I briefly review the emergence of “ design-based” research methods in labor economics in the 1980s and early 1990s. These methods were seen as a partial solution to the problems of credible inference identified by Ashenfelter (1974), Leamer (1978), Hendry (1980), and others. Designed-based studies typically use a simplified one-equation model of the outcome of interest—in contrast to model-based studies that specify a data generating process for all factors determining the outcome. I discuss some of the strengths and weaknesses of the design-based approach and the value of such research in the field. (JEL C20, J01, J24, J31, J38, J51, J53)
{"title":"Design-Based Research in Empirical Microeconomics","authors":"David Card","doi":"10.1257/aer.112.6.1773","DOIUrl":"https://doi.org/10.1257/aer.112.6.1773","url":null,"abstract":"I briefly review the emergence of “ design-based” research methods in labor economics in the 1980s and early 1990s. These methods were seen as a partial solution to the problems of credible inference identified by Ashenfelter (1974), Leamer (1978), Hendry (1980), and others. Designed-based studies typically use a simplified one-equation model of the outcome of interest—in contrast to model-based studies that specify a data generating process for all factors determining the outcome. I discuss some of the strengths and weaknesses of the design-based approach and the value of such research in the field. (JEL C20, J01, J24, J31, J38, J51, J53)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"51 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73066056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Two players bargain over a single indivisible good and a transfer, with one-sided incomplete information about preferences. Both players can offer arbitrary mechanisms to determine the allocation. We show that there is a unique perfect Bayesian equilibrium outcome. In the equilibrium, one of the players proposes a menu that is optimal for the uninformed player among all menus, such that each type of the informed player receives at least her payoff under complete information. The optimal menu can be implemented with at most three allocations. Under a natural assumption on the uninformed player’s beliefs, the optimal menu coincides with the Myerson’s neutral solution to the bargaining problem in this environment. (JEL C78, D82, D83)
{"title":"Bargaining with Mechanisms","authors":"Marcin Peski","doi":"10.1257/aer.20210626","DOIUrl":"https://doi.org/10.1257/aer.20210626","url":null,"abstract":"Two players bargain over a single indivisible good and a transfer, with one-sided incomplete information about preferences. Both players can offer arbitrary mechanisms to determine the allocation. We show that there is a unique perfect Bayesian equilibrium outcome. In the equilibrium, one of the players proposes a menu that is optimal for the uninformed player among all menus, such that each type of the informed player receives at least her payoff under complete information. The optimal menu can be implemented with at most three allocations. Under a natural assumption on the uninformed player’s beliefs, the optimal menu coincides with the Myerson’s neutral solution to the bargaining problem in this environment. (JEL C78, D82, D83)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"107 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89972085","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Concentration-based thresholds for horizontal mergers, such as those in the US Horizontal Merger Guidelines, play a central role in merger analysis but their basis remains unclear. We show that there is both a theoretical and an empirical basis for focusing solely on the change in concentration, and ignoring its level, in screening mergers for whether their unilateral price effects will harm consumers. We also argue that current threshold levels likely are too lax, unless one expects efficiency gains of 5 percent or greater, or other factors such as entry and product repositioning to significantly constrain the exercise of market power postmerger. (JEL D43, G34, G38, K21, L13, L41)
{"title":"Concentration Thresholds for Horizontal Mergers","authors":"Volker Nocke, M. Whinston","doi":"10.1257/aer.20201038","DOIUrl":"https://doi.org/10.1257/aer.20201038","url":null,"abstract":"Concentration-based thresholds for horizontal mergers, such as those in the US Horizontal Merger Guidelines, play a central role in merger analysis but their basis remains unclear. We show that there is both a theoretical and an empirical basis for focusing solely on the change in concentration, and ignoring its level, in screening mergers for whether their unilateral price effects will harm consumers. We also argue that current threshold levels likely are too lax, unless one expects efficiency gains of 5 percent or greater, or other factors such as entry and product repositioning to significantly constrain the exercise of market power postmerger. (JEL D43, G34, G38, K21, L13, L41)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"64 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72806692","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Stable matchings in school choice needn’t be Pareto efficient and can leave thousands of students worse off than necessary. Call a matching μ priority-neutral if no matching can make any student whose priority is violated by μ better off without violating the priority of some student who is made worse off. Call a matching priority-efficient if it is priority-neutral and Pareto efficient. We show that there is a unique priority-efficient matching and that it dominates every priority-neutral matching and every stable matching. Moreover, truth-telling is a maxmin optimal strategy for every student in the mechanism that selects the priority-efficient matching. (JEL C78, I21, I28)
{"title":"Efficient Matching in the School Choice Problem","authors":"P. Reny","doi":"10.1257/aer.20210240","DOIUrl":"https://doi.org/10.1257/aer.20210240","url":null,"abstract":"Stable matchings in school choice needn’t be Pareto efficient and can leave thousands of students worse off than necessary. Call a matching μ priority-neutral if no matching can make any student whose priority is violated by μ better off without violating the priority of some student who is made worse off. Call a matching priority-efficient if it is priority-neutral and Pareto efficient. We show that there is a unique priority-efficient matching and that it dominates every priority-neutral matching and every stable matching. Moreover, truth-telling is a maxmin optimal strategy for every student in the mechanism that selects the priority-efficient matching. (JEL C78, I21, I28)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"5 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88825865","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Fatih Guvenen, R. Mataloni, Dylan G. Rassier, Kim J. Ruhl
We show how offshore profit shifting by US multinational enterprises affects several key measures of the US economy. Profits shifted out of the United States grew rapidly from the mid-1990s to 2010 and have since waned. From 1982–2016, on average, 38 percent of income attributed to US direct investment abroad is reattributable to the United States. We find that adjusting for profit shifting shrinks the trade deficit, decreases the return on US foreign direct investment abroad, boosts productivity growth rates in the late 1990s and early 2000s, and lowers labor’s share of income. (JEL E23, E25, F14, F23, H25, H87, L25)
{"title":"Offshore Profit Shifting and Aggregate Measurement: Balance of Payments, Foreign Investment, Productivity, and the Labor Share","authors":"Fatih Guvenen, R. Mataloni, Dylan G. Rassier, Kim J. Ruhl","doi":"10.1257/aer.20190285","DOIUrl":"https://doi.org/10.1257/aer.20190285","url":null,"abstract":"We show how offshore profit shifting by US multinational enterprises affects several key measures of the US economy. Profits shifted out of the United States grew rapidly from the mid-1990s to 2010 and have since waned. From 1982–2016, on average, 38 percent of income attributed to US direct investment abroad is reattributable to the United States. We find that adjusting for profit shifting shrinks the trade deficit, decreases the return on US foreign direct investment abroad, boosts productivity growth rates in the late 1990s and early 2000s, and lowers labor’s share of income. (JEL E23, E25, F14, F23, H25, H87, L25)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"3 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90659603","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the 2013 threefold increase in the French dividend tax rate. Using administrative data covering the universe of firms from 2008 to 2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments and used this tax-induced increase in liquidity to invest more. Heterogeneity analyses show that firms with high demand and returns on capital responded most while no group of firms cut their investment. Our results reject models in which higher dividend taxes increase the cost of capital and show that the tax-induced increase in liquidity relaxes credit constraints, which can reduce capital misallocation. (JEL D22, G31, G35, H25, H32)
{"title":"Dividend Taxes and the Allocation of Capital","authors":"Charles Boissel, Adrien Matray","doi":"10.3386/w30099","DOIUrl":"https://doi.org/10.3386/w30099","url":null,"abstract":"This paper investigates the 2013 threefold increase in the French dividend tax rate. Using administrative data covering the universe of firms from 2008 to 2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments and used this tax-induced increase in liquidity to invest more. Heterogeneity analyses show that firms with high demand and returns on capital responded most while no group of firms cut their investment. Our results reject models in which higher dividend taxes increase the cost of capital and show that the tax-induced increase in liquidity relaxes credit constraints, which can reduce capital misallocation. (JEL D22, G31, G35, H25, H32)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"8 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73271429","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we conduct a structural analysis of multi-attribute auctions of contracts with a general allocation rule when private information is multidimensional. Upon modeling bidders’ contract value that accounts for their endogenous ex post actions, we nonparametrically identify bidders’ private information from their bids and estimate their joint distribution. Analyzing cash-royalty auctions of Louisiana oil leases, we find government revenue worse and development rates no better than in a cash auction with a fixed royalty in view of adverse selection and moral hazard. Our findings revise conventional wisdom on the optimality of multi-attribute auctions. (JEL D44, D82, D86, H82, Q35)
{"title":"Multidimensional Auctions of Contracts: An Empirical Analysis","authors":"Yunmi Kong, I. Perrigne, Q. Vuong","doi":"10.1257/aer.20200864","DOIUrl":"https://doi.org/10.1257/aer.20200864","url":null,"abstract":"In this paper, we conduct a structural analysis of multi-attribute auctions of contracts with a general allocation rule when private information is multidimensional. Upon modeling bidders’ contract value that accounts for their endogenous ex post actions, we nonparametrically identify bidders’ private information from their bids and estimate their joint distribution. Analyzing cash-royalty auctions of Louisiana oil leases, we find government revenue worse and development rates no better than in a cash auction with a fixed royalty in view of adverse selection and moral hazard. Our findings revise conventional wisdom on the optimality of multi-attribute auctions. (JEL D44, D82, D86, H82, Q35)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"54 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84383908","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We measure the overall influence of contextual versus individual factors (e.g., voting rules and media as opposed to race and education) on voter behavior, and explore underlying mechanisms. Using a US-wide voter-level panel, 2008–2018, we examine voters who relocate across state and county lines, tracking changes in registration, turnout, and party affiliation to estimate location and individual fixed effects in a value-added model. Location explains 37 percent of the cross-state variation in turnout (to 63 percent for individual characteristics) and an only slightly smaller share of variation in party affiliation. Place effects are larger for young and White voters. (JEL D12, D72, I20, J15, L82, R23)
{"title":"Does Context Outweigh Individual Characteristics in Driving Voting Behavior? Evidence from Relocations within the United States","authors":"Enrico Cantoni, V. Pons","doi":"10.1257/aer.20201660","DOIUrl":"https://doi.org/10.1257/aer.20201660","url":null,"abstract":"We measure the overall influence of contextual versus individual factors (e.g., voting rules and media as opposed to race and education) on voter behavior, and explore underlying mechanisms. Using a US-wide voter-level panel, 2008–2018, we examine voters who relocate across state and county lines, tracking changes in registration, turnout, and party affiliation to estimate location and individual fixed effects in a value-added model. Location explains 37 percent of the cross-state variation in turnout (to 63 percent for individual characteristics) and an only slightly smaller share of variation in party affiliation. Place effects are larger for young and White voters. (JEL D12, D72, I20, J15, L82, R23)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"211 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77489185","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A data broker sells market segmentations to a producer with private cost who sells a product to a unit mass of consumers. This paper characterizes the revenue-maximizing mechanisms for the data broker. Every optimal mechanism induces quasi-perfect price discrimination. All the consumers with values above a cost-dependent cutoff buy by paying their values while the rest of consumers do not buy. The characterization implies that market outcomes remain unchanged even if the data broker becomes more powerful—either by gaining the ability to sell access to consumers or by becoming a retailer who purchases the product and sells to the consumers exclusively. (JEL D42, D82, D83, L81, M31)
{"title":"Selling Consumer Data for Profit: Optimal Market-Segmentation Design and Its Consequences","authors":"K. Yang","doi":"10.1257/aer.20210616","DOIUrl":"https://doi.org/10.1257/aer.20210616","url":null,"abstract":"A data broker sells market segmentations to a producer with private cost who sells a product to a unit mass of consumers. This paper characterizes the revenue-maximizing mechanisms for the data broker. Every optimal mechanism induces quasi-perfect price discrimination. All the consumers with values above a cost-dependent cutoff buy by paying their values while the rest of consumers do not buy. The characterization implies that market outcomes remain unchanged even if the data broker becomes more powerful—either by gaining the ability to sell access to consumers or by becoming a retailer who purchases the product and sells to the consumers exclusively. (JEL D42, D82, D83, L81, M31)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"39 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79179929","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper documents that the earnings cost of job loss is concentrated among workers who find reemployment in lower-skill occupations, and that the cost and incidence of such occupation displacement is higher for workers who lose their job during a recession. I propose a model where hiring is endogenously more selective during recessions, leading some unemployed workers to optimally search for reemployment in lower-skill jobs. The model accounts for existing estimates of the size and cyclicality of the present value cost of job loss, and the cost of entering the labor market during a recession. (JEL E24, E32, J23, J24, J31, J63, J64)
{"title":"Understanding the Scarring Effect of Recessions","authors":"C. Huckfeldt","doi":"10.1257/aer.20160449","DOIUrl":"https://doi.org/10.1257/aer.20160449","url":null,"abstract":"This paper documents that the earnings cost of job loss is concentrated among workers who find reemployment in lower-skill occupations, and that the cost and incidence of such occupation displacement is higher for workers who lose their job during a recession. I propose a model where hiring is endogenously more selective during recessions, leading some unemployed workers to optimally search for reemployment in lower-skill jobs. The model accounts for existing estimates of the size and cyclicality of the present value cost of job loss, and the cost of entering the labor market during a recession. (JEL E24, E32, J23, J24, J31, J63, J64)","PeriodicalId":48472,"journal":{"name":"American Economic Review","volume":"62 1","pages":""},"PeriodicalIF":10.7,"publicationDate":"2022-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81534323","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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