Knowledge that Transforms

This paper examines how the allocation of authority within an organization affects workers’ incentives and performance, using personnel data from a Chinese newspaper. Relying on an authority change that transferred the right of making editorial decisions from midlevel editors to top editors in four of the eight divisions in the newspaper, I find that the authority change improves reporters’ performance while reducing their activities for private gain and decreases midlevel editors’ journalistic initiative. To reconcile these findings, a synthesis of two theories on authority and incentives—the vertical and the horizontal allocation of authority—is needed.

This paper investigates how collusion between regulators and firms affects workplace safety using the case of China’s coal mine deaths. We argue that decentralization makes collusion more likely and that its effect is strengthened if the transaction costs of collusion are lower. These hypotheses are tested by investigating the impact of decentralization contingent on regulators’ characteristics. Exploring both decentralization and centralization reforms in the coal mine industry, we find that decentralization is correlated with an increase in coal mine death rates. Moreover, this increase in mortality is larger for the regulators with lower transaction costs (proxied by the locality of origin).

This paper develops a new approach for measuring the stringency of a major form of land use regulation, building height restrictions, and applies it to an extraordinary data set of land-lease transactions from China. Our theory shows that the elasticity of land price with respect to the floor area ratio (FAR), a building height indicator, is a measure of the regulation's stringency (the extent to which FAR is kept below the free-market level). Using a national sample, estimation allowing this elasticity to be city-specific shows variation in the stringency of FAR regulation across Chinese cities. Single-city estimation for Beijing shows that stringency varies with site characteristics.

We study the effect of public subsidies from the Hill-Burton program on hospital capacity, organization of the hospital industry, and utilization. We estimate that the program accounted for a net increase of over 70,000 beds nationwide and that these effects lasted well beyond twenty years. We also show that differences in the number of hospital beds per capita between high- and low-income counties, rural and urban counties, and the South and the rest of the country fell substantially. We conclude that the program largely achieved its goals, with substantial and long-lasting effects on the U.S. hospital industry.

Admission practices at high-profile universities are often criticized for undermining academic merit. Popular tests for detecting such biases suffer from omitted characteristic bias. We develop a bounds-based test to circumvent this problem. We assume that students who are better qualified on observableswould, on average, appear academically stronger to admission officers based on unobservables. This assumption reveals the sign of differences in admission standards across demographic groups that are robust to omitted characteristics. Applying our methods to admissions data from a British university, we find higher admission standards for men and slightly higher ones for private school applicants, despite equal admission success probability across gender and school background.

Using data on the age, sex, ethnicity, and criminal involvement of more than 14 million residents of all ages residing in approximately 4,000 Dutch neighborhoods, we test if an individual's criminal involvement is affected by the proportion of criminals living in his or her residential neighborhood. We develop a binomial discrete choice model for criminal involvement and estimate it on individual data. We control for both the endogeneity that may be related to unobserved neighborhood characteristics and for sorting behavior. We find significant social interaction effects, but our findings do not imply multiple equilibria or large multiplier effects.

Quantity surcharges occur when retailers carry a product in two sizes and offer a promotion on the small size: the large size then costs more per unit than the small one. When quantity surcharges occur, sales of the large size decline only slightly even though the same quantity can be purchased for less. We document this behavior in two data sets and four product categories. It is consistent with the notion of passive shoppers found in the industrial organization literature and the notion of rational inattention in macroeconomics. We discuss implications for consumer decision making, demand estimation, and firm pricing.

Research as to the size of the black-white test score gap often comes to contradictory conclusions. Recent literature has affirmed that the source of these contradictions and other controversies in education economics may be due to the fact that test scores contain only ordinal information. In this paper, I propose a normalization of test scores that is invariant to monotonic transformations. Under fairly weak assumptions, this metric has interval properties and thus solves the ordinality problem. The measure can serve as a valuable robustness check to ensure that any results are not simply statistical artifacts from the choice of scale.

Decades of campaigns have cautioned households in Bangladesh about waterborne contaminants such as arsenic. In addition to switching water sources, mothers can protect young children from contaminated water by breastfeeding longer. We exploit time series variation in whether children were born before or after a nationwide information campaign and geographic variation in exposure to arsenic. We find that mothers breast-feed children longer in response to the campaign, especially when they have less access to uncontaminated wells, and that infants are more likely to be exclusively breast-fed. We find consistent evidence of lower mortality rates and diarrheal incidence for infants.

In the past twenty years, the share of top incomes in Switzerland has risen, while exhibiting large variations. Switzerland is similar to European countries for the top 1% but closer to the United States for higher top income groups. With the synthetic control method, we close a time gap in the tax data, exploiting the fact that Swiss cantons changed their tax system at different points in time. Using social security data, which cover all top labor incomes, we document the growing importance of labor compared to capital incomes among top income earners in Switzerland.