Roughly one-third of world trade is intrafirm trade. This paper starts by unveiling two systematic patterns in the volume of intrafirm trade. In a panel of industries, the share of intrafirm imports in total U.S. imports is significantly higher, the higher the capital intensity of the exporting industry.

Many social scientists presume that the quality of the neighborhood to which children are exposed affects a variety of long-run social outcomes. I examine the effect on long-run labor market outcomes of adults who were assigned, when young, to substantially different public housing projects in Toronto. Administrative data are matched to public housing addresses to track children from the program to when they are more than 30 years old. The main finding is that, while living conditions and exposure to crime differ substantially across projects, neighborhood quality plays little role in determining a youth's eventual earnings, unemployment likelihood, and welfare participation. Living in contrasting housing projects cannot explain large variances in labor market outcomes but family differences, as measured by sibling outcome correlations, account for up to 30 percent of the total variance in the data.

Recent immigrants tend to locate in ethnic “enclaves” within metropolitan areas. The economic consequence of living in such enclaves is still an unresolved issue. We use data from an immigrant policy initiative in Sweden, when government authorities distributed refugee immigrants across locales in a way that we argue is exogenous. This policy initiative provides a unique natural experiment, which allows us to estimate the causal effect on labor market outcomes of living in enclaves. We find substantive evidence of sorting across locations. When sorting is taken into account, living in enclaves improves labor market outcomes for less skilled immigrants: the earnings gain associated with a standard deviation increase in ethnic concentration is 13 percent. Furthermore, the quality of the enclave seems to matter. Members of high-income ethnic groups gain more from living in an enclave than members of low-income ethnic groups.

We propose a boundedly rational model of opinion formation in which individuals are subject to persuasion bias; that is, they fail to account for possible repetition in the information they receive. We show that persuasion bias implies the phenomenon of social influence, whereby one's influence on group opinions depends not only on accuracy, but also on how well-connected one is in the social network that determines communication. Persuasion bias also implies the phenomenon of unidimensional opinions; that is, individuals' opinions over a multidimensional set of issues converge to a single “left-right” spectrum. We explore the implications of our model in several natural settings, including political science and marketing, and we obtain a number of novel empirical implications.

This study examines the effect of an increase in product quality information to consumers on firms' choices of product quality. In 1998 Los Angeles County introduced hygiene quality grade cards to be displayed in restaurant windows. We show that the grade cards cause (i) restaurant health inspection scores to increase, (ii) consumer demand to become sensitive to changes in restaurants' hygiene quality, and (iii) the number of foodborne illness hospitalizations to decrease. We also provide evidence that this improvement in health outcomes is not fully explained by consumers substituting from poor hygiene restaurants to good hygiene restaurants. These results imply that the grade cards cause restaurants to make hygiene quality improvements.

This paper provides new evidence on the substitutability between private and pension wealth by exploiting the Italian pension reform of 1992. We use a difference-in-difference estimator that exploits the differential effects of the reform on individuals belonging to several year-of-birth cohorts and different occupational groups. We find convincing evidence that saving rates increase as a result of a reduction in pension wealth. By allowing for the possibility that substitutability changes with age, we find that substitutability is particularly high (and precisely estimated) for workers between 35 and 45.

Shareholder rights vary across firms. Using the incidence of 24 governance rules, we construct a “Governance Index” to proxy for the level of shareholder rights at about 1500 large firms during the 1990s. An investment strategy that bought firms in the lowest decile of the index (strongest rights) and sold firms in the highest decile of the index (weakest rights) would have earned abnormal returns of 8.5 percent per year during the sample period. We find that firms with stronger shareholder rights had higher firm value, higher profits, higher sales growth, lower capital expenditures, and made fewer corporate acquisitions.