Knowledge that Transforms

We present a class of one-to-one matching models with perfectly transferable utility. We discuss identification and inference in these separable models, and we show how their comparative statics are readily analyzed.

We use rich German administrative data to estimate new measures of skill transferability between manufacturing and other sectors. These measures capture the value of workers' human capital when applied in different sectors and are directly related to workers' displacement costs. We estimate these transferability measures using a selection correction model, which addresses workers' endogenous mobility, and a novel selection instrument based on the social network of workers. Our results indicate substantial heterogeneity in how workers can transfer their skills when they move across sectors, which implies heterogeneous displacement costs that depend on the sector to which workers reallocate.

Price and quantity interventions intended to affect assignments are common in many labor and education markets (e.g., financial aid, quotas). This article discusses an empirical framework, based on the theory of stable matching, that is suitable for policy analysis while accounting for the presence of equilibrium sorting. It then compares financial incentives and supply interventions for encouraging the training of family medicine residents in rural America. Due to equilibrium effects, the primary effect of financial incentives is to increase the quality, not numbers, of residents in rural programs, while quantity regulations directly affect numbers without adversely affecting quality.

We document four similarities between American human healthcare and American pet care: (i) rapid growth in spending as a share of GDP over the last two decades; (ii) strong income-spending gradient; (iii) rapid growth in the employment of healthcare providers; and (iv) similar propensity for high spending at the end of life. We speculate about possible implications of these similar patterns in two sectors that share many common features but differ markedly in institutional features, such as the prevalence of insurance and of public sector involvement.

A structural economic model is one where the structure of decision making is incorporated in the model specification. Structural models aim to identify three distinct, but related, objects: (i) structural “deep” parameters; (ii) underlying mechanisms; (iii) policy counterfactuals. The ability to provide counterfactual predictions sets structural models apart from reduced-form models. The focus is on studies that allow a better understanding of the mechanisms underlying observed behavior and that provide reliable insights about policy counterfactuals. Emphasis is given to models that minimize assumptions on the structural function and on unobserved heterogeneity and approaches that align structural and “reduced form” moments.

Since the early 1990s, recoveries from recessions in the US have been plagued by weak employment growth. One possible explanation for these "jobless" recoveries is rooted in technological change: middle-skill jobs, often involving routine tasks, are lost during recessions, and the displaced workers take time to transition into other jobs (Jaimovich and Siu, 2014). But technological replacement of middle-skill workers is not unique to the US – it also takes place in other developed countries (Goos, Manning, and Salomons, 2014). So if jobless recoveries in the US are due to technology, we might expect to also see them elsewhere in the developed world. We test this possibility using data on recoveries from 71 recessions in 28 industries and 17 countries from 1970-2011. We find that though GDP recovered more slowly after recent recessions, employment did not. Industries that used more routine tasks, and those more exposed to robotization, did not recently experience slower employment recoveries. Finally, middle-skill employment did not recover more slowly after recent recessions, and this pattern was no different in routine-intensive industries. Taken together, this evidence suggests that technology is not causing jobless recoveries in developed countries outside the US.

Although school choice programs are common, we know little about the underlying decision-making processes. In this study, we randomly assigned 900 junior high schools in Ghana, a country with universal secondary school choice, to 1 of 3 treatment arms: (1) information to students, (2) information to students and guardians, and (3) control group. We observe changes in beliefs, behaviors, and the decision maker's identity through a survey of guardians. Our intervention increased the likelihood that guardians were involved with and informed about the school selection process. Moreover, specifically targeting guardians led to significantly larger changes for most outcomes.

Most approaches to entrepreneurship assume that entrepreneurial control over their inventions is critical for success and, in turn, for incentives. Such control is usually supported by regulations that protect intellectual property including patents, copyrights, and trade secrets. Each give the entrepreneurs control over who can appropriate value from their activities. However, we note that another, distinct path exists for appropriation by entrepreneurs' execution. Execution forgoes the formal protection from control instead of a more rapid approach to market in the pursuit of capabilities that will allow entrepreneurs to compete with others in the future rather than block their activities per se. We characterize the conditions under which one path is preferred to another and present evidence from university startups delineating the tradeoffs at the heart of our theoretical approach.

This paper provides evidence from a negotiation experiment that the 2016 US presidential election of Donald Trump had a profound impact on individual behavior in the lab. Using a Battle of the Sexes game with unstructured communication, we find that post-election individuals are less cooperative in general, more likely to use adversarial negotiation strategies, and less likely to reach an agreement. Furthermore, this is particularly driven by men acting more aggressively toward women. Our results are robust to controlling for sample selection. These results suggest that Trump's election may have disrupted community norms around civility and chivalry.