I exploit the large variation across U.S. cities and through time in the relative size of the low-skilled immigrant population to estimate the causal effect of immigration on prices of nontraded goods and services. Using an instrumental variables strategy, I find that, at current immigration levels, a 10 percent increase in the share of low-skilled immigrants in the labor force decreases the price of immigrant-intensive services, such as housekeeping and gardening, by 2 percent. Wage equations suggest that lower wages are a likely channel through which these effects take place. However, wage effects are significantly larger for low-skilled immigrants than for low-skilled natives, implying that the two are imperfect substitutes.

We provide evidence of advantageous selection in the Medigap insurance market and analyze its sources. Conditional on controls for Medigap prices, those with Medigap spend, on average, $4,000 less on medical care than those without. But if we condition on health, those with Medigap spend $2,000 more. The sources of this advantageous selection include income, education, longevity expectations, and financial planning horizons, as well as cognitive ability. Conditional on all these factors, those with higher expected medical expenditures are more likely to purchase Medigap. Risk preferences do not appear as a source of advantageous selection; cognitive ability is particularly important.

We test the predictions from Becker's (1957) seminal work on employer prejudice and find that relative black wages (a) vary negatively with the prejudice of the "marginal" white in a state, (b) vary negatively with the prejudice in the lower tail of the prejudice distribution but are unaffected by the prejudice of the most prejudiced persons in a state, and (c) vary negatively with the fraction of a state that is black. Our estimates suggest that one-quarter of the racial wage gap is due to prejudice, with nontrivial consequences for black lifetime earnings

We use a novel research design to empirically detect the effect of social interactions on labor market outcomes. Using Census data on residential and employment locations, we examine whether individuals residing in the same city block are more likely to work together than those in nearby blocks. We find evidence of significant social interactions. The estimated referral effect is stronger when individuals are similar in sociodemographic characteristics. These findings are robust across specifications intended to address sorting and reverse causation. Further, the increased availability of neighborhood referrals has a significant impact on a wide range of labor market outcomes