A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.

• Derenoncourt, E., Kim, C. H., Kuhn, M., & Schularick, M. (2024). Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860–2020*. The Quarterly Journal of Economics, 139, 693–750.

  The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this article, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the past 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and convergence via income growth and savings has come to a halt.

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• Ganimian, A. J., Muralidharan, K., & Walters, C. R. (2024). Augmenting State Capacity for Child Development: Experimental Evidence from India. Journal of Political Economy, 132, 1565–1602.

  We use a large-scale randomized experiment to study the impact of augmenting staffing in the world?s largest public early-childhood program: India?s Integrated Child Development Services. Adding a worker doubled net preschool instructional time and led to increases of 0.28σ and 0.46σ in math and language test scores after 18 months for children who remained enrolled in the program and 0.13σ and 0.10σ for all children enrolled at baseline. Rates of stunting and severe malnutrition were also lower in the treatment group for children who remained enrolled. A cost-benefit analysis suggests that the benefits of augmenting staffing significantly exceed its costs. These effects are likely to replicate even at larger scales of program implementation.

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• Golosov, M., Graber, M., Mogstad, M., & Novgorodsky, D. (2024). How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income*. The Quarterly Journal of Economics, 139, 1321–1395.

  We study how Americans respond to idiosyncratic and exogenous changes in household wealth and unearned income. Our analyses combine administrative data on U.S. lottery winners with an event study design. We first examine individual and household earnings responses to these windfall gains, finding significant and sizable wealth and income effects. On average, an extra ${\$}$1 of unearned income in a given period reduces household labor earnings by about 50 cents, decreases total labor taxes by 10 cents, and increases consumption expenditure by 60 cents. These effects are heterogeneous across the income distribution, with households in higher quartiles of the income distribution reducing their earnings by a larger amount. Next we examine margins of adjustment other than earnings and, in the course of doing so, address a number of important economic questions about how additional wealth or unearned income affect retirement decisions and labor market dynamics, family formation and dissolution, entrepreneurship and self-employment, and geographic mobility and neighborhood choice. Last, we carefully compare our findings to those reported in existing lottery studies. This comparison reveals that existing U.S. studies substantially underestimate wealth and income effects because they use measures that understate the earnings responses and overstate the after-tax wealth changes associated with lottery wins.

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• Grieco, P. L. E., Murry, C., & Yurukoglu, A. (2024). The Evolution of Market Power in the U.S. Automobile Industry*. The Quarterly Journal of Economics, 139, 1201–1253.

  We construct measures of industry performance and welfare in the U.S. automobile market from 1980 to 2018. We estimate a demand model using product-level data on market shares, prices, and attributes, and consumer-level data on demographics, purchases, and stated second choices. We estimate marginal costs assuming Nash-Bertrand pricing. We relate trends in consumer welfare and markups to trends in market structure and the composition of products. Although real prices rose, we find that markups decreased substantially, and the fraction of total surplus accruing to consumers increased. Consumer welfare increased over time due to improved product quality and improved production technology.

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• Hortaçsu, A., Natan, O. R., Parsley, H., Schwieg, T., & Williams, K. R. (2024). Organizational Structure and Pricing: Evidence from a Large U.S. Airline★. The Quarterly Journal of Economics, 139, 1149–1199.

  Firms facing complex objectives often decompose the problems they face, delegating different parts of the decision to distinct subunits. Using comprehensive data and internal models from a large U.S. airline, we establish that airline pricing is not well approximated by a model of the firm as a unitary decision maker. We show that observed prices, however, can be rationalized by accounting for organizational structure and for the decisions by departments that are tasked with supplying inputs to the observed pricing heuristic. Simulating the prices the firm would charge if it were a rational, unitary decision maker results in lower welfare than we estimate under observed practices. Finally, we discuss why counterfactual estimates of welfare and market power may be biased if prices are set through decomposition, but we instead assume that they are set by unitary decision makers.

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• Huang, R., Mayer, E. J., & Miller, D. P. (2024). Gender Bias in Promotions: Evidence from Financial Institutions. The Review of Financial Studies, 37, 1685–1728.

  We test for gender bias in promotions at financial institutions using two central predictions of Becker’s (1957, 1993) model: firms with bias will (1) raise the promotion bar for marginally promoted female workers, and (2) incur costs from forgoing efficient employment practices. We find support for both of these predictions using a new nationwide panel of mortgage loan officers and their managers encompassing approximately 72,000 workers from over 1,000 shadow banks from 2014 to 2019. Overall, our findings provide evidence that gender bias is an important factor in gender gaps at financial institutions.

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• Ivanov, I. T., Kruttli, M. S., & Watugala, S. W. (2024). Banking on Carbon: Corporate Lending and Cap-and-Trade Policy. The Review of Financial Studies, 37, 1640–1684.

  We estimate the effect of carbon pricing policy on bank credit to greenhouse-gas-emitting firms. Our analyses exploit the geographic restrictions inherent in California’s cap-and-trade bill and a discontinuity in the embedded free permit threshold of the federal Waxman-Markey cap-and-trade bill. Affected high emission firms face shorter loan maturities, lower access to permanent forms of bank financing, higher interest rates, and higher participation of shadow banks in their lending syndicates. These effects are concentrated among private firms, while credit terms of public firms are largely unaffected. Overall, we show that banks respond quickly to realizations of transition risk.

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• Lerner, J., Seru, A., Short, N., & Sun, Y. (2024). Financial Innovation in the Twenty-First Century: Evidence from US Patents. Journal of Political Economy, 132, 1391–1449.

  We explore the evolution of financial innovation using US finance patents. Patented financial innovations are substantial and increasingly economically important. Their subject matter has changed, consistent with the industry?s shift toward household investors and borrowers. Information technology (IT) and other nonfinancial firms drove the surge in financial patenting. The location of innovation shifted, with banks moving activity away from states with tight financial regulation and high-tech regions attracting innovation by payments, IT, and nonfinancial firms. Analyses of returns suggest that the social value of these innovations is higher than their private value. We present a simple model to explain these trends.

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• Ludwig, J., & Mullainathan, S. (2024). Machine Learning as a Tool for Hypothesis Generation*. The Quarterly Journal of Economics, 139, 751–827.

  While hypothesis testing is a highly formalized activity, hypothesis generation remains largely informal. We propose a systematic procedure to generate novel hypotheses about human behavior, which uses the capacity of machine learning algorithms to notice patterns people might not. We illustrate the procedure with a concrete application: judge decisions about whom to jail. We begin with a striking fact: the defendant’s face alone matters greatly for the judge’s jailing decision. In fact, an algorithm given only the pixels in the defendant’s mug shot accounts for up to half of the predictable variation. We develop a procedure that allows human subjects to interact with this black-box algorithm to produce hypotheses about what in the face influences judge decisions. The procedure generates hypotheses that are both interpretable and novel: they are not explained by demographics (e.g., race) or existing psychology research, nor are they already known (even if tacitly) to people or experts. Though these results are specific, our procedure is general. It provides a way to produce novel, interpretable hypotheses from any high-dimensional data set (e.g., cell phones, satellites, online behavior, news headlines, corporate filings, and high-frequency time series). A central tenet of our article is that hypothesis generation is a valuable activity, and we hope this encourages future work in this largely “prescientific” stage of science.

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• Nocke, V., & Rey, P. (2024). Consumer Search, Steering, and Choice Overload. Journal of Political Economy, 132, 1684–1739.

  We develop a model of within-firm sequential, directed search and study a firm?s ability and incentive to steer consumers. We find that the firm often benefits from adopting a noisy positioning strategy, which limits the information available to consumers. This induces consumers to keep searching but discourages some of them from visiting the firm. This occurs even though the firm and the consumers have in common an interest in maximizing the probability of trade. Because of such noisy positioning, an increase in the size of the product line further discourages consumers from visiting the firm?consistent with choice overload.

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