Research

This is a collection of current projects and a few older projects that I think are worthwhile making public but do not anticipate publishing.

Older Papers I Doubt I Will Ever Publish

How to Be a Good Enough Writer

This isn’t an old paper, but I do not expect to publish it. I initially wrote it to organize my thoughts for a class I teach on writing for PhD economists. I have refined it over the last three years and hope that it will be a resource for others.

Ability Bias, Discount Rate Bias and the Return to Education

This is a paper I wrote a long time ago for which I still get frequent requests. Although I got a “revise and resubmit” from a prestigious journal, I never rewrote the paper because I thought there were errors in the approach. There are definitely mistakes in the paper, but in retrospect, I regret not revising it. I believe the paper was very influential in making people think about the proper interpretation of instrumental variables when coefficients are not constant and, in particular, laid some of the groundwork for the work of Josh Angrist and Guido Imbens on LATE and the work of Jim Heckman and his coauthors on the interpretation of instrumental variables. I post it here for the historical record.

The Effect of High School Exit Exams on Graduation, Employment and Incarceration (with Olesya Baker)

After a rejection, we never resubmitted this because we felt uncomfortable that the evidence for incarceration results, while intriguing and possibly important, was too limited for the attention it received. We evaluate the effects of high school exit exams on high school graduation, incarceration, employment and wages. We construct a state/graduation-cohort dataset using the Current Population Survey, Census and information on exit exams. We find relatively modest effects of high school exit exams except on incarceration. Exams assessing academic skills below the high school level have little effect. However, more challenging standards-based exams reduce graduation and increase incarceration rates. About half the reduction in graduation rates is offset by increased GED receipt. We find no consistent effects of exit exams on employment or the distribution of wages.

The Pricing of Job Characteristics When Markets Do Not Clear: Theory and Policy Implications (with Sumon Majumdar) extended version of paper in International Economic Review

There are some intriguing, at least to me, that got left out of the published version. This paper examines a model of nonsequential search when jobs can vary with respect to nonpecuniary characteristics. We find that in the presence of frictions in the labor market, the equilibrium distribution need not show evidence of compensating wage differentials. The model also generates several pervasive features of labor markets: (a) unemployment and vacancies, (b) apparent discrimination, and (c) market segmentation. When workers are homogeneous, there is no positive role for policy — restrictions on the range of job offers must decrease welfare and cannot reduce unemployment. However, when workers have heterogeneous preferences, such restrictions may lower unemployment and even lead to a Pareto-improvement in welfare. In particular, we consider the impact of policies banning discrimination and regulating working-conditions.

Current Projects

Obsolescence Rents: Teamsters, Truckers & Impending Computerization (with Costas Cavounidis, Qingyuan Chai, and Raghav Malhotra)

Impending technological innovation, such as self-driving trucks, threatens occupations like truck drivers with sudden obsolescence. Using a bare-bones overlapping generations model, we examine an occupation facing such possible obsolescence. Employers must pay ‘obsolescence rents,’ with fewer and older workers remaining in the occupation. We study teamsters at the dawn of the motor truck, current occupations threatened by computerization, and truckers dreading robotic trucks. As predicted, wages in threatened occupations rise, employment falls, and the occupations become ‘grayer’. Older workers become more likely to enter and less likely to exit the occupations than younger ones and sometimes even increase in number.

Do Elite Universities Overpay Their Faculty? (with César Garro-Marìn and Shulamit Kahn) accepted subject to minor revisions at the Review of Economics and Statistics

No. Elite institutions offer high salaries because they hire the most valued faculty. Moreover, in contrast to the broader labor market, faculty are equally likely to move up and down the prestige ladder, and they increase their salary either way. We speculate that these facts reflect the visible nature of faculty productivity and the sporadic nature of academic job openings.

The Nature of Technological Change 1960-2016 (with Costas Cavounidis, Vittoria Dicandia, and Raghav Malhotra) under revision at the request of the Journal of Labor Economics

We present a unified technological explanation of both the movement of workers across jobs using different skills and the changes in skill use within jobs. An envelope theorem approach allows us to estimate relative skill-productivity growth from worker mobility using OLS while making minimal assumptions on each occupation’s production function. Using six decades of data, we conclude that routine-cognitive- and finger-dexterity-skill productivity grew rapidly and abstract- and social-skill productivity grew slowly – a form of “skill bias.” These effects, along with our estimated relationships between skill inputs, also explain changes in skill use within occupations.

The Determinants of Teachers’ Occupational Choice (with Maria Dolores Palacios)

 Among college graduates, teachers have both low average AFQT and high average risk aversion, perhaps because the compression of earnings within teaching attracts relatively risk-averse individuals. Using a dynamic optimization model with unobserved heterogeneity, we show that were it possible to make teacher compensation mimic the return to skills and riskiness of the non-teaching sector, overall compensation in teaching would increase. Moreover, this would make many current teachers substantially worse off, making reform challenging. Importantly, our conclusions are sensitive to the degree of heterogeneity for which we allow. Since even a model with no unobserved heterogeneity fits well within sample, one could easily conclude that allowing for two or three types fits the data adequately. Formal methods reject this conclusion. The BIC favors seven types. Ranking models using cross-validation, nine types is better although the improvements of going from six to seven, from seven to eight and from eight to nine types are noticeably smaller than those from adding an additional type to a lower base.