Imperfect Competition, Compensating Differentials, and Rent Sharing in the US Labor Market

By Thibaut Lamadon, Magne Mogstad, and Bradley Setzler

American Economic Review, January 2022

We quantify the importance of imperfect competition in the US labor market by estimating the size of labor market rents earned by American firms and workers. We construct a matched employer-employee panel dataset by combining the universe of US business a...

Consumption Response to Credit Expansions: Evidence from Experimental Assignment of 45,307 Credit Lines

By Deniz Aydin

American Economic Review, January 2022

In a field experiment that constructs a randomized credit limit shock, participants borrow to spend 11 cents on the dollar in the first quarter and 28 cents by the third year. Effects extend to those far from the limit, those who had the new limits as ava...

Employment Structure and the Rise of the Modern Tax System

By Anders Jensen

American Economic Review, January 2022

This paper builds a new microdatabase that covers 100 countries at all income levels and long-run time series in the United States (1870–2010) and Mexico (1960–2010) to document how the modern tax system arises over development. I establish a new set ...

The Relative Efficiency of Skilled Labor across Countries: Measurement and Interpretation

By Federico Rossi

American Economic Review, January 2022

I study how the relative efficiency of high- and low-skill labor varies across countries. Using microdata for countries at different stages of development, I document that differences in relative quantities and wages are consistent with high-skill workers...

A/B Contracts

By George Georgiadis and Michael Powell

American Economic Review, January 2022

This paper aims to improve the practical applicability of the classic theory of incentive contracts under moral hazard. We establish conditions under which the information provided by an A/B test of incentive contracts is sufficient for answering the ques...

When Should There Be Vertical Choice in Health Insurance Markets?

By Victoria R. Marone and Adrienne Sabety

American Economic Review, January 2022

We study the welfare effects of offering choice over coverage levels—"vertical choice"—in regulated health insurance markets. We emphasize that heterogeneity in efficient coverage level is not sufficient to motivate choice. When premiums cannot reflec...

Counterfactuals with Latent Information

By Dirk Bergemann, Benjamin Brooks, and Stephen Morris

American Economic Review, January 2022

We describe a methodology for making counterfactual predictions in settings where the information held by strategic agents and the distribution of payoff-relevant states of the world are unknown. The analyst observes behavior assumed to be rationalized by...

Front Matter

American Economic Journal: Applied Economics, January 2022

The Long-Run Effects of Recessions on Education and Income

By Bryan A. Stuart

American Economic Journal: Applied Economics, January 2022

This paper examines the long-run effects of the 1980–1982 recession on education and income. Using confidential census data, I estimate difference-in-difference regressions that exploit variation across counties in recession severity and across cohorts ...

Finally a Smoking Gun? Compensating Differentials and the Introduction of Smoking Bans

By Daniel Wissmann

American Economic Journal: Applied Economics, January 2022

Using the staggered introduction of smoking bans in the German hospitality industry over 2007–2008, I find a robust 2.4 percent decline in the daily earnings of workers in bars and restaurants associated with the most comprehensive smoking ban. This eff...

Subways and Urban Air Pollution

By Nicolas Gendron-Carrier, Marco Gonzalez-Navarro, Stefano Polloni, and Matthew A. Turner

American Economic Journal: Applied Economics, January 2022

We investigate the effect of subway system openings on urban air pollution. On average, particulate concentrations are unchanged by subway openings. For cities with higher initial pollution levels, subway openings reduce particulates by 4 percent in the a...

Can Information Reduce Ethnic Discrimination? Evidence from Airbnb

By Morgane Laouénan and Roland Rathelot

American Economic Journal: Applied Economics, January 2022

We use data from Airbnb to identify the mechanisms underlying discrimination against ethnic minority hosts. Within the same neighborhood, hosts from minority groups charge 3.2 percent less for comparable listings. Since ratings provide guests with increas...

Rational Habit Formation: Experimental Evidence from Handwashing in India

By Reshmaan Hussam, Atonu Rabbani, Giovanni Reggiani, and Natalia Rigol

American Economic Journal: Applied Economics, January 2022

We test the predictions of the rational addiction model, reconceptualized as rational habit formation, in the context of handwashing in rural India. To track handwashing, we design soap dispensers with timed sensors. We test for rational habit formation b...

Information Frictions, Internet, and the Relationship between Distance and Trade

By Anders Akerman, Edwin Leuven, and Magne Mogstad

American Economic Journal: Applied Economics, January 2022

We examine how the adoption of information communication technology affects bilateral trade. The context is a public program in Norway that rolled out broadband access points leading to plausibly exogenous variation in the availability and adoption of bro...

Does Patient Demand Contribute to the Overuse of Prescription Drugs?

By Carolina Lopez, Anja Sautmann, and Simone Schaner

American Economic Journal: Applied Economics, January 2022

In an experiment in Mali, we tested whether patients pressure providers to prescribe unnecessary medical treatment. We varied patients' information about a discount for antimalarial tablets and measure demand for both tablets and costlier antimalarial inj...

The Origins of Common Identity: Evidence from Alsace-Lorraine

By Sirus H. Dehdari and Kai Gehring

American Economic Journal: Applied Economics, January 2022

We study how more negative historical exposure to the actions of nation-states—like war, occupation, and repression—affects the formation of regional identity. The quasi-exogenous division of the French regions Alsace and Lorraine allows us to impleme...

How Effective Are Monetary Incentives to Vote? Evidence from a Nationwide Policy

By Mariella Gonzales, Gianmarco León-Ciliotta, and Luis R. Martínez

American Economic Journal: Applied Economics, January 2022

We study voters' response to marginal changes to the fine for electoral abstention in Peru, leveraging variation from a nationwide reform. A smaller fine has a robust, negative effect on voter turnout, partly through irregular changes in voter registratio...

Front Matter

American Economic Journal: Macroeconomics, January 2022

Offshoring, Automation, Low-Skilled Immigration, and Labor Market Polarization

By Federico S. Mandelman and Andrei Zlate

American Economic Journal: Macroeconomics, January 2022

We show that the observed polarization of employment toward the high- and low-skill occupations disappears when only native workers are considered. Instead, low-skilled immigration explains employment growth at the low tail of the skill distribution. More...

Endogenous Separations, Wage Rigidities, and Unemployment Volatility

By Mikael Carlsson and Andreas Westermark

American Economic Journal: Macroeconomics, January 2022

We show that in microdata, as well as in a search and matching model with flexible wages for new hires, wage rigidities of incumbent workers have substantial effects on separations and unemployment volatility. Allowing for an empirically relevant degree o...