Knowledge that Transforms

I14, O15 For forty years, the Tuskegee Study of Untreated Syphilis in the Negro Male passively monitored hundreds of adult black males with syphilis despite the availability of effective treatment. The study's methods have become synonymous with exploitation and mistreatment by the medical profession. To identify the study's effects on the behavior and health of older black men, we use an interacted difference-in-difference-in-differences model, comparing older black men to other demographic groups, before and after the Tuskegee revelation, in varying proximity to the study's victims. We find that the disclosure of the study in 1972 is correlated with increases in medical mistrust and mortality and decreases in both outpatient and inpatient physician interactions for older black men. Our estimates imply life expectancy at age 45 for black men fell by up to 1.5 years in response to the disclosure, accounting for approximately 35% of the 1980 life expectancy gap between black and white men and 25% of the gap between black men and women.

Abstract “Ban the Box” (BTB) policies restrict employers from asking about applicants’ criminal histories on job applications and are often presented as a means of reducing unemployment among black men, who disproportionately have criminal records. However, withholding information about criminal records could risk encouraging racial discrimination: employers may make assumptions about criminality based on the applicant's race. To investigate BTB’s effects, we sent approximately 15,000 online job applications on behalf of fictitious young, male applicants to employers in New Jersey and New York City before and after the adoption of BTB policies. These applications varied whether the applicant had a distinctly black or distinctly white name and the felony conviction status of the applicant. We confirm that criminal records are a major barrier to employment: employers that asked about criminal records were 63% more likely to call applicants with no record. However, our results support the concern that BTB policies encourage racial discrimination: the black-white gap in callbacks grew dramatically at companies that removed the box after the policy went into effect. Before BTB, white applicants to employers with the box received 7% more callbacks than similar black applicants, but BTB increased this gap to 43%. We believe that the best interpretation of these results is that employers are relying on exaggerated impressions of real-world racial differences in felony conviction rates.

An influential thesis often associated with de Tocqueville views social mobility as a bulwark of democracy: when members of a social group expect to join the ranks of other social groups in the near future, they should have less reason to exclude these other groups from the political process. In this article, we investigate this hypothesis using a dynamic model of political economy. As well as formalizing this argument, our model demonstrates its limits, elucidating a robust theoretical force making democracy less stable in societies with high social mobility: when the median voter expects to move up (respectively down), she would prefer to give less voice to poorer (respectively richer) social groups. Our theoretical analysis shows that in the presence of social mobility, the political preferences of an individual depend on the potentially conflicting preferences of her “future selves,” and that the evolution of institutions is determined through the implicit interaction between occupants of the same social niche at different points in time.

To answer the question in the title, this article characterizes the socially efficient organization of the market with search frictions. The efficient organization depends on the relative elasticity in the supply between the two sides of the market, the costs of participating in the market and organizing trade, and the (a)symmetry in matching. We also show that the social optimum can be implemented by a realistic market equilibrium where the organizers set up trading sites to direct the other side’s search. The results provide a unified explanation for why trade has often been organized by sellers in the goods market, by buyers (firms) in the labor market, and by both sides in the asset market. The analysis also sheds light on how the efficient market organization can change with innovations such as e-commerce and just-in-time production.

How does a large unconditional increase in salary affect the performance of incumbent employees in the public sector? We present experimental evidence on this question in the context of a policy change in Indonesia that led to a permanent doubling of teacher base salaries. Using a large-scale randomized experiment across a representative sample of Indonesian schools that accelerated this pay increase for teachers in treated schools, we find that the large pay increase significantly improved teachers' satisfaction with their income, reduced the incidence of teachers holding outside jobs, and reduced self-reported financial stress. Nevertheless, after two and three years, the increase in pay led to no improvement in student learning outcomes. The effects are precisely estimated, and we can rule out even modest positive impacts on test scores. Our results suggest that unconditional pay increases are unlikely to be an effective policy option for improving the effort and productivity of incumbent employees in public-sector settings.

This article estimates workers' preferences for firms by studying the structure of employer-to-employer transitions in U.S. administrative data. The article uses a tool from numerical linear algebra to measure the central tendency of worker flows, which is closely related to the ranking of firms revealed by workers' choices. There is evidence for compensating differentials when workers systematically move to lower-paying firms in a way that cannot be accounted for by layoffs or differences in recruiting intensity. The estimates suggest that compensating differentials account for over half of the firm component of the variance of earnings.

This study uses discontinuities in U.S. strategies employed during the Vietnam War to estimate their causal impacts. It identifies the effects of bombing by exploiting rounding thresholds in an algorithm used to target air strikes. Bombing increased the military and political activities of the communist insurgency, weakened local governance, and reduced noncommunist civic engagement. The study also exploits a spatial discontinuity across neighboring military regions that pursued different counterinsurgency strategies. A strategy emphasizing overwhelming firepower plausibly increased insurgent attacks and worsened attitudes toward the U.S. and South Vietnamese government, relative to a more hearts-and-minds-oriented approach.

Using new narrative measures of exogenous variation in marginal tax rates associated with postwar tax reforms in the US, this study estimates short run tax elasticities of reported income of around 1.2 based on time series from 1946 to 2012. Elasticities are larger in the top 1% of the income distribution but are also positive and statistically significant for other income groups. Previous time series studies of tax returns data have found little evidence for income responses to taxes outside the top of the income distribution. The different results in this study arise because of additional efforts to account for dynamics, expectations and especially the endogeneity of tax policy decisions. Marginal rate cuts lead to increases in real GDP and declines in unemployment. This study also presents evidence that the responses are to marginal tax rates rather than average tax rates. Counterfactual tax cuts targeting the top 1% alone have short-run positive effects on economic activity and incomes outside of the top 1%, but increase inequality in pre-tax incomes. Cuts for taxpayers outside of the top 1% also lead to increases in incomes and economic activity, but with a longer delay.

This article provides field-experimental evidence on status goods. We work with an Indonesian bank that markets platinum credit cards to high-income customers. In a first experiment, we show that demand for the platinum card exceeds demand for a nondescript control product with identical benefits, suggesting demand for the pure status aspect of the card. Transaction data reveal that platinum cards are more likely to be used in social contexts, implying social image motivations. In a second experiment, we provide evidence of positional externalities from the consumption of these status goods. A final experiment provides suggestive evidence that increasing self-esteem causally reduces demand for status goods, indicating that social image might be a substitute for self-image.

We use a hypothetical choice methodology to estimate preferences for workplace attributes from a sample of high-ability undergraduates attending a highly selective university. We estimate that women on average have a higher willingness to pay (WTP) for jobs with greater work flexibility and job stability, and men have a higher WTP for jobs with higher earnings growth. These job preferences relate to college major choices and to actual job choices reported in a follow-up survey four years after graduation. The gender differences in preferences explain at least a quarter of the early career gender wage gap.