Knowledge that Transforms

We propose a quantitative spatial model featuring heterogeneous worker groups and their travel to consume nontradable goods and services. We consider the opening of the Downtown Line in Singapore, which connected regions where high-income households have residential amenities to where nontraded sectors are productive. Leveraging transit farecard data, we show that high-income workers saw large welfare gains but low-income workers gained little. Everyone enjoyed improved access to consumption opportunities, but low-income jobs in nontradables moved to less attractive workplaces. Abstracting from consumption travel understates the disparate impact across worker groups threefold.

We show that the demand shocks associated with the U.S. Civil War and World War I led to substantial increases in prosthetic device patenting (relative to patenting in other medical and mechanical technology classes). Through analyses of patent texts, we find that the Civil War led inventors to focus on production process improvements, while World War I did not. Further, we find that inventors emphasized dimensions of product quality that aligned with differences in buyers’ preferences across wars. Alongside evidence from the historical record, these findings imply that procurement environments can significantly shape the scientific problems with which inventors engage.

This paper examines the effect of expanding transportation networks on spatial industrial growth across the United States from 1953 to 2016. I use a new methodological approach that applies network theory combined with a historic military map to address the two forms of endogeneity present in expanding transportation networks: route placement and construction timing. I find that Interstate counties experienced significant growth in employment and the number of establishments relative to non-Interstate counties. Growth rates are highest within two decades of receiving an Interstate. Results also reveal positive spillovers occurred in later decades among adjacent counties along the metropolitan periphery.

Does police oversight increase crime? Studies examining this relationship often rely on major scandals as shocks, but the simultaneous effect of public outrage on officer behavior and crime contaminates the results. Using a framework distinguishing oversight and outrage, we identify two events that increased oversight but elicited no public reaction. We find that despite a subsequent decline in reported misconduct, these oversight increases likely did not significantly impact crime or officer activity, suggesting oversight can reduce misconduct without increasing crime. However, a major policing scandal likely increased crime but did not increase arrests and decreased stops and uses of force.

This article investigates the determinants of international technology licensing using data for 50 countries during 1996–2012. A multicountry model of innovation yields a dynamic structural gravity equation for royalty payments as a function of fundamentals, including imperfect intellectual property protection and differences in corporate taxation. The gravity equation is estimated with nonlinear methods. My model’s fundamentals account for about 60% of the variation in royalty payments. A quantitative analysis sheds light on the impact of global taxation reforms on international technology licensing and innovation. The findings highlight the role of taxation in shaping cross-border technology flows and the consequences of profit-shifting.

We study how stickiness in business relationships influences the trade impact of aggregate uncertainty. To begin, we construct a product-level index of relationship stickiness using firm-to-firm relationship duration data. We then demonstrate how relationship stickiness shapes trade dynamics in response to uncertainty shocks. We find that episodes of uncertainty lead to a decline in the overall establishment of new business relationships, with the impact varying depending on the level of stickiness. In markets characterized by high stickiness, uncertainty shocks primarily impede investments in new firm-to-firm relationships. In contrast, for nonsticky products, the adjustment to uncertainty shocks mainly manifests as the disruption of existing relationships.

Multinational firms (MNEs) dominate trade flows, yet their foreign production decisions are often ignored in firm-level studies of exporting and importing. Using newly merged data on U.S. firms’ trade and global production, we show that MNEs are more likely to trade with countries that are proximate to their affiliates. We rationalize these patterns with a new source of firm-level scale economies that arises when fixed costs to source from, or sell in, a market are shared across the MNE’s plants. These shared fixed costs create interdependencies between firms’ production and trade locations that generate third-market responses to trade policy changes.

We develop a data-rich measure of expected macroeconomic skewness in the U.S. economy. Expected macroeconomic skewness is strongly procyclical, mainly reflects the cyclicality in the skewness of real variables, is highly correlated with the cross-sectional skewness of firm-level employment growth, and is distinct from financial market skewness. Revisions in expected skewness lead to business cycle fluctuations nearly indistinguishable from those induced by the main business cycle shock of Angeletos et al. (2020). This result is robust to controlling for macroeconomic volatility and uncertainty, and alternative macroeconomic shocks. Our findings suggest an important role of higher-order dynamics for business cycle theories.

Addressing climate change requires individual behavior change and voter support for pro-climate policies, yet surprisingly little is known about how to achieve these outcomes. In this paper, we estimate causal effects of additional education on pro-climate outcomes using new compulsory schooling law data across 20 European countries. We analyze effects on pro-climate beliefs and behaviors, as well as novel data on policy preferences and voting for green parties. Results show that a year of education substantially increases pro-climate beliefs, behaviors, and policy preferences.

Relative intergenerational mobility declined for cohorts born around 1960 compared to those born around 1950. The former entered the labor market after the rise in inequality around 1980, while the latter entered the labor market earlier. We show that the rank-rank slope rose from 0.25 to 0.36 and the intergenerational elasticity increased from 0.28 to 0.45. These increases are more pronounced for men than for women. Increases in returns to schooling and in the gradient in the likelihood of marriage by parent income are contributors to increased intergenerational persistence.