Knowledge that Transforms

Abstract Complementarities between partners’ characteristics are often held responsible for the patterns of assortative mating observed in marriage markets along different dimensions, such as race and education. However, when the marriage market is segmented into racially and educationally homogeneous clusters, people naturally have more match opportunities with their likes. In this paper, we build an empirically tractable dynamic matching model with endogenous separation and remarriage. In every period, agents participate in a competitive matching game with transferable utility, where mating strategies depend on both the expected match gains and search frictions in the form of meeting costs. We leverage panel data on the duration of both non-cohabiting and cohabiting relationships to jointly estimate both determinants of assortative mating with a nationally representative sample of the U.S. population. We show that, in the absence of search frictions, the share of matches between people of the same race (education) would decrease from 88.2% (49.2%) to 55.5% (40.8%), as opposed to 53.3% (33.5%) if singles were randomly matched. As a result, search frictions explain nearly all the racial homogamy observed in the data, but only approximately half of the observed educational homogamy, with the other half attributed to match complementarities. In a counterfactual exercise, we show that minority groups experiencing an unfavourable gender ratio when marriage markets are segmented, such as Hispanic men and Black women, would benefit from access to a broader and more diverse pool of partners.

Abstract I introduce a generic method for inference about a scalar parameter in research designs with a finite number of heterogeneous clusters where only a single cluster received treatment. This situation is commonplace in difference-in-differences estimation, but the test developed here applies more broadly. I show that the test controls size and has power under asymptotics where the number of observations within each cluster is large but the number of clusters is fixed. The test combines weighted, approximately Gaussian parameter estimates with a rearrangement procedure to obtain its critical values. The weights needed for most empirically relevant situations are tabulated in the paper. Calculation of the critical values is computationally simple and does not require simulation or resampling. The rearrangement test is highly robust to situations where some clusters are much more variable than others. Examples and an empirical application are provided.

Abstract This paper proposes that strong institutions provide comparative advantage in clean industries, and thereby improve a country’s environmental quality. I study financial, judicial, and labour market institutions. Five complementary tests evaluate and assess implications of this hypothesis. First, industries that depend on institutions are clean. Second, strong institutions increase relative exports in clean industries. Third, an industry’s complexity helps explain the link between institutions and clean goods. Fourth, cross-country differences in the composition of output between clean and dirty industries explain an important share of the global distribution of emissions. Fifth, a quantitative general equilibrium model indicates that strengthening a country’s institutions decreases its pollution through relocating dirty industries abroad, though increases pollution in other countries. The comparative advantage that strong institutions provide in clean industries gives one under-explored reason why developing countries have relatively high pollution levels.

Abstract We estimate impacts of male job loss, female job loss, and male unemployment benefits on domestic violence (DV) in Brazil. We merge individual-level employment and welfare registers with different measures of DV: judicial cases brought to criminal courts, the use of public shelters by victims, and mandatory DV notifications by health providers. Leveraging mass layoffs for identification, we first show that both male and female job loss, independently, lead to large, and pervasive increases in DV. Using a regression discontinuity design, we then show that access to unemployment benefits does not reduce DV while benefits are being paid, and it leads to higher DV risk once benefits expire. Our findings can be explained by the negative income shock brought by job loss and by increased exposure of victims to perpetrators, as partners tend to spend more time together after displacement. Although unemployment benefits partially offset the income drop following job loss, they reinforce the exposure shock as they increase unemployment duration. Since our results cannot be explained by prominent DV theories, we propose a simple model formalizing these mechanisms.

Abstract Diversity can pose fundamental challenges to state building and development. The Tanzanian Ujamaa policy—one of post-colonial Africa’s largest state-building experiments—addressed these challenges by resettling a diverse population in planned villages, where children received political education. We combine differences in exposure to Ujamaa across space and age to identify long-term impacts of the policy. Analysis of contemporary surveys shows persistent, positive effects on national identity and perceived state legitimacy. Our preferred interpretation, supported by evidence that considers alternative hypotheses, is that changes to educational content drive our results. Our findings also point to trade-offs associated with state building: while the policy contributed to establishing the new state as a legitimate central authority, exposure to Ujamaa lowered demands for democratic accountability and did not increase generalized inter-ethnic trust.

Wage rigidity is an important explanation for unemployment fluctuations. In benchmark models wages for new hires are key, but there is limited evidence on this margin. We use wages posted on vacancies, with job and establishment information, to measure the wage for new hires. We show that our measure of the wage for new hires is rigid downward and flexible upward, in two steps. First, wages change infrequently at the job level, and fall especially rarely. Second, wages do not respond to rises in unemployment, but respond strongly to falls in unemployment. Job information is crucial for detecting downward rigidity. (JEL E24, E32, J23, J31, J63, M51)