Publications

This article studies the effects of automation in a task-based economy in which some jobs pay workers rents—wages above workers' outside options. We show that automation targets high-rent tasks, dissipating rents, amplifying wage losses, and reducing within-group wage dispersion in exposed groups. This form of rent dissipation is inefficient and offsets the productivity gains from automation. Using U.S. data from 1980 to 2016, we find evidence of sizable rent dissipation and reduced within-group wage dispersion due to automation. Automation accounts for 52% of the increase in between-group inequality since 1980, with rent dissipation explaining one-fifth of this total. Our estimates imply that inefficient rent dissipation has offset 60%–90% of the productivity gains from automation over this period.

We document employment preferences of workers at the margin of informality using open-ended questions and discrete choice experiments in Brazil's largest favela complex. Stated preferences emphasize pay and tangible job attributes rather than meaning or purpose. Stated complaints center on management, customers, and inflexible schedules. Workers exhibit high willingness to pay for unemployment insurance, parental leave, and learning opportunities, but none for termination notice or shorter commutes. We find larger willingness to accept to forgo amenities than willingness to pay to obtain them, consistent with preference-based sorting or endowment effects.

We examine the effects of international trade in the presence of a set of domestic distortions giving rise to informality, a prevalent phenomenon in developing countries. In our quantitative model, the informal sector arises from burdensome taxes and regulations that are imperfectly enforced by the government. In equilibrium, smaller, less productive firms face fewer distortions than larger, more productive ones, potentially leading to substantial misallocation. We show that in settings with a large informal sector, the gains from trade are significantly amplified, as reductions in trade barriers imply a reallocation of resources from initially less distorted to more distorted firms. We confirm findings from earlier reduced‐form studies that the informal sector mitigates the impact of negative labor demand shocks on unemployment. Nonetheless, the informal sector can exacerbate the adverse real income effects of economic downturns, amplifying misallocation. Last, our research sheds light on the relationship between trade openness and cross‐firm wage inequality.

We analyze a nonlinear pricing model where the seller controls both product pricing (screening) and buyer information about their own values (persuasion). We prove that the optimal mechanism always consists of finitely many signals and items, even with a continuum of buyer values. The seller optimally pools buyer values and reduces product variety to minimize informational rents. We show that value pooling is optimal even for finite value distributions if their entropy exceeds a critical threshold. We also provide sufficient conditions under which the optimal menu restricts offering to a single item.

We investigate the efficiency of a market relative to a non-market institution—an auction relative to a quota—as allocation mechanisms in the presence of frictions. We use data from water markets in southeastern Spain and explore a specific change in the institutions to allocate water. On the one hand, frictions arose because poor farmers were liquidity constrained. On the other hand, farmers who were part of the wealthy elite were not liquidity constrained. We estimate a structural dynamic demand model by taking advantage of the fact that water demand for both types of farmers is determined by the technological constraint imposed by the crop’s production function. This approach allows us to differentiate liquidity constraints from unobserved heterogeneity. We show that the institutional change from an auction to a quota increased total efficiency for the farmers considered. Welfare increased by 23.4 real pesetas per farmer per tree, a 6 % increase in total production relative to the market.

During adolescence, peer interactions become increasingly central to children’s development, whereas the direct influence of parents wanes. Nevertheless, parents can continue to exert leverage by shaping their children’s peer groups. We construct and estimate a model of parenting with peer and neighborhood effects where parents intervene in peer formation and show that the model captures empirical patterns of skill accumulation, parenting style, and peer characteristics among US high school students. We find that interventions that move children to better neighborhoods lose impact when they are scaled up, because parents’ equilibrium responses push against successful integration with the new peer group.

This paper estimates the consumer surplus from using alternative payment methods. We use evidence from Uber rides in Mexico, where riders have the option to use cash or cards to pay for rides. We design and conduct three large-scale field experiments, which involved approximately 400,000 riders. We also build a structural model which, disciplined by our new experimental data, allows us to estimate the loss of private benefits for riders when a ban on cash payments is implemented. We find that Uber riders who use cash as means of payment either sometimes or exclusively suffer an average loss of approximately 40–50% of their total trip expenditures paid in cash before the ban. The magnitude of these estimates reflects the intensity with which cash is used in the application, the shape of the demand curve for Uber rides, and the imperfect substitutability across means of payments. Welfare losses fall mostly on the least-advantaged households, who rely more heavily on the cash payment option.

We exploit a unique event to study the extent to which popular attitudes towards trade are driven by economic fundamentals. In 2007, Costa Rica put a free trade agreement (FTA) to a national referendum. With a single question on the ballot, 59% of Costa Rican adult citizens cast a vote on whether they wanted an FTA with the U.S. to be ratified or not. We merge disaggregated referendum results, which break new ground on anonymity-compatible voting data, with employer–employee, customs, and firm-to-firm transactions data, and data on household composition and expenditures. We document that a firm’s exposure to the FTA, directly and via input–output linkages, significantly influences the voting behaviour of its employees. This effect dominates that of sector-level exposure and is greater for voters aligned with pro-FTA political candidates. We also show that citizens considered the expected decrease in consumer prices when exercising their vote. Overall, economic factors explain 7% of the variation in voting patterns, which cannot be accounted for by non-economic factors such as political ideology, and played a pivotal role in this vote.

We exploit a unique event to study the extent to which popular attitudes towards trade are driven by economic fundamentals. In 2007, Costa Rica put a free trade agreement (FTA) to a national referendum. With a single question on the ballot, 59% of Costa Rican adult citizens cast a vote on whether they wanted an FTA with the U.S. to be ratified or not. We merge disaggregated referendum results, which break new ground on anonymity-compatible voting data, with employer–employee, customs, and firm-to-firm transactions data, and data on household composition and expenditures. We document that a firm’s exposure to the FTA, directly and via input–output linkages, significantly influences the voting behaviour of its employees. This effect dominates that of sector-level exposure and is greater for voters aligned with pro-FTA political candidates. We also show that citizens considered the expected decrease in consumer prices when exercising their vote. Overall, economic factors explain 7% of the variation in voting patterns, which cannot be accounted for by non-economic factors such as political ideology, and played a pivotal role in this vote.

We study the role of information in Bertrand competition with differentiated goods and heterogeneous production costs. When producers know their costs and consumers know their values, consumer surplus and total surplus are aligned, in the sense that the information and equilibrium that maximize consumer surplus also maximize total surplus. Alignment may fail if consumers do not know their values: Partial information about values makes purchases less efficient but intensifies price competition. We illustrate this within a Hotelling duopoly framework.

Substantial advances toward global decarbonization have been made in areas such as electricity generation and the electrification of building heat and road transport, yet the decarbonization of energy-intensive industries remains a formidable but crucial challenge. Decarbonization of the industrial sector, whose direct emissions account for about 25% of global carbon dioxide, is essential for transitioning the world economy toward a sustainable growth path. With present technologies and policies, such decarbonization appears technically possible, but difficult and costly. Here, we highlight the pressing need for new lines of research on two emerging frontiers. The first quantifies how industrial decarbonization technologies and policies interact with the broader economy. The second builds on growing data availability and policy experience with industrial decarbonization to provide broad-scale ex post quantifications of its impacts as an essential empirical complement to a largely modeling-based literature to date.

We examine how labor market disruptions following childbirth relate to intra-household consumption inequality in the long run. Novel survey data from Germany shows that women less educated than their partners are more likely to report child-related career interruptions and receive a smaller share of household consumption, relative to women more educated than their spouses. Moreover, conditioning on partners’ relative education, female career disruptions correlate with higher male consumption, suggesting that child-rearing may shape gender disparities not only in labor outcomes but also in long-term consumption—an overlooked aspect of the “motherhood penalty.”

As businesses increasingly rely on granular consumer data, the public has increasingly pushed for enhanced regulation to protect consumers’ privacy. We provide a perspective based on the academic marketing literature that evaluates the various benefits and costs of existing and pending government regulations and corporate privacy policies. We make four key points. First, data-based personalized marketing is not automatically harmful. Second, consumers have heterogeneous privacy preferences, and privacy policies may unintentionally favor the preferences of the rich. Third, privacy regulations may stifle innovation by entrepreneurs who are more likely to cater to underserved, niche consumer segments. Fourth, privacy measures may favor large companies who have less need for third-party data and can afford compliance costs. We also discuss technology platforms’ recent proposals for privacy solutions that mitigate some of these harms but, again, in a way that might disadvantage small firms and entrepreneurs.

Two opposed interested parties (IPs) compete to influence citizens with heterogeneous priors which receive news items produced by a variety of sources. The IPs fight to capture the coverage conveyed in these items. We characterize the equilibrium level of capture of item as well as the equilibrium level of information transmission. Capture increases the prevalence of the ex ante most informative messages and can explain the empirical distribution of slant at the news-item level. Opposite capturing efforts do not cancel each other and instead undermine social learning as rational citizens discount informative messages. Citizen skepticism makes efforts to capture the news strategic substitutes. Because of strategic substitution, competition for influence is compatible with horizontal differentiation between successful media. In equilibrium, rational citizens choose to consume messages from aligned sources despite knowledge of the bias in a manner consistent with recent empirical evidence.

We present a model of digital advertising with three key features: (1) advertisers can reach consumers on and off a platform, (2) additional data enhances the value of advertiser–consumer matches, and (3) the allocation of advertisements follows an auction-like mechanism. We contrast data-augmented auctions, which leverage the platform’s data advantage to improve match quality, with managed-campaign mechanisms that automate match formation and price-setting. The platform-optimal mechanism is a managed campaign that conditions the on-platform prices for sponsored products on the off-platform prices set by all advertisers. This mechanism yields the efficient on-platform allocation but inefficiently high off-platform product prices. It attains the vertical integration profit for the platform and the advertisers, and it increases off-platform product prices while decreasing consumer surplus, relative to data-augmented auctions.