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The Speed of Earnings Responses to Taxation and the Role of Firm Labor Demand

Journal of Labor Economics 2024 42(3), 793-835
This paper studies the speed at which workers’ pretax earnings respond to tax changes along the intensive margin. We do so in the context of Germany, where a large notch in the tax schedule induces sharp bunching in the earnings distribution. We analyze earnings responses to two policy reforms that shift this notch outward and find clear evidence that frictions delay the earnings responses of more than 38% of workers. We propose that heterogeneity in firm labor demand plays a key role in generating the observed differences in the speed of workers’ earnings responses and provide supporting evidence.

Army Service in the All-Volunteer Era

Quarterly Journal of Economics 2022 137(4), 2363-2418
Since the beginning of the all-volunteer era, millions of young Americans have chosen to enlist in the military. These volunteers disproportionately come from disadvantaged backgrounds, and while some aspects of military service are likely to be beneficial, exposure to violence and other elements of service could worsen outcomes. This article links the universe of army applicants between 1990 and 2011 to their federal tax records and other administrative data and uses two eligibility thresholds in the Armed Forces Qualification Test (AFQT) in a regression discontinuity design to estimate the effects of army enlistment on earnings and related outcomes. In the 19 years following application, army service increases average annual earnings by over $4,000 at both cutoffs. However, whether service increases long-run earnings varies significantly by race. Black servicemembers experience annual gains of $5,500 to $15,000 11–19 years after applying while white servicemembers do not experience significant changes. By providing Black servicemembers a stable and well-paying army job and by opening doors to higher-paid postservice employment, the army significantly closes the Black-white earnings gap in our sample.

The Promise and Pitfalls of Conflict Prediction: Evidence from Colombia and Indonesia

The Review of Economics and Statistics 2022 104(4), 764-779
How feasible is violence early-warning prediction? Colombia and Indonesia have unusually fine-grained data. We assemble two decades of local violent events alongside hundreds of annual risk factors. We attempt to predict violence one year ahead with a range of machine learning techniques. Our models reliably identify persistent, high-violence hot spots. Violence is not simply autoregressive, as detailed histories of disaggregated violence perform best, but socioeconomic data substitute well for these histories. Even with unusually rich data, however, our models poorly predict new outbreaks or escalations of violence. These “best-case” scenarios with annual data fall short of workable early-warning systems.

The Effects of Combat Deployments on Veterans’ Outcomes

Journal of Political Economy 2024 132(8), 2830-2879
As millions of soldiers deployed to Iraq or Afghanistan between 2001 and 2021, Veteran Affairs Disability Compensation payments quadrupled and the veteran suicide rate rose rapidly. We estimate the causal contribution of combat deployments to declining veteran well-being. Deployments increase injuries, combat deaths, and disability compensation, but we find limited effects on suicide, deaths of despair, financial health, incarceration, or education. Our estimates suggest that deployment cannot explain either the recent rise in disability payments, which is more likely driven by policy changes, or the surge in noncombat deaths, which is better explained by shifts in observable characteristics of soldiers.