Knowledge that Transforms

This paper analyses the interaction between a present-biased saver and profit-maximising financial providers. Using a tractable theoretical model, I find that a naïve present-biased agent selects an ‘ineffciently cheap’ (low-yield, low-fee) contract when the income effect of an interest rate change is sufficiently strong, and an ‘inefficiently expensive’ (high-yield, high-fee) contract otherwise. Subsequently, I embed the contract choice in a calibrated life-cycle model. Given the extent of present bias, exploitative contracting reduces the naïve agent's pension wealth by 8%, lowering expected annual consumption in retirement by 3%. The associated loss of consumer welfare corresponds to 0:23% of annual consumption.

Worker shortages are common in many industries. This paper examines the effect of government subsidies to address these shortages in the context of a reform that tied Medicaid payments to nursing home staffing levels. We find that the reform substantially increased staffing, especially for facilities serving many Medicaid patients. Facilities responded primarily by hiring workers in lower-wage roles rather than increasing hours of incumbent or high-wage staff. This contrasts with null effects we estimate for a non-incentivized rate increase, suggesting that the incentive structure of government payments—rather than just the level—is key to boosting employment in sectors facing worker shortages.

The surge in foreign currency (FC) corporate debt in emerging economies has sparked concerns about macroeconomic stability, heightened by speculation about non-financial firms engaging in carry trades. Using firm-level data on the currency denomination of both assets and liabilities, we find evidence of firms' carry trades: firms save in local currency liquid assets and earn higher interest income after issuing short-term FC debt. They also set aside FC liquid assets as FX risk buffers. A large degree of heterogeneity in incentives is observed. Notably, listed firms participate more in carry trades and allocate less FX risk buffers than non-listed firms.

We leverage the high degree of worker mobility across production lines in a large Indian manufacturer to estimate the sorting of workers to managers, using data on daily worker productivity. We find negative assortative matching (NAM): better workers tend to be matched with worse managers. Estimates of the production technology, however, reveal that productivity would increase by up to 4% under positive sorting. Exploiting a survey of managers and data on orders from multinational brands, we document that NAM arises, at least partly, because maintaining valuable relationships with buyers provides strong incentives to avoid delays on any given production line.

Do firms value court enforceability of their workers' noncompete agreements (NCAs)? We leverage a 2020 Washington law that made NCAs unenforceable for workers earning less than $100k per year. If firms value the ability to enforce NCAs in court, then they should give just-below threshold workers raises to reach the threshold, resulting in excess mass just above the threshold. Using administrative data, we find no evidence of bunching, even where efficiency arguments are most plausible. A survey of Washington employment attorneys suggests little bunching because firms rarely need to enforce NCAs and because firms can use other, less restrictive alternatives.

We study how peer beliefs shape individual attitudes toward maternal labor supply using hypothetical scenarios that elicit recommendations on the labor supply choices of a mother with a young child and an information treatment embedded within geographically representative surveys of the US population. Across scenarios, we find that individuals are systematically misinformed about the extent of gender conservativeness of the people around them. Exposure to information on peer beliefs leads to a shift in recommendations, driven largely by information-based belief updating. The information treatment also increases (intended and actual) donations to a non-profit organization advocating for women in the workplace.

International transactions are costly because they require investments in logistics, contracts, and the acquisition of local institutional knowledge. We posit that a portion of the fixed cost of entering a specific export market can be used toward covering the cost of acquiring imported inputs from that same market, and vice versa. Using dis-aggregated transactions data for Chinese firms from 2000 to 2015, we document firm-level trading patterns suggesting such bilateral economies of scope. Through a structural model, we estimate that the simultaneous export and import in a given country reduce export and import fixed costs by around 42 and 35 percent, respectively.

We study how a market uses temporary workers to accommodate extraordinary demand shocks. When COVID-19 surges, hospitals need additional nurses—especially in specialties central to COVID-19 care. By comparing markets for COVID-relevant and other specialties, we show that the market for travel nurses expands dramatically and estimate travel nurse labor supply across space. Supply is quite elastic, as workers can choose to travel where they are needed. Workers travel longer distances to temporary jobs when payment increases, suggesting that an integrated national market facilitates reallocation when demand spikes. But when national cases peak, travel distance is less responsive to local demand.

We study communication frictions within multinationals (MNCs), hypothesizing that language barriers reduce management knowledge transfers within the organization. A distinct feature of such MNCs is a three-tier hierarchy: foreign managers (FMs) supervise domestic managers (DMs) who supervise production workers. Tailored surveys from our setting – MNCs in Myanmar – reveal that language barriers impede interactions between FMs and DMs. A first experimental protocol offers DMs free English courses and confirms that lowering communications costs increases their interactions with FMs. A second experimental protocol that asks human-resource managers at domestic firms to rate hypothetical resumes reveals that multinational experience and, specifically, DM-FM interactions are valued in the domestic labor market. Together, these results suggest that reducing language barriers can improve transfers of management knowledge, an interpretation supported by improvements in soft skills among treatment DMs in the first experiment. A model in which communication within MNCs is non-contractible – a realistic feature of workplace life – reveals that the experimental results are consistent with underinvestment in language training and provide a rationale for policy intervention.

In nonlinear panel data models, fixed-effects methods are often criticized because they cannot identify average marginal effects (AMEs) in short panels. In contrast with that criticism, we prove the point identification of different AMEs, including causal effects of changes in the lagged dependent variable or the last choice's duration, in a panel dynamic logit model for T as small as three. Our proofs are constructive and provide simple closed-form expressions for the AMEs in terms of probabilities of choice histories. We illustrate our results using Monte Carlo experiments and with an empirical application of a dynamic model of consumer brand choice.