Knowledge that Transforms

We use Canadian matched employer-employee data to assess the sources of the union pay premium. After controlling for worker heterogeneity using the two-way fixed effects approach of Abowd, Kramarz, and Margolis (AKM), we find that unionized firms pay about 15 log points more than non-unionized firms. Forty percent of this gap is linked to productivity differences between unionized and non-unionized firms as measured by value added per worker. The remaining gap reflects unions’ ability to extract more rents for workers. Our estimates imply that unions raise pay among unionized workers by around 9 log points, with considerable heterogeneity by industry and firm birth cohorts. The union effect grows to about 11 log points in an extension of the AKM approach where unions also affect the returns to unobservable worker characteristics.

Schools across the U.S. have sharply restricted student use of phones during the school day. We evaluate one type of restriction—lockable phone pouches—using nationwide data combining a large-scale teacher survey, GPS pings, standardized test scores, and school administrative records, along with sales records from the largest pouch provider. Using a staggered difference-in-differences design, we find that pouch adoption substantially reduces phone use as measured by GPS pings and teacher reports. In the first year after adoption, disciplinary incidents increase, and we find suggestive evidence that student subjective well-being falls, consistent with short-term disruption. However, disciplinary effects fade, while the estimated effects on well-being appear to recover and become positive in later years. For academic achievement, average effects on test scores are consistently close to zero. High schools see modest positive effects, particularly in math, while middle schools see small negative effects. We find little evidence of effects on school attendance and no clear evidence of improvements in self-reported classroom attention or perceived online bullying.

People may fail to recall and use information they already know when making decisions. We empirically investigate whether such “retrieval failures” distort consumption-smoothing behavior among Zambian farmers, who derive their income from one annual harvest and spend it over the course of the year. We document that individuals underestimate upcoming spending by 50%, creating scope for undersaving. To improve recall, we randomize an intervention that prompts people to think through their future expenses associatively in categories—without providing any external information or guidance. Treated individuals increase “remembered” expenses by 36%–60%; as predicted by the memory literature, effects are concentrated among small, irregular, and stochastic items. Immediate spending drops and, six weeks after the intervention, treated households hold 15% higher savings. They subsequently enter the hungry season—the final months of the year when consumption typically declines sharply—with one additional month of savings, leading to a flatter spending profile over the year. Households use the increased savings to self-finance additional farm investment, resulting in a 9% increase in the next year’s crop revenue. We replicate the intervention’s effect on beliefs among low-income Americans, suggesting that retrieval failures generalize across settings and populations.

There is a large latent workforce in developing countries that consists of hundreds of millions of women who prefer to have paid work and yet are out of the labor force. Often, available job opportunities are incompatible with traditional gender roles that encourage women to stay at home. In a randomized experiment with 1,670 households, we partner with a jobs platform to offer short-term data work to women who are out of the labor force. We find three main results. First, flexible work-from-home jobs are highly effective at bringing women into paid work. Job flexibility more than triples take-up from 15% for an office job to 48% for a job that women can do from home while multitasking with childcare. Second, these jobs can act as a stepping stone to less flexible work. Trying paid work from home increases take-up of less flexible jobs two to three months later among women without previous work experience. “Gateway jobs” are especially important for women from more traditional households: their labor supply is more likely to be marginal to flexibility, and in turn, work experience shifts their attitudes to become less traditional. Third, from the labor demand side, remote work comes with trade-offs in worker performance. Working from the office increases accuracy by 3% and speed by 18%. However, these performance drawbacks of work-from-home arrangements may be outweighed by the increase in available workers.

We measure which economic topics are top of mind using quarterly German household and firm panels from 2020 to 2024, a period that spans the post-pandemic inflation surge and the subsequent disinflation. With these data, we study potential determinants and consequences of having inflation top of mind. In line with goal-directed attention, the likelihood that inflation is top of mind rises with proxies for its true payoff relevance. At the same time, prior experiences predict whether respondents have inflation and energy prices top of mind conditional on a large set of controls for payoff relevance, and this relationship strengthens when the environment becomes more inflationary. Having inflation top of mind predicts stronger increases in information acquisition and inflation expectations over the shock period. At odds with goal-optimality, having inflation top of mind is associated with expectations further away from multiple ex-ante benchmarks. Finally, both key determinants of having inflation top of mind—payoff relevance and prior experiences—are associated with stronger shifts of expectations away from these benchmarks over the shock period.

This paper provides the first comprehensive global evidence on people’s fairness and efficiency preferences, beliefs about the sources of inequality and the efficiency cost of redistribution, and policy attitudes toward redistribution. Using a globally harmonized consequential experiment with more than 65,000 individuals across 60 countries, we show that the source of inequality plays a substantially larger role for inequality acceptance than the efficiency cost of redistribution. At the global level, implemented inequality increases by 85 percent when inequality is caused by merit rather than luck, compared to a 14 percent increase when redistribution entails a 50 percent efficiency cost. We document substantial heterogeneity in fairness views and beliefs both within and across societies. The meritocratic fairness view is most prominent in many richer Western societies, while libertarian and egalitarian fairness views are widespread in many other parts of the world. Globally, people are more likely to believe that inequality reflects luck rather than merit, while beliefs in large efficiency costs of redistribution are relatively weak. Fairness preferences and beliefs are strongly associated with redistribution attitudes and actual redistribution through taxes and transfers across countries. Our findings illustrate how the interaction between fairness views and beliefs may shape redistribution across societies, highlighting the importance of jointly understanding preferences and beliefs in the political economy of redistribution.

Investors’ return expectations are pivotal in stock markets, but the reasoning behind these expectations is not well understood. This paper explores economic agents’ mental models of what drives returns. We survey the general population, retail investors, financial professionals, and academic experts to investigate how they forecast and explain future returns in scenarios with stale news about future company earnings. We find that investors strongly disagree in their forecasts and reasoning. Most academic experts view markets as efficient. By contrast, most households express a perspective we call “expected earnings reasoning”: they directly equate higher expected earnings with higher expected returns. Professionals are split between market efficiency, mispricing, and expected earnings reasoning. In detailed experiments, we dissect why households adopt expected earnings reasoning. We show that it arises from inattention to how stock-price changes affect investor costs — that is, how much investors must pay to acquire a claim to future cash flows — because the typical format and context of investment problems obscure these cost implications. Our results help connect a series of previously documented anomalies in expectation and trading data and highlight the importance of selective attention and context in shaping reasoning and belief formation.

Do men negatively respond when women first enter an occupation? We answer this question by studying the end of one of the final explicit occupational barriers to women in the United States: in 2016, the U.S. military opened all positions to women, including historically male-only combat occupations. We exploit the staggered integration of women into combat units to estimate the causal effects of the introduction of female colleagues on men’s job performance, behavior, and perceptions of workplace quality, using monthly administrative personnel records and rich survey responses. We find that integrating women into previously all-male units does not negatively affect men’s performance or behavioral outcomes, including retention, promotions, demotions, separations for misconduct, criminal investigations, and medical conditions. Most of our results are precise enough to rule out small detrimental effects. However, there is a wedge between men’s perceptions and performance. The integration of women causes a negative shift in male soldiers’ perceptions of workplace quality. The decline is driven by units integrated with female officers, likely arising from female officers increasing men’s awareness of workplace problems or from men’s dissatisfaction from working with women in positions of authority—even though men in such units show some performance gains. If male-dominated workplaces are reluctant to incorporate women due to expectations that men will become less productive, our paper provides evidence to weigh against that notion.

We study the effect of conflict-induced displacement on human capital and occupational shifts, focusing on the Mozambican civil war (1977–1992), during which millions of civilians were forced to flee to the countryside, cities, and neighboring countries. Reconstructing the wartime mobility histories of the surviving population, we examine the consequences of multiple displacement trajectories in a unified framework. First, we characterize the education and sectoral employment of the universe of (non-)displaced. Second, we exploit differences in relocation trajectories among extended kin members during their schooling years. Displacement is associated with significant gains in education. Third, using a movers design, we show that minors displaced earlier to better districts experienced an increase in educational attainment. Focusing on moves during the intensification of the war and when comparing members of the same household, regional childhood exposure effects remain strong, whereas spatial sorting becomes negligible. Fourth, we jointly estimate place-based, spatial sorting, and uprootedness effects, showing that all forces are at play. Fifth, a small survey in Mozambique’s largest northern city reveals long-term effects: internally displaced people report higher education than their siblings who stayed behind but lower social capital and worse mental health relative to locals. Our findings demonstrate that displacement shocks can foster human capital accumulation, even in very low-income settings, albeit at the cost of enduring social and psychological traumas.

This article investigates whether virtual contact, initiated through a documentary film, can promote interethnic harmony. We carried out a cluster-randomized field experiment involving over 3,300 households across 121 multiethnic villages in Bangladesh. We find that a documentary film, designed to humanize the ethnic-minority Santals and evoke empathy among the ethnic majority Bengalis, increased the ethnic majority’s prosociality toward minorities, though the strength of the evidence varies by treatment arm and outcome. Using emotion-detecting software to analyze facial expressions during the film viewing suggests that the documentary elicited emotional responses consistent with empathy. We do not find evidence that the intervention reduced the prevalence of negative stereotypes and discriminatory opinions toward minorities. In villages assigned to target network-central people, we find positive behavioral effects on untreated individuals, including Santals, and village-level administrative data suggest a reduction in police complaints in those villages. About five months after the intervention, we conducted a casual-work field experiment involving 720 participants from the main intervention. In this task, pairs of ethnic-majority and minority participants jointly produced paper bags for a local supplier under a piece-rate compensation scheme. We find positive treatment effects on productivity for both ethnic groups, with effects concentrated in villages where network-central people were treated. For the ethnic majority, increased prosociality, and for the ethnic minority, reciprocity or peer pressure may have contributed to increased productivity. Overall, our findings suggest that virtual contact and social networks may help promote harmony in multiethnic communities.