of color. Moreover, many low-wage staff intend to work in the industry throughout their careers, in stark contrast to more heavily studied low-wage industries such as restaurants and retail, where many workers expect to leave the industry quickly. Accordingly, wage policies in the nursing home sector have the potential to not only affect the economic well-being of low-income workers but also shape gender and racial pay divides. In addition, the nursing home industry is of particular interest to regulators and policymakers since Medicaid and Medicare finance the vast majority of long-term care, and policies that affect the wages of employees in this sector will correspondingly affect state and federal budgets. Employment or composition changes may also have important consequences for quality of care.
Homeownership Disparities and Access to Family Child Care
This project will use longitudinal data from two states to explore racial disparities in access to family child care centers by looking at rates of homeownership and disparities in homeownership by race. Family child care centers—licensed child care centers located within an operator’s home—make up a declining but still substantial proportion of the supply of formal child care. There are many obstacles to licensing a family child care center in a rental property, so areas with low rates of homeownership may experience a lack of access to this often more affordable child care option. Family child care centers also tend to have more flexible hours, making them especially valuable for parents working irregular or unpredictable schedules. Borowsky will conduct a market-definition analysis intended to approximate regions of common demand and supply. He will then evaluate the extent to which low rates of homeownership in a region are associated with low supply of family child care centers.
Understanding Amazon: Strategy and Welfare Implications
This project aims to provide a detailed, comprehensive analysis of the Amazon.com Inc. platform, its evolution, market power, and welfare implications. Gutierrez will utilize a massive dataset that has product information, alongside prices and sales ranks, for products sold on Amazon’s platform to produce three papers. The first will provide an overview of the Amazon platform and study the evolution and heterogeneity of fees in order to empirically test whether Amazon’s fees to sellers reflect market power. The second will consist of a structural analysis of reselling to test whether Amazon competing on its own platform is anticompetitive. And the third paper will analyze the impact of private label products. This research not only examines the Amazon platform but also provides empirical evidence on whether these types of activities can be anticompetitive.
The Welfare Effects of Price Discrimination Under Endogenous Product Entry: the case of Implantable Medical Devices
This project seeks to answer two questions: What are the welfare effects of third-degree price discrimination, and what are the effects of third-degree price discrimination on the take-up of newer and better technologies? Goel will address this question in the context of a particular type of implantable medical device: defibrillators. The implantable medical device industry has three features that make it a compelling setting to study. First, manufacturers are able to prevent hospitals from disclosing prices, allowing them to charge different prices for the same device in different hospitals. Second, the industry is very concentrated, with more than 95 percent of the market share captured by just four firms. And third, there is a lot of product variety. On average, a manufacturer offers six brands of this particular device per year from 2014–2019. Goel will utilize a rich dataset with purchase volumes, prices, and characteristics of defibrillators, and will combine this with approval information from the U.S. Food and Drug Administration. She will then estimate a model of supply and demand, and conduct a counterfactual analysis in which third-degree price discrimination is banned in order to understand the dynamics of price discrimination.
The Impact of Paid Sick Leave Mandates on Women’s Employment, Income, and Economic Security
As the U.S. economy emerges from the coronavirus recession, public policies to support women’s ability to return to work and stay in the workforce will be necessary for economic recovery. This study seeks to assess if paid sick leave reduces short-term income volatility and increases long-term economic security through improved job attachment among women, particularly those who are less likely to have access to paid sick leave in the absence of paid sick leave mandates. Using the American Community Survey, Slopen will conduct analyses at the state and county level using the five states and 21 counties that implemented paid sick leave as the treatment group. She will exploit the variation in the timing of the implementation of mandates at the state or county level using a difference-in-differences approach to estimate the effect of paid sick leave mandates on women’s labor force participation, continuity of employment, weekly hours worked, income, and poverty. She also will identify effects on subpopulations most likely to lack access to paid sick leave in the absence of mandates.
Sectoral bargaining and spillovers in monopsonistic labour markets
There is increasing evidence of monopsony power in labor markets, with implications of lower wages and higher inequality. One popular policy recommendation is to constrain such monopsony power through more organized unions of workers, such as in local bargaining councils—collections of trade unions and employers representing specific industry-regions that consultatively bargain over and set minimum wages and working conditions for those industry-regions. This project will study the effect of such “sectoral bargaining” using South African data. Using matched employer-employee tax data from the South African Revenue Service, Bassier will match these agreements to firms as demarcated by industry and location. There are currently 39 legally recognized bargaining councils in South Africa, each covering a specific industry-region. Bargaining councils are estimated to cover 40 percent of workers in the formal sector in South Africa, concentrated mainly in the manufacturing, construction, trade, and transport industries in addition to covering the public sector. This research could give insight into how sectoral bargaining could improve worker power and mitigate the effects of monopsonistic labor markets.
Optimal Monetary Policy with Menu Costs is Nominal Wage Targeting
Central banks across the developed world are reconsidering their monetary policy frameworks and are frequently looking to academic research to inform the question of whether to stick with the dominant paradigm of inflation targeting or to adopt a new monetary policy regime. To address this question, Halperin and Caratelli will build a model where price stickiness is modeled in a substantially more realistic way, compared to other models, in order to explore whether it is optimal for central banks to use nominal income targeting rather than inflation targeting. The two researchers will examine whether nominal income targeting would mean that central banks would not have to tighten policy in response to strong wage growth, which could boost equitable growth.
Who Weathers the Storm? The Unequal Effects of Hurricanes in the United States
Understanding the degree to which, and how, hurricanes have had disparate effects across disadvantaged and advantaged groups in the United States is key to policymakers’ ability to craft climate policy that ensures disadvantaged communities do not bear the brunt of our warming world. Most of the literature in this area has focused on average impacts, with relatively little attention paid to heterogeneity. But even in cases where no negative impacts of natural disasters are found, on average, some subgroups may experience substantial negative effects. This project leverages newly linked administrative tax data from the IRS and demographic information from the American Community Survey and decennial census with exogenous variation in individual-level exposure to all hurricanes in the United States between 1995 and 2019. The analysis seeks to uncover a deeper understanding of the consequences of and responses to hurricanes, and how these effects differ across socioeconomic and demographic groups.
Joint Ventures in Dialysis Care: Improving Coordination or Enabling Market Power?
In virtually all areas of the U.S. healthcare service sector, physicians are barred from referring patients to entities in which they have an ownership stake. But this is not the case for the dialysis industry, which is exempt from such restrictions. Joint ventures between physicians and dialysis facilities exist at nearly 20 percent of facilities. This research will explore how physicians’ ownership ties with dialysis firms affect steering, spending, and outcomes. Using data obtained from a Freedom of Information Act request from the Centers for Medicare and Medicaid Services, Eliason, McDevitt, and Roberts will construct a first-of-its-kind dataset that tracks the ownership of dialysis facilities, including whether physicians have an ownership stake. They will add in data on dialysis providers and patients, including detailed Medicare claims and rich information on patient characteristics and health outcomes. An event-study analysis will allow the three researchers to test whether there is a clear trend-break in new patient arrivals and referrals when parties enter into a joint venture in order to examine how integration affects competition. The analysis will enable the researchers to study how patient caseloads and referrals at unintegrated facilities change after a nearby rival forms a joint venture, along with the impact of vertical integration on patient outcomes such as hospitalizations and mortality, as well as overall Medicare spending. Prior research has found that Black, Latinx, and low-income patients suffer disproportionately from kidney failure and often receive worse care, potentially making these groups especially vulnerable to providers’ growing market power and physicians’ conflicting interests.