Knowledge that Transforms

We evaluate the impact of a training program aimed at improving the relational atmosphere in the workplace. The program encourages prosocial behavior and the use of professional language, focusing primarily on leaders’ behavior and leader-subordinate interactions. We implement this program using a clustered randomized design involving over 3,000 headquarters employees of 20 large corporations in Turkey. We evaluate the program with respect to employee separation, pro- and antisocial behavior, the prevalence of support networks, and perceived workplace climate. We find that treated firms have a lower likelihood of employee separation at the leadership level, fewer employees lacking professional and personal help, and denser, less segregated support networks. We also find that employees in treated corporations are less inclined to engage in toxic competition, exhibit higher reciprocity toward each other, and report higher workplace satisfaction and a more collegial environment. The program’s success in improving leader-subordinate relationships emerges as a likely mechanism to explain these results. Treated subordinates report higher professionalism and empathy in their leaders and are more likely to consider their leaders as professional support providers.

Economic theory predicts that outsourcing public services to private firms reduces costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in Stockholm County, Sweden, a setting where patients are as good as randomly assigned to ambulances with different ownership status. We find that private ambulances reduce costs and perform better on contracted measures such as response time, but perform worse on noncontracted measures such as mortality. In fact, a patient has a 1.4% higher risk of death within three years if a private ambulance is dispatched (in aggregate, 420 more deaths each year). We also present evidence of the mechanism at work, suggesting that private firms cut costs at the expense of ambulance staff quality.

We develop a new data set to study asset specificity among nonfinancial firms. Our data cover the liquidation values of each category of assets on firms’ balance sheets and provides information across major industries. First, we find that nonfinancial firms have high asset specificity. For example, the liquidation value of fixed assets is 35% of the net book value in the average industry. Second, we analyze the determinants of asset specificity and document that assets’ physical attributes (e.g., mobility, durability, and customization) play a crucial role. Third, we investigate several implications. Consistent with theories of investment irreversibility, high asset specificity is associated with less disinvestment and stronger effects of uncertainty on investment activities. We also find that the increasing prevalence of intangible assets has not significantly reduced firms’ liquidation values.

We run a series of experiments involving over 4,000 online participants and over 10,000 school-aged youth. When individuals are asked to subjectively describe their performance on a male-typed task relating to math and science, we find a large gender gap in self-evaluations. This gap arises when self-evaluations are provided to potential employers, and thus measure self-promotion, and when self-evaluations are not driven by incentives to promote. The gender gap in self-evaluations proves to be persistent and arises as early as the sixth grade. No gender gap arises if individuals are asked about their performance on a more female-typed task.

We give a full analytic characterization of a large class of sticky-price models where the firm’s price-setting behavior is described by a generalized hazard function. Such a function allows for a vast variety of empirical hazards to be fitted. This setup is microfounded by random adjustment costs, as in Caballero and Engel (1999), or by information frictions, as in Woodford (2009). We establish two main results. First, we show how to identify all the primitives of the model, including the distribution of the fundamental adjustment costs and the implied generalized hazard function, using the distribution of price changes. Second, we derive a sufficient statistic for the aggregate effect of a monetary shock: given an arbitrary generalized hazard function, the cumulative impulse response of output to a once-and-for-all monetary shock is proportional to the ratio of the kurtosis of the steady-state distribution of price changes over the frequency of price adjustment. We prove that Calvo’s model yields the upper bound and Golosov and Lucas’s model the lower bound on this measure in the class of random menu cost models.

There are two broad views as to why people stay poor. One emphasizes differences in fundamentals, such as ability, talent, or motivation. The poverty traps view emphasizes differences in opportunities that stem from access to wealth. To test these views, we exploit a large-scale, randomized asset transfer and an 11-year panel of 6,000 households who begin in extreme poverty. The setting is rural Bangladesh, and the assets are cows. The data support the poverty traps view—we identify a threshold level of initial assets above which households accumulate assets, take on better occupations (from casual labor in agriculture or domestic services to running small livestock businesses), and grow out of poverty. The reverse happens for those below the threshold. Structural estimation of an occupational choice model reveals that almost all beneficiaries are misallocated in the work they do at baseline and that the gains arising from eliminating misallocation would far exceed the program costs. Our findings imply that large transfers, which create better jobs for the poor, are an effective means of getting people out of poverty traps and reducing global poverty.

We link newly digitized personnel records of the U.S. government for 1907–1921 to census data to study the segregation of the civil service by race under President Woodrow Wilson. Using a difference-in-differences design around Wilson’s inauguration, we find that the introduction of employment segregation increased the black-white earnings gap by 3.4–6.9 percentage points. This increasing gap is driven by a reallocation of existing black civil servants to lower-paid positions, lowering their returns to education. Importantly, the negative effects extend beyond Wilson’s presidency. Using census data for 1900–1940, we show that segregation caused a relative decline in the home ownership rate of black civil servants. Moreover, by comparing children of black and white civil servants in adulthood, we provide suggestive evidence that descendants of black civil servants who were exposed to Wilson’s presidency exhibit lower levels of education, earnings, and social mobility. Our combined results thus document significant short- and long-run costs borne by minorities during a unique episode of state-sanctioned discrimination.

We study the results of a massive nationwide correspondence experiment sending more than 83,000 fictitious applications with randomized characteristics to geographically dispersed jobs posted by 108 of the largest U.S. employers. Distinctively Black names reduce the probability of employer contact by 2.1 percentage points relative to distinctively white names. The magnitude of this racial gap in contact rates differs substantially across firms, exhibiting a between-company standard deviation of 1.9 percentage points. Despite an insignificant average gap in contact rates between male and female applicants, we find a between-company standard deviation in gender contact gaps of 2.7 percentage points, revealing that some firms favor male applicants and others favor women. Company-specific racial contact gaps are temporally and spatially persistent, and negatively correlated with firm profitability, federal contractor status, and a measure of recruiting centralization. Discrimination exhibits little geographical dispersion, but two-digit industry explains roughly half of the cross-firm variation in both racial and gender contact gaps. Contact gaps are highly concentrated in particular companies, with firms in the top quintile of racial discrimination responsible for nearly half of lost contacts to Black applicants in the experiment. Controlling false discovery rates to the 5% level, 23 companies are found to discriminate against Black applicants. Our findings establish that discrimination against distinctively Black names is concentrated among a select set of large employers, many of which can be identified with high confidence using large-scale inference methods.

We use a field experiment to study price discrimination in a market with price posting and negotiation. Motivated by concerns that low-income consumers do poorly in markets with privately negotiated prices, we built a call center staffed with actors armed with bargaining scripts to reveal negotiated prices and their determinants. Our actors implement sequential bargaining games under incomplete information in the field. By experimentally manipulating how information is revealed, we generate sequences of price offers that allow us to identify price discrimination in negotiations based on retailer perceptions of consumers’ search and switching costs. We also document differences in price distributions between entrants and incumbents, reflecting differences in captivity of their respective consumer bases. Finally, we show that higher prices paid by lower-income subsidy recipients in our market is not due to discriminatory targeting; they can be explained by variation in consumer willingness and ability to search and bargain.

We study the scope for international cooperation in macroprudential policies. Multinational banks contribute to and are affected by fire sales in countries they operate in. National governments setting quantity regulations noncooperatively fail to achieve the globally efficient outcome, underregulating domestic banks and overregulating foreign banks. Surprisingly, noncooperative national governments using revenue-generating Pigouvian taxation can achieve the global optimum. Intuitively, this occurs because governments internalize the business value of foreign banks through the tax revenue collected. Our theory provides a unified framework to think about international bank regulations and yields concrete insights with the potential to improve on the current policy stance.