Edward L Glaeser of Harvard University reviews “Chicago before the Fire: An Economic History” by Louis P. Cain The Econlit abstract of this book begins: “Examines the economic and business history of Chicago before the Great Fire of 1870, focusing on how the city's early growth and development determined its rise as the Midwest's dominant city.”

The empirical economics literature on taxation in developing countries has centered on the importance of third-party information for enforcement. Yet, while surely a long-run objective, leveraging such information remains out of reach in many developing countries due to largely informal economies and low state capacity. This article examines an emerging complementary literature focused on strengthening the “sinews” of state capacity: tax administration. We argue that reforms to the organizational structure, personnel management, and task management of tax authorities have potential to raise tax capacity in developing countries. We also argue that efforts to improve the state’s legitimacy—popular acceptance of its right to tax—can increase capacity and may complement investments in tax administration. Our approach bridges a long-standing divide between how scholars in public finance and political economy approach tax capacity building in developing countries. (JEL D63, D73, H20, H50, K34, M50, O17)

Abstract Unemployment differentials are greater between countries in the euro area than between U.S. states. In both regions, net migration responds to unemployment differentials, though the response is smaller in the euro area compared to the U.S. We use a multi-country DSGE model with cross-border migration to quantify Mundell’s hypothesis that labour mobility could substitute for independent monetary policy in a currency union. While not as effective as independent monetary policy, increased labour mobility reduces business cycle fluctuations for most countries in the euro area. However, Mundell’s conjecture does not hold uniformly. For countries that primarily face demand shocks, labour mobility stabilizes inflation and unemployment and improves welfare. If supply shocks are dominant however, labour mobility increases the cost of being in a currency union by magnifying inflation volatility.

We propose life history (LH) theory as an overarching theoretical explanation of CEO preferences and decision-making. LH theory has the potential to integrate prior research on variation in top executives’ impact on decision outcomes and to demonstrate how observable differences in behavior can be explained by evolutionary drivers. According to LH theory, individuals pursue fast or slow LH strategies. Fast individuals tend to follow accelerated reproduction strategies and engage in impulsive, opportunistic, and risk-seeking behavior. We theorize how CEO LH strategies shape both on-the-job and off-the-job decisions and thus add to a growing body of research on evolutionary drivers of preferences and decision-making in accounting. We measure CEO LH strategies based on biodemographic micro-data related to reproductive behavior. Our findings linked to on-the-job decisions suggest that firms managed by CEOs who pursue fast LH strategies exhibit more financial irregularities, lower accounting conservatism, and higher earnings management. Findings related to CEO off-the-job decisions show that fast CEOs are more likely to engage in criminal behavior and to have a higher conspicuous consumption and a higher personal leverage. By applying an LH theory lens, we reconcile and advance prior fragmented research on CEO preferences by showing a clear theoretical link between on-the-job and off-the-job decisions.

Abstract Allocative wages—the labor costs considered when deciding to form or dissolve a long-term employment relationship—are more sensitive to cyclical conditions for more educated workers. Specifically, college-educated workers’ allocative wages are highly pro-cyclical, while high school dropouts’ wages exhibit only moderate cyclicality. Further, as education increases, an increasing share of the sensitivity of allocative wages is driven by the persistent scarring effects of the cyclical position at the time of hiring on the wages associated with higher levels of tenure, amounting to more than a third of the overall sensitivity for the college educated. The greater job stability of the more educated—and therefore the exposure to scarring—contributes to these differences. In addition, more significant scarring at each horizon of tenure amplifies the effect. In service of documenting these facts, I develop new methods for inferring the sensitivity of labor costs to shocks when agents are forward-looking and wages may be intertemporally smoothed.

Abstract Cryptocurrency has been the subject of heightened regulatory and investor attention in recent years, and regulators and policymakers across the globe are deliberating on how to account for, regulate, tax, and oversee digital assets and cryptocurrency marketplaces. Yet researchers have a limited understanding of key attributes of those who deal in crypto assets, such as whether their financial sophistication differs from that of other investors. Using U.S. administrative data, we provide evidence on (i) the attributes of taxpayers reporting cryptocurrency sales to the IRS, (ii) how these attributes are evolving, and (iii) how investors treat cryptocurrency versus other financial assets in certain settings. The results suggest that average reporting cryptocurrency sellers exhibit demographic attributes generally associated with less financial sophistication and are more likely to trade in meme stocks. Overall, we provide timely evidence that can inform cryptocurrency policy deliberations by highlighting the characteristics of taxpayers who appear to report cryptocurrency sales.

ABSTRACT This paper provides early evidence on the integration and impact of generative artificial intelligence (GenAI) in accounting at the accountant and task levels. Using survey data from 277 professional accountants, we document substantial heterogeneity in adoption patterns, perceived benefits, and concerns about GenAI. Using proprietary field data from an AI‐enabled accounting platform serving 79 small‐ and medium‐sized enterprises, we analyze over 200,000 transaction‐level records. We document that GenAI adoption is associated with significant productivity gains and systematic reallocation of effort away from routine data entry toward business communication and quality assurance tasks. GenAI use is also associated with improvements to financial reporting quality, evidenced by more granular ledgers and faster month‐end closing. Examining human–AI interaction, we find that accountants selectively intervene when AI confidence scores are low, consistent with complementarity between professional expertise and AI. A framed field experiment further shows that while AI assistance improves classification accuracy on average, reliance on non‐consensus AI recommendations can increase the risk of error. Overall, our findings highlight both the promise and the risks of GenAI in accounting and suggest that, in practice, AI is most effective as a tool that augments—rather than replaces—professional judgment.

ABSTRACT This study examines whether competition in the form of emerging threats from rivals' overlapping product strategies has explanatory power for future performance and volatility, beyond existing competition measures and firm life cycle proxies. We proxy for emerging threats using product market fluidity, which captures competitive pressures and instability arising from rivals' evolving product overlap. Specifically, higher fluidity (i.e., higher product market threats) is negatively associated with future profitability and operating cash flows and positively associated with the variability of future profitability and operating cash flows. We also find fluidity is negatively associated with future asset turnover, margins, and expenses, and only moderately positively associated with future sales, shedding light on the mechanisms through which product market threats manifest in future performance. However, capital market participants do not fully incorporate this information, leading to predictable future stock returns and analyst forecast errors. Overall, our findings suggest that the dynamism and fluidity in a firm's product market space convey valuable and distinct information to capital market participants.

Abstract This study examines turnover experiences in public accounting, including the exit phase (from public accountants' initial thoughts of leaving to their exit) and the post‐exit phase (from their exit to the present moment) of the turnover process. Drawing on social exchange theory and organizational support theory, we also investigate the relationship between these phases by exploring how turnover characteristics within the exit phase impact alumni's decisions to engage in post‐employment citizenship in the post‐exit phase (e.g., recommending the firm's services to others). Using the experiential questionnaire method, we rely upon two separate surveys to investigate the turnover process from the perspective of 284 firm alumni (“leavers”) and 83 experienced public accountants (“stayers”). Our process‐based research method allows us to gather a large and rich data set that provides multiple perspectives on the turnover experience in public accounting. Our results not only provide insights into the underlying factors influencing turnover but also indicate several places in the turnover decision process where firms can strategically intervene. Finally, our results show that several turnover characteristics within the exit phase impact post‐employment citizenship behaviors in the post‐exit phase. Consequently, our results demonstrate that the characteristics that drive employees' decisions to leave the firm also play a significant role in shaping their post‐employment citizenship behaviors following their departure.