How much does the liquidity of the secondary market matter for the pricing of the housing market? In this paper, we investigate a discontinuity in the supply of mortgages called the “conforming loan limit.” Mortgage loans smaller than this limit are eligible to be purchased by Fannie Mae and Freddie Mac—and therefore, they are more easily underwritten and more readily supplied by lenders. Using county-level variation in this limit and a border discontinuity model with transaction-level data, we estimate that a 10% increase in this limit leads to a 3% to 4% increase in housing prices. We identify the transmission mechanism primarily at the intensive margins, as the higher conforming loan limit leads to larger individual loans and therefore a greater volume of total lending. We show evidence that this effect is likely driven by greater availability, rather than lower interest pricing, of conforming loans.

Do employees trust founders more than professional managers? We explore this question with employee actions that are indicative of their distrust in management. We document significant differences in unionization efforts, labor strikes, and unfair labor practice (ULP) complaints between founder-managed firms and professionally managed firms. We posit that these differences stem from the predictability of corporate culture in founder firms and the alignment of interests between founders and employees. Although we employ various methods to establish causation, drawing definitive conclusions regarding employee trust in management is challenging due to the vastly different characteristics of founder-led firms compared to professionally managed firms.