Knowledge that Transforms

Using full-population data from Finland, we show that individuals at the top of the income distribution are significantly more likely to start new incorporated businesses. High-income earners also establish more successful and productive businesses than others. In contrast, parental income is not linked with selection into new entrepreneurship or firm-level outcomes. We find that income gains from entrepreneurship are rather similar across individual and parental characteristics, and that entrepreneurship is associated with upward income mobility regardless of initial income levels. Overall, our findings suggest that entrepreneurship can serve as an upward economic ladder for individuals from diverse backgrounds.

Most studies on the labor market effects of immigration use repeated cross-sectional data to estimate the effects of immigration on regions. This paper shows that such regional effects are composites of effects that address fundamental questions in the immigration debate but remain unidentified with repeated cross-sectional data. We provide a unifying empirical framework that decomposes the regional effects of immigration into their underlying components and show how these are identifiable from data that track workers over time. Our empirical application illustrates that such analysis yields a far more informative picture of immigration's effects on wages, employment, and occupational upgrading.

This paper discovers that people born in the fourth quarter tend to have better lifecycle outcomes for 1930-1990 cohorts in China, and this birth quarter effect (BQE) is larger for females than males. To explain this finding, we hypothesize that seasonality in agricultural production, combined with son preference, leads to a gender gap in BQEs on child neonatal investment, and subsequently, on lifecycle outcomes. Exploiting seasonal agricultural production patterns and spatial variations in crop structures across provinces in China, we find individuals born in seasons with more abundant household resources for neonatal investment tend to have better lifecycle outcomes. In addition, we leverage weather shocks as a natural experiment for agricultural production and find that higher agricultural output in the previous year reduces the gender gap in BQEs in a given year of birth. Exploring China's economic reform in 1979 as a quasi-experiment, we further find that the effect of previous-year agricultural output is mitigated by economic development. Finally, we find a gender gap in BQEs on child neonatal investment, which is proxied by infant breastfeeding. Our findings demonstrate that economic development lessens the effect of poverty on gender inequality.

Does opening the door to US citizenship for unauthorized immigrants cause out-of-control “chain migration”? We address this question using variation from the legalization programs of the Immigration Reform and Control Act of 1986 (IRCA). Exploiting IRCA’s introduction and differences across metropolitan areas in program intensity, we estimate that each IRCA-legalized Mexican was responsible for the subsequent immigration and legal admission of one relative, in total, through 2019. Most sponsored relatives were immediate family, and the adult sponsorship rate is inconsistent with out-of-control chain migration. Estimates using cross-country variation are substantively similar and suggest limited demand for reunification of extended families.

Children’s and parents’ incomes are highly correlated, yet little is known about how early-career shocks contribute to this correlation. This paper focuses on a consequential labor market shock: job loss. We document three new results. First, adult children born into the bottom 20% of the income distribution have double the unemployment following job loss compared with those from the top 20% and 154% higher earnings losses. Second, this increases the rank-rank correlation 30% for those impacted. Third, richer parents provide career opportunities to their adult children after job loss, consistent with advantages from wealthy parents persisting well into adulthood.

The US suffers from persistent regional disparities in employment rates. In principle, these disparities should be eliminated by population mobility. Can immigration fulfill this role? Remarkably, since 1960, I show that new migrants from abroad account for 40% of the average population response to these disparities - which vastly exceeds their historic share of gross migratory flows. But despite this, immigration does not significantly accelerate local population adjustment (or reduce local employment rate disparities), as it crowds out the contribution from internal mobility. Indeed, this crowd-out can help account for the concurrent decline in internal mobility. Finally, I attribute the “excess” foreign contribution to a local snowballing effect, driven by persistent local shocks and the dynamics of migrant enclaves. This mechanism raises challenges to the (pervasive) application of migrant enclaves as an instrument for foreign inflows. But rather than abandoning the instrument, I offer an empirical strategy (motivated by my model) to overcome these challenges; and I demonstrate its efficacy.