In a setting of many-to-one two-sided matching with nontransferable utilities, for example, college admissions, we study conditions under which preferences of both sides are identified with data on one single market. Regardless of whether the market is centralized or decentralized, assuming that the observed matching is stable, we show nonparametric identification of preferences of both sides under certain exclusion restrictions. To take our results to the data, we use Monte Carlo simulations to evaluate different estimators, including the ones that are directly constructed from the identification. We find that a parametric Bayesian approach with a Gibbs sampler works well in realistically sized problems. Finally, we illustrate our methodology in decentralized admissions to public and private schools in Chile and conduct a counterfactual analysis of an affirmative action policy.
{"title":"Identification and Estimation in Many-to-One Two-Sided Matching Without Transfers","authors":"YingHua He, Shruti Sinha, Xiaoting Sun","doi":"10.3982/ECTA19636","DOIUrl":"https://doi.org/10.3982/ECTA19636","url":null,"abstract":"<div>\u0000 <p>In a setting of many-to-one two-sided matching with nontransferable utilities, for example, college admissions, we study conditions under which preferences of both sides are identified with data on one single market. Regardless of whether the market is centralized or decentralized, assuming that the observed matching is stable, we show nonparametric identification of preferences of both sides under certain exclusion restrictions. To take our results to the data, we use Monte Carlo simulations to evaluate different estimators, including the ones that are directly constructed from the identification. We find that a parametric Bayesian approach with a Gibbs sampler works well in realistically sized problems. Finally, we illustrate our methodology in decentralized admissions to public and private schools in Chile and conduct a counterfactual analysis of an affirmative action policy.</p>\u0000 </div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 3","pages":"749-774"},"PeriodicalIF":6.1,"publicationDate":"2024-06-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA19636","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141251388","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies certification design and its implications for information disclosure. Our model features a profit-maximizing certifier and the seller of a good of unknown quality. We allow for common values as the seller's opportunity cost may depend on the quality of the good. We compare certifier-optimal with transparency-maximizing certification design. Certifier-optimal certification design implements the evidence structure of Dye (1985)—a fraction of sellers acquire information while the remaining sellers are uninformed—and results in partial disclosure to the market. A transparency-maximizing regulator prefers a less precise signal, which conveys more information to the market through a higher rate of certification and unraveling (Grossman (1981), Milgrom (1981)) at the disclosure stage.
{"title":"Certification Design With Common Values","authors":"Andreas Asseyer, Ran Weksler","doi":"10.3982/ECTA21653","DOIUrl":"https://doi.org/10.3982/ECTA21653","url":null,"abstract":"<div>\u0000 <p>This paper studies certification design and its implications for information disclosure. Our model features a profit-maximizing certifier and the seller of a good of unknown quality. We allow for common values as the seller's opportunity cost may depend on the quality of the good. We compare certifier-optimal with transparency-maximizing certification design. Certifier-optimal certification design implements the evidence structure of Dye (1985)—a fraction of sellers acquire information while the remaining sellers are uninformed—and results in partial disclosure to the market. A transparency-maximizing regulator prefers a less precise signal, which conveys more information to the market through a higher rate of certification and unraveling (Grossman (1981), Milgrom (1981)) at the disclosure stage.</p>\u0000 </div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 3","pages":"651-686"},"PeriodicalIF":6.1,"publicationDate":"2024-06-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA21653","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141251380","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Tom Ahn, Peter Arcidiacono, Amy Hopson, James Thomas
We show that stricter grading policies in STEM courses reduce STEM enrollment, especially for women. We estimate a model of student demand for courses and optimal effort choices given professor grading policies. Grading policies are treated as equilibrium objects that in part depend on student demand for courses. Differences in demand for STEM and non-STEM courses explain much of why STEM classes give lower grades. Restrictions on grading policies that equalize average grades across classes reduce the STEM gender gap and increase overall enrollment in STEM classes.
{"title":"Equilibrium Grading Policies With Implications for Female Interest in STEM Courses","authors":"Tom Ahn, Peter Arcidiacono, Amy Hopson, James Thomas","doi":"10.3982/ECTA17876","DOIUrl":"https://doi.org/10.3982/ECTA17876","url":null,"abstract":"<p>We show that stricter grading policies in STEM courses reduce STEM enrollment, especially for women. We estimate a model of student demand for courses and optimal effort choices given professor grading policies. Grading policies are treated as equilibrium objects that in part depend on student demand for courses. Differences in demand for STEM and non-STEM courses explain much of why STEM classes give lower grades. Restrictions on grading policies that equalize average grades across classes reduce the STEM gender gap and increase overall enrollment in STEM classes.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 3","pages":"849-880"},"PeriodicalIF":6.1,"publicationDate":"2024-06-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141251389","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}
{"title":"The Econometric Society 2023 Annual Report of the President","authors":"","doi":"10.3982/ECTA923PRES","DOIUrl":"https://doi.org/10.3982/ECTA923PRES","url":null,"abstract":"","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 3","pages":"931-945"},"PeriodicalIF":6.1,"publicationDate":"2024-06-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141251392","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 note makes a brief response to Portnoy (2022) and Pötscher and Preinerstorfer (2024), and discusses what instructors should teach about best unbiased estimation.
{"title":"Reply to: Comment on “A Modern Gauss–Markov Theorem”","authors":"Bruce E. Hansen","doi":"10.3982/ECTA22362","DOIUrl":"https://doi.org/10.3982/ECTA22362","url":null,"abstract":"<div>\u0000 <p>This note makes a brief response to Portnoy (2022) and Pötscher and Preinerstorfer (2024), and discusses what instructors should teach about best unbiased estimation.</p>\u0000 </div>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 3","pages":"925-928"},"PeriodicalIF":6.1,"publicationDate":"2024-06-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22362","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141251387","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Shubhdeep Deb, Jan Eeckhout, Aseem Patel, Lawrence Warren
<p><span><span>Violante</span></span> <span>(</span><span><span>2023</span></span><span>) and</span> <span><span>Van Reenen</span></span> <span>(</span><span><span>2023</span></span><span>)</span> offer a comprehensive review of the lecture and point out the key aspects of the paper. We are grateful for their comments which have greatly improved this research.</p><p>Our goals in this paper are twofold: (a) to provide a methodological framework that jointly incorporates goods market power (oligopoly) and labor market power (oligopsony) in a general equilibrium setting, and (b) to propose an empirical strategy for applying such a framework to microdata to estimate key structural parameters and a joint distribution of establishment-level productivity. Combined, these features allow us to quantify the relative importance of technological change and changes in market structure on the labor market, in particular on the evolution of wages, wage stagnation, and wage inequality. The main insight of our model is that market power and wage inequality are both endogenous objects, determined simultaneously in equilibrium by (1) the market structure (the number of competing firms); (2) the dispersion of establishment-level productivity; and (3) the substitutability parameters in the product and labor markets.</p><p>We find that a change in the market structure (excluding changes in the dispersion of productivity and within- and between-market substitutability parameters) accounts for 8.1% of the rise in the skill premium, and 54.8% of the increase in between-establishment inequality. Our analysis also establishes that technology is indeed the main driver of wage inequality, whereas the decline in competition is behind the increasing gap between wages and productivity.</p><p>Both commentators rightly point out that our assumption of perfectly <i>overlapping boundaries</i> between product and labor markets is strong. We agree, and nonetheless maintain this simplifying assumption for two reasons. The first is for computational tractability, as allowing for non-overlapping boundaries greatly increases the dimensionality of the system of equations needed to compute the economy's equilibrium.<sup>1</sup> Second, we estimate market structure without using industry, occupation, or geography-based definitions, which would be considerably more challenging without overlapping boundaries.<sup>2</sup> Additional future work is needed to establish whether, in which direction, and by what magnitude non-overlapping markets will alter our results with multiple skilled inputs. Despite the simplification in our analysis, our model provides a computationally tractable way to analyze the effect of imperfect competition on labor market inequality.</p><p>Both commentators further emphasize the need to carefully disentangle the <i>sources</i> of firms' market power. We agree that it is important to understand whether rising markups are due to lax antitrust enforcement or to past inve
{"title":"Reply to: Comments on “Walras–Bowley Lecture: Market Power and Wage Inequality”","authors":"Shubhdeep Deb, Jan Eeckhout, Aseem Patel, Lawrence Warren","doi":"10.3982/ECTA22384","DOIUrl":"https://doi.org/10.3982/ECTA22384","url":null,"abstract":"<p><span><span>Violante</span></span> <span>(</span><span><span>2023</span></span><span>) and</span> <span><span>Van Reenen</span></span> <span>(</span><span><span>2023</span></span><span>)</span> offer a comprehensive review of the lecture and point out the key aspects of the paper. We are grateful for their comments which have greatly improved this research.</p><p>Our goals in this paper are twofold: (a) to provide a methodological framework that jointly incorporates goods market power (oligopoly) and labor market power (oligopsony) in a general equilibrium setting, and (b) to propose an empirical strategy for applying such a framework to microdata to estimate key structural parameters and a joint distribution of establishment-level productivity. Combined, these features allow us to quantify the relative importance of technological change and changes in market structure on the labor market, in particular on the evolution of wages, wage stagnation, and wage inequality. The main insight of our model is that market power and wage inequality are both endogenous objects, determined simultaneously in equilibrium by (1) the market structure (the number of competing firms); (2) the dispersion of establishment-level productivity; and (3) the substitutability parameters in the product and labor markets.</p><p>We find that a change in the market structure (excluding changes in the dispersion of productivity and within- and between-market substitutability parameters) accounts for 8.1% of the rise in the skill premium, and 54.8% of the increase in between-establishment inequality. Our analysis also establishes that technology is indeed the main driver of wage inequality, whereas the decline in competition is behind the increasing gap between wages and productivity.</p><p>Both commentators rightly point out that our assumption of perfectly <i>overlapping boundaries</i> between product and labor markets is strong. We agree, and nonetheless maintain this simplifying assumption for two reasons. The first is for computational tractability, as allowing for non-overlapping boundaries greatly increases the dimensionality of the system of equations needed to compute the economy's equilibrium.<sup>1</sup> Second, we estimate market structure without using industry, occupation, or geography-based definitions, which would be considerably more challenging without overlapping boundaries.<sup>2</sup> Additional future work is needed to establish whether, in which direction, and by what magnitude non-overlapping markets will alter our results with multiple skilled inputs. Despite the simplification in our analysis, our model provides a computationally tractable way to analyze the effect of imperfect competition on labor market inequality.</p><p>Both commentators further emphasize the need to carefully disentangle the <i>sources</i> of firms' market power. We agree that it is important to understand whether rising markups are due to lax antitrust enforcement or to past inve","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 3","pages":"647-650"},"PeriodicalIF":6.1,"publicationDate":"2024-06-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.3982/ECTA22384","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141251425","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study a flexible class of trade models with international production networks and arbitrary wedge-like distortions like markups, tariffs, or nominal rigidities. We characterize the general equilibrium response of variables to shocks in terms of microeconomic statistics. Our results are useful for decomposing the sources of real GDP and welfare growth, and for computing counterfactuals. Using the same set of microeconomic sufficient statistics, we also characterize societal losses from increases in tariffs and iceberg trade costs and dissect the qualitative and quantitative importance of accounting for disaggregated details. Our results, which can be used to compute approximate and exact counterfactuals, provide an analytical toolbox for studying large-scale trade models and help to bridge the gap between computation and theory.
我们研究了一类具有国际生产网络和任意楔形扭曲（如加价、关税或名义刚性）的灵活贸易模型。我们用微观经济统计数据来描述变量对冲击的一般均衡反应。我们的结果有助于分解实际 GDP 和福利增长的来源，也有助于计算反事实。利用同一套微观经济充分统计数据，我们还描述了关税和冰山贸易成本增加造成的社会损失，并剖析了考虑分类细节在质量和数量上的重要性。我们的结果可用于计算近似和精确的反事实，为研究大规模贸易模型提供了一个分析工具箱，并有助于弥合计算与理论之间的差距。
{"title":"Networks, Barriers, and Trade","authors":"David Rezza Baqaee, Emmanuel Farhi","doi":"10.3982/ECTA17513","DOIUrl":"https://doi.org/10.3982/ECTA17513","url":null,"abstract":"<p>We study a flexible class of trade models with international production networks and arbitrary wedge-like distortions like markups, tariffs, or nominal rigidities. We characterize the general equilibrium response of variables to shocks in terms of microeconomic statistics. Our results are useful for decomposing the sources of real GDP and welfare growth, and for computing counterfactuals. Using the same set of microeconomic sufficient statistics, we also characterize societal losses from increases in tariffs and iceberg trade costs and dissect the qualitative and quantitative importance of accounting for disaggregated details. Our results, which can be used to compute approximate and exact counterfactuals, provide an analytical toolbox for studying large-scale trade models and help to bridge the gap between computation and theory.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 2","pages":"505-541"},"PeriodicalIF":6.1,"publicationDate":"2024-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140161415","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}
Kyle Herkenhoff, Jeremy Lise, Guido Menzio, Gordon M. Phillips
To what extent is a worker's human capital growth affected by the quality of his coworkers? To answer this question, we develop and estimate a model in which the productivity and the human capital growth of an individual depend on the average human capital of his coworkers. The measured production function is supermodular: The marginal product of a more knowledgeable individual is increasing in the human capital of his coworkers. The measured human capital accumulation function is convex: An individual's human capital growth is increasing in coworkers' human capital only when paired with more knowledgeable coworkers, but independent of coworkers' human capital when paired with less knowledgeable coworkers. Learning from coworkers accounts for two thirds of the stock of human capital accumulated on the job. Technological changes that increase production supermodularity lead to labor market segregation and, by reducing the opportunities for low human capital workers to learn from better coworkers, lead to a decline in aggregate human capital and output.
{"title":"Production and Learning in Teams","authors":"Kyle Herkenhoff, Jeremy Lise, Guido Menzio, Gordon M. Phillips","doi":"10.3982/ECTA16748","DOIUrl":"https://doi.org/10.3982/ECTA16748","url":null,"abstract":"<p>To what extent is a worker's human capital growth affected by the quality of his coworkers? To answer this question, we develop and estimate a model in which the productivity and the human capital growth of an individual depend on the average human capital of his coworkers. The measured production function is supermodular: The marginal product of a more knowledgeable individual is increasing in the human capital of his coworkers. The measured human capital accumulation function is convex: An individual's human capital growth is increasing in coworkers' human capital only when paired with more knowledgeable coworkers, but independent of coworkers' human capital when paired with less knowledgeable coworkers. Learning from coworkers accounts for two thirds of the stock of human capital accumulated on the job. Technological changes that increase production supermodularity lead to labor market segregation and, by reducing the opportunities for low human capital workers to learn from better coworkers, lead to a decline in aggregate human capital and output.</p>","PeriodicalId":50556,"journal":{"name":"Econometrica","volume":"92 2","pages":"467-504"},"PeriodicalIF":6.1,"publicationDate":"2024-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140161414","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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