· JMP

The Spillover Effect of Large Firms’ Entry on Wage Distribution and Skill Demand

· Abstract

Big firms matter in big ways. They are high-wage employers, valuable invention producers, and early technology adopters. They matter so much that local governments spend $47 billion annually trying to attract and appease them in the name of job creation and future industrialization. And while there is empirical evidence supporting employment gains, there is little to no evidence exploring intensive margin effects like subsequent skill and technology adoption by other employers in the market. This project fills this gap in the literature by evaluating the spillover effects of large firms’ entry on local labor markets' wage distribution and skill demand. Using Lightcast vacancy data in a difference and difference event study model, we compare change in posted wages and skill demand in counties where a million-dollar establishment opened to counties of runner-up sites the firm was considering. Findings so far suggest that the entry of million-dollar establishments significantly shifts the hourly wage distributions downward and have a negative albeit insignificant effect on number of postings. They further prompt incumbent firms to relax their demand for college degrees, such that we see a significant increase in high school degrees as the minimum education listed for many jobs. This downskilling in education is not counterbalanced with an increase in incumbent firms' demand for computer, cognitive, or social skills.

· Download

https://www.dropbox.com/scl/fi/ni2v9mugz924h5tpy135a/Job_market_paper_Abdelfattah.pdf?rlkey=pgsvnagq4l2jpcjtl71whjt7e&dl=0

· JMP

When are D-graded neighborhoods not degraded? Greening the legacy of redlining

· Abstract

This paper explores how geography shapes the legacy of redlining, the systemic mortgage lending bias against minority US neighborhoods. On average, redlined neighborhoods lag behind adjacent less-discriminated areas in home values, income, and racial composition. Yet, redlined neighborhoods near parks and water fare better. To help understand convergence, we inventory waterfront renovations, apply machine learning to historical imagery to track tree canopy changes, and instrument such changes exploiting tree replacements due to geographic variation in tree plagues and susceptible species. Findings suggest that enhancing waterfronts and increasing tree canopy can mitigate the long-lasting effects of institutionalized discrimination.

· Download

https://albaminanomanero.github.io/files/job-market-paper.pdf

· JMP

The Impact of Greenbelts on Housing Markets: Evidence from Toronto

· Abstract

Greenbelts are a common policy tool used to protect natural spaces from urban sprawl. With rising housing costs in many metropolitan areas, questions have been raised about the impact of Greenbelts on housing markets. Despite the intense policy debate, there is little empirical evidence on how Greenbelts affect housing supply and prices across a metropolitan region. In this paper, I contribute a new approach to estimate the impact of Greenbelt policies on housing market outcomes and use it to evaluate the introduction of the world’s largest contiguous Greenbelt, which occurred in Toronto in the early-2000s. Using rich project-level data on housing developments, I first show that the Greenbelt did have an impact on housing development patterns, where restricted, developable census tracts saw less housing built relative to unrestricted tracts. Then, to quantify the effects across the metropolitan area, I build and estimate a model of housing supply and demand with heterogeneity at the census tract level. Using the model, I simulate the counterfactual scenario in which no Greenbelt was implemented, finding that the Greenbelt led to a reduction in housing supply of almost 10,000 units and price increases of 4.1% for houses and 6.1% for condominiums in 2010; this corresponds to an increase in condo rent of $675 a year. Finally, I show that had the Greenbelt been paired with a small relaxation of zoning regulations, the effects of the Greenbelt would be minimized, suggesting a viable alternative to developing Greenbelts in the face of rising housing prices.

· Download

https://hempeleconomics.com/files/Hempel_JMP.pdf

· JMP

Racial Discrimination in Eviction Filing

· Abstract

Minority renters are 42% more likely to face an eviction case than white renters. I develop and apply a simple framework to test whether this reflects discrimination by landlords. Discrimination is measured by racial disparities in back rent owed at the time of an eviction filing, conditional on landlord and monthly contract rent. Distinguishing the sources of discrimination requires further conditioning and conducting a marginal outcome test which compares a landlord’s rate of winning court-ordered repossession of the property by tenant race. Using detailed administrative data from Philadelphia, I find evidence of discrimination: landlords tolerate 4.5% less back rent from minority tenants before filing an eviction case. Between 49% and 73% of landlords exhibit racial discrimination. Discrimination is higher among non-corporate, white landlords and against minority renters in majority-white neighborhoods. I find additional evidence consistent with accurate statistical discrimination: landlords observe that winning repossession of the property from minority tenants requires less back rent and therefore apply lower filing thresholds to minority tenants to achieve the same rate of repossession.

· Download

https://alilodermeier.github.io/PaperRepository/evict_discrimination.pdf

· JMP

Paradise Lost: Population Growth and Wildfire Mitigation

· Abstract

Wildfires are enormously costly events. Human causes make up 85 % of wildfire ignitions in the US. This paper examines household location choice as a driver of wildfire risk. I estimate an inverted U-shaped relationship between population density and wildfires: locations with medium population density have the highest ignition rates. Incorporating this relationship into a quantitative spatial model of Los Angeles County allows me to examine the effects of climate migration and potential policy solutions on wildfire risk. Failing to account for the effect of density underestimates the cost of wildfires by up to 8 %. Limiting construction in areas prone to wildfires does not improve fire outcomes. However, a tax on residents in risky areas combined with lifting building restrictions in low-risk areas can mitigate the rise in wildfire-related costs associated with population growth.

· Download

https://drive.google.com/file/d/13J9VCrVw37EqW_Weq23bbE3bIcPkfdRD/view

· JMP

The Geography of Higher Education and Spatial Inequalities

· Abstract

This paper shows that the within-country spatial distribution of colleges largely contributes to spatial inequalities. Using data on the universe of college applicants and programs in France, I document that higher education options are unevenly distributed across space while students' demand is highly sensitive to geographic proximity. This creates inequalities in access to higher education across space, feeding gaps in educational attainment and spatial skill sorting. To quantify these effects, I build a dynamic model linking equilibrium sorting on the higher education market and location choices of entry-level workers. I show that students' and programs' preferences can be identified and estimated from data on choices and equilibrium outcomes. One-third of regional gaps in educational attainment are explained by the interaction of the uneven distribution of colleges and mobility frictions. Eliminating the latter, however, generates a trade-off, as it benefits students from low-opportunity areas but accelerates their migration to higher education hubs, magnifying regional inequalities. Low-opportunity areas could halt this brain drain and outsource the education of their local labor force by tying mobility scholarships and incentives to return.

· Download

https://drive.google.com/file/d/1Y1rDnk5ptVtynmGGmo9iYC0S1comYJgc/view

· JMP

Commercial Eviction Moratoria, Liquidity Relief and Business Closure

· Abstract

In this paper, I estimate the effects of the commercial eviction moratorium (CEM) policy on business closure and employment during the Covid-19 pandemic. CEM temporarily prohibits commercial evictions and gives business tenants more time to pay rent, thereby providing liquidity relief. I construct an instrument for CEM based on pre-pandemic partisanship, measured as the difference between Democratic and Republican voter registration. I find that CEM significantly reduces business closure in the short run in both retail and food services but has long-run effects only in food services. Consistent with the mechanism that CEM provides liquidity relief, I show first that CEM is more effective in reducing long-run closure for businesses that are more solvent coming into the pandemic. Additionally, CEM reduces business take-up of costly loans but does not affect take-up of grants. Turning to employment, the impact of CEM operates along an extensive margin through a reduction in business closure, rather than along an intensive margin through a change in employment while a business is in operation. The total impact of CEM on employment is a preservation of 0.98 percentage points of pre-pandemic employment, which equals 39% of the estimated effects of the Paycheck Protection Program.

· Download

https://bpb-us-e1.wpmucdn.com/sites.harvard.edu/dist/d/533/files/2023/11/JMP_AngelaMa.pdf

· JMP

Beyond the Local Impacts of Place-Based Policies: Spillovers through Latent Housing Markets

· Abstract

Many analyses of place-based policies, which target geographic areas often to foster economic development, focus on their direct effects. Responses of households and firms that propagate within similar markets (e.g., housing markets) are also important for studying overall effectiveness. I propose an approach to estimate non-spatial spillover effects on non-targeted areas in the same markets as the targeted areas. My approach can be adapted to other settings with possible non-spatial spillovers. I illustrate the approach and discuss the economic framework using a widespread, place-based policy, Tax Increment Financing (TIF). To characterize housing markets, I construct a network of connected neighborhoods using data on household moves and define markets based on a model of community detection from network theory. With this data-driven characterization, I estimate the market spillover effects to non-targeted areas within the same housing market. TIF is locally effective at increasing property values within the targeted area. However, the market spillover effects indicate a negative effect on non-targeted areas within the same housing markets. This result implies that the policy relocates investment from non-targeted to targeted areas. I analyze outcomes related to household and firm characteristics and find support for the relocation mechanism. I combine the direct and spillover effects to calculate a back-of-the-envelope estimate of an overall effect close to zero, with the policy redistributing investment towards relatively disadvantaged targeted areas within housing markets.

· Download

https://www.dropbox.com/scl/fi/kmedd02fl0e9s2ad646wx/AnnaZiff_MainPaper.pdf?rlkey=0l8jxnv6wf51ir7828k0q9v4t&dl=0

· JMP

Density Restrictions and Housing Inequality 

· Abstract

Rising housing prices and rents in the U.S. have led to increased scrutiny of policies that restrict housing density, specifically the number of units that can be built on an acre of land. However, we know little about the equilibrium effects of these restrictions on housing production, prices, and welfare. In this paper, I first infer the stringency of density restrictions at the census tract level across 30 U.S. metro areas by estimating the marginal returns to building an additional housing unit. I show that restrictiveness tends to increase with the transition from urban to suburban neighborhoods, and that higher-income neighborhoods—with some notable exceptions—tend to be more restrictive. I then embed these restrictions in an equilibrium model of housing markets where forward-looking landowners choose the size and number of units to build, and households choose locations and units in which to live. I estimate the supply model using parcel-level housing data from CoreLogic and the demand model using household-level microdata from the Census and ACS. I use the estimated model to analyze a wide-reaching counterfactual reduction in density restrictiveness (to the 25th percentile tract level) in San Diego beginning in the year 2000. Preliminary results suggest that this policy change leads to a 2% increase in welfare for the median household (as a share of income) by 2020, with considerably higher gains for lower-income households. High-income households see a slight reduction in welfare due to the smaller selection of large, low-density units. The share of San Diego's population comprised of households from the bottom half of the national income distribution rises from 38% to 40%.

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https://drive.google.com/file/d/183r5wpcwSLmSWoIBY-uWEwVw-1d83s4y/view

· JMP

The Economic Dynamics of City Structure: Evidence from Hiroshima's Recovery

· Abstract

We provide new theory and evidence on the resilience of internal city structure after a large shock. We analyze the atomic bombing of Hiroshima, which destroyed the city center but not its outskirts. Exploiting newly digitized data on block-level population and employment, we document that the city structure recovered within five years after the bombing. We then develop a dynamic quantitative model of internal city structure, which incorporates commuting, forward-looking location choices, migration frictions, agglomeration forces, and heterogeneous location fundamentals. Strong agglomeration forces in our estimated model can explain the recovery of Hiroshima. While we find an alternative equilibrium in which the city center did not recover, self-fulfilling expectations might have selected the equilibrium in which the city center recovered. These results highlight the importance of agglomeration forces, multiple equilibria, and expectations in the dynamics of city structure.

· Download

https://atsushiyamagishi.github.io/documents/draft_hiroshima.pdf

· JMP

The Emperor’s Geography—City Locations, Nature and Institutional Optimisation 

· Abstract

The emergence of cities in specific locations depends on both geographical features (such as elevation and proximity to rivers) and institutional factors (such as centrality within an administrative region). In this paper, we analyse the importance of these factors at different levels of the urban hierarchy. To do so, we exploit a unique data set on the locations of cities of different status in imperial China from 221 BCE to 1911 CE, a geographically diverse empire with a long history of centralised rule. Developing a stylised theoretical model, we combine econometrics with machine learning techniques. Our results suggest that the higher a city is in the urban hierarchy, the less important are local geographical features compared to institutional factors. At the lower end of the scale, market towns without government responsibilities are most strongly shaped by geographical characteristics. We also find evidence that many cities of political importance in imperial times still enjoy a special status nowadays, underlining the modern relevance of these historical factors.

· Download

https://academic.oup.com/ej/article-abstract/133/651/1067/6695308?redirectedFrom=fulltext

· JMP

 Should Governments Subsidize Homeownership? A Quantitative Analysis of Spatial Housing Policies

· Abstract

Should governments promote homeownership? Although such policies are widespread, their welfare implications are not straightforward. While subsidies can overcome financial frictions and, by increasing homeownership, insure against rent volatility, they can also reduce internal migration to productive locations. To address this question, I build a dynamic spatial equilibrium model with coresidence, homeownership, internal migration, and savings decisions. Homeownership provides utility and insurance against aggregate rental price risk but reduces migration due to the transaction costs associated with selling the property. Migration decisions, in turn, affect homeownership. In particular, non-migrant workers can coreside with their parents, which allows them to save and buy a house earlier than migrants. I develop a new strategy to solve dynamic spatial models with aggregate uncertainty, which models agents' expectations about local endogenous prices and wages using lower-rank factors. The model is estimated for Spain and validated using quasi-experimental evidence from recent place-based homeownership subsidies. I find that mortgage interest deduction policies reduce wealth inequality, have majority support, and are welfare-increasing, primarily due to homeownership's insurance value. However, they decrease internal migration and the share of people living in productive locations. Targeting high-wage locations leads to lower welfare gains and does not increase homeownership due to higher house prices.

· Download

https://claudioluccioletti.com/pdf/jmp_draft.pdf

· JMP

Where to Build Affordable Housing? Evaluating the Tradeoffs of Location

· Abstract

How does the location of affordable housing affect tenant welfare, the distribution of assistance, and broader social objectives such as racial and economic integration? Using administrative data on households living in units funded by the Low-Income Housing Tax Credit (LIHTC), we first show that tenant characteristics such as income, race, education, and family structure vary widely across neighborhoods, despite common eligibility thresholds. To quantify the welfare implications, we develop and estimate a residential choice model in which households choose from both market-rate and affordable housing options, where the latter are priced below-market and must be rationed. Moving a new development to a neighborhood with less poverty and better access to good schools and jobs increases aggregate tenant welfare and reduces both racial and economic segregation. However, it is also more costly to provide and disproportionately benefits more moderate-need, non-Black/Hispanic households. This change in the distribution of assistance arises in part because of the rationing process: households that only apply for assistance in opportunity-rich neighborhoods crowd out other households willing to apply anywhere. Relative to the choice of where to build, policy levers available post-construction—such as lowering the eligibility thresholds—have only limited effects on outcomes.

· Download

https://www.cody-cook.com/papers/Cook_JMP.pdf

· JMP

Housing and Human Capital: Condominiums in Ethiopia

· Abstract

Rapidly growing urban centers have led housing policy to become increasingly important across the developing world. In this project, we leverage random lotteries for government-subsidized condominiums in Ethiopia to understand the medium-run effects of winning a condominium on the educational and labor market outcomes of children. This policy affects children directly by influencing their neighborhood of residence, exposing them to different peers and educational and labor market opportunities. The direction of the policy and direct impacts are theoretically ambiguous given potentially offsetting features of the condominium neighborhoods. The condominium policy may also indirectly affect outcomes by increasing parental wealth. Through detailed household surveys, supplementary administrative data, and a structural selection model, we separately identify the relative importance of the direct and indirect consequences of this policy.

· JMP

Labor Market Shocks across Heterogeneous Housing Markets

· Abstract

In this paper I study how changes in the composition of the local residents due to structural technological changes have shaped the cross-section of housing prices within cities in Germany during the period 2007-2021. To do so I combine a large listing dataset containig information on housings at the 1x1km2 grid level with administrative data for the labor market. I first show that the price of housings of different quality evolved heterogeneously both between and within cities, and that housings of low-quality have gained more value in big cities than in the rest of the country, making the local market there more homogeneous. By relying on a shift-share approach, I study the impact of the variation in the abstract jobs at different quartile of the housing prices/quality distribution. I show that this change in the composition of the local demand has heterogeneous effects along the housing prices distribution, and can be seen as a spillover effect from the top to the bottom of the distribution due to mis-smatches in the local housing sub-markets. Finally, I study the implications for the local workers in terms of welfare and the displacement effects of low-skilled workers.

· JMP

Equal Prices, Unequal Access: The Effects of National Pricing in the US Life Insurance Industry

· Abstract

Regulators that care about financial inclusion may address inequities by restricting prices. In response, firms may reduce the supply of their product, implying that some households may lose from reduced access. This paper explores this tradeoff in the context of national price setting in the US life insurance industry. I collect a new data set with over one million insurer-agent links across a subset of US commuting zones and document that poor commuting zones have fewer agents per household, fewer active insurers, and smaller and lower-rated insurers relative to rich commuting zones. Motivated by the data, I build a spatial model with multi-region insurers and households with heterogeneous preferences for a differentiated product. The model captures the empirical spatial sorting patterns and admits clear predictions for how insurer location choices change in response to national pricing. I take the model to the data and estimate heterogeneous price elasticities for low- and high-income households. I find that most of the spatial dispersion in welfare under flexible pricing comes from the access margin. National pricing exacerbates spatial disparities due to the geographic reallocation of insurers toward richer markets. Place-based policies that complement national price setting can raise household welfare in the life insurance industry by 3.3-5.2% in poor commuting zones relative to flexible pricing and reduce spatial welfare dispersion by 18%.

· Download

https://derekwenning.github.io/files/DW_JMP.pdf

· JMP

Tax Incentives and the Supply of Low-Income Housing

· Abstract

Subsidies to developers are a core instrument of housing policy. How do they affect housing markets, and who benefits? I assess their impacts and incidence with a dynamic model of housing markets and new data on developers competing for Low-Income Housing Tax Credits. I estimate the model using three sources of variation: quasi-random assignment of subsidies, shocks to subsidy generosity, and nonlinearities in scoring rules for subsidy applications. I find that, due to displacement of unsubsidized housing, subsidies add few net units to the housing stock and instead reallocate units progressively. Households benefit from developer competition for subsidies, but competition also results in high entry costs, and developers still capture nearly half of the welfare gains. In counterfactuals, a stylized voucher program can generate the same household benefits at less fiscal cost.

· Download

https://evansoltas.com/papers/SoltasJMP.pdf

· JMP

Firm Localness and Labour Misallocation

· Abstract

Limitations to workers' spatial job mobility reduce access to productive jobs, misallocating labour and lowering output and welfare. Several policies aim to mitigate this misallocation by bringing workers closer to productive firms. Nevertheless, they substantially differ in how they affect the local costs firms face. For example, reducing planning regulations in productive locations lowers local rental costs. In contrast, making productive locations more attractive increases them by fostering congestion. I show that the effectiveness of these policies crucially depends on which firms are more sensitive to changes in local costs. I call this sensitivity localness. Using UK microdata, I find that productivity and localness are negatively correlated. I evaluate the effectiveness of different types of policies using a spatial general equilibrium model that, as a novelty, accounts for the observed joint distribution of productivity and localness. I find that accounting for localness heterogeneity dampens, by up to 35%, the aggregate welfare gains from policies that decrease costs in productive locations. Intuitively, lower rental costs lead to the creation of low-productivity jobs rather than productive ones, as productive firms are less local. Conversely, policies that indirectly increase local costs in productive locations are more effective, since not many productive jobs are destroyed. Finally, I show that localness heterogeneity has broader implications for how these policies shape the distribution of wages. 

· Download

https://warwick.ac.uk/fac/soc/economics/staff/gguaitoli/guaitoli_gabriele_jmp.pdf

· JMP

Skills, Distortions, and the Labor Market Outcomes of Immigrants across Space

· Abstract

I study the geography of immigrants' labor market outcomes and its implications for spatial inequality. Using US micro-data, I document that, compared to natives and immigrants from high-income countries, immigrants from low-income countries i) do not earn a premium from working in big cities and ii) are more likely to live in big cities and work in non-cognitive occupations. To shed light on the mechanisms driving these facts, I build a quantitative general equilibrium spatial model where the technology of firms in cities favors cognitive skills, workers are heterogeneous in human capital and tastes for cities and occupations, and immigrants face labor market distortions. Removing all sources of heterogeneity between immigrants and natives reduces their earnings gap by 29 percent at the expense of an increase in the earnings gap between cities by 2.3 percent. An immigration policy opening borders to non-college-educated workers increases the earnings gap between immigrants and natives by 2.6 percent but reduces the earnings gap between cities by 0.3 percent.

· Download

https://gabrielelucchetti11.github.io/jmp_draft/Gabriele_Lucchetti_jmp_draft_Nov_2023.pdf

· JMP

Scaling Heights: Affordability Implications of Zoning Deregulation in India 

· Abstract

Does relaxation of zoning regulations substantially increase affordable housing or simply trigger a trickle of new luxury units? This paper exploits a rule-based relaxation of the regulatory cap on building height and floorspace provision, the Floor Area Ratio (FAR), to answer this question in Mumbai, India. Leveraging granular panel data and exploiting variation in time and space, we find that the reform increased housing supply in treated areas by 28%, implying an elasticity of housing supply to the FAR of 1.59. The FAR relaxation increases the scale of development, resulting in higher investment in shared amenity space within the building. Increased supply and scale economies facilitate an 18% decline in unit sizes, leading to a 29% decline in apartment prices that allows lower-income households to access housing. We develop a structural model of housing supply and demand that incorporates the provision of amenity floorspace and shows that average home buyer incomes are 3.18% lower post-relaxation. Finally, we use the estimated model to show that a further 5% rule-based relaxation would amplify the scale economies and increase the affordability gains from deregulation by 1.7%. Taken together, our results show that concentrating FAR relaxation can improve affordability.

· Download

https://papers.geetika-nagpal.com/Nagpal_JMP.pdf

· JMP

School Access and City Structure

· Abstract

This paper quantifies the effect of schools on the internal structure of cities by developing a quantitative spatial model that incorporates school choice. Parents select their residence by balancing access to schools and jobs, choose a school considering its endogenous peer composition, and compete with childless households for houses and jobs. For estimation, I leverage data from Madrid on school admissions, workers' commuting trips by skill, and the location, composition, and education of every household in the city. Schools influence parental residential and job choices, but non-parents reduce by 40% the impact of schools on house prices and the distribution of workers by moving to locations less favored by parents. Commuting costs concentrate skilled households in productive areas, and as parents tend to enroll children in schools close to their homes, peer effects in school quality triple the impact of jobs on the distribution of students. The equilibrium interactions between schools and the labor market significantly affect the outcome of policies increasing school choice and the city-wide consequences of work-from-home. 

· Download

https://giorgiopietrabissa.github.io/files/school_sorting.pdf

· JMP

Not in My Back Yard: The Local Political Economy of Land-use Regulations 

· Abstract

We provide evidence that local preferences for neighborhood characteristics play an important role in shaping the political economy of residential land-use regulations and their distributional consequences. We leverage a land-use regulation reform in Houston, TX that reduced the minimum lot size—permitting denser single-family housing—while allowing incumbent property owners on individual city blocks to opt out of the change and adopt higher alternative minimum lot sizes. Initially wealthier, whiter neighborhoods were more likely to opt out and adopt higher minimum lot sizes after the reform. Supply of denser housing increased in areas that did not opt out. We develop a model where incumbents set minimum lot size. Incumbents trade off potential gains from redevelopment and local spillovers from housing density. The local nature of block-level regulatory decisions allows us to distinguish between preferences for neighborhood density and alternative political economy motives for regulation. Model estimates reveal large, negative local externalities from density that vary across incumbent socio-economic groups. Our results suggest that local control can tailor regulation to heterogeneous incumbent preferences, possibly making reform more politically feasible. However, doing so will likely limit supply in areas where housing demand is the highest.

· JMP

Two-Sided Sorting of Workers and Firms: Implications for Spatial Inequality and Welfare

· Abstract

High-skilled workers and high-productivity firms co-locate in large cities. In this paper, I study how the two-sided sorting of workers and firms affects spatial earnings inequality, efficiency of the allocation of workers and firms across cities, and the welfare consequences of place-based policies. I build a general equilibrium model in which heterogeneous workers and firms sort across cities and match within cities. I structurally estimate the model using Canadian matched employer-employee data and decompose the urban earnings premium, finding that worker and firm sorting account for 67% and 27% of this premium, respectively. The decentralized equilibrium is inefficient as low-productivity firms overvalue locating in high-skilled cities. The optimal spatial policy would incentivize high-skilled workers and high-productivity firms to co-locate to a greater extent while redistributing income towards low-earning cities, leading to a 6% increase in social welfare. Model counterfactuals underscore the importance of two-sided sorting when evaluating distributional and aggregate outcomes of place-based policies.

· Download

https://www.guangbinhong.com/files/JMP/jmp_hong.pdf

· JMP

The Welfare Consequences of Incoming Remote Workers on Local Residents

· Abstract

This paper studies the impact of an influx of high-skilled remote workers on local residents in destination cities. Dozens of U.S. municipalities have recently implemented Remote Worker Relocation Programs that provide cash incentives to remote workers who relocate to their city. Using Tulsa Remote as a case study—the largest and the earliest such program—and employing an event study design, I find that the program attracted remote workers but had offsetting effects on local employment across sectors. The local service sector saw growth, while the wholesale trade sector experienced a decline. To assess the overall and distributional effects of this kind of policy, I build and estimate a structural equilibrium model that takes into account workers' industry choices with a nonemployment option. The program slightly improves the average welfare of local residents primarily due to higher wages and a greater variety of local goods, which compensates for increased rents and prices of local goods. However, nonemployed and low-skilled renters in the tradable sector are adversely affected. Finally, a Remote Worker Relocation Program financed by local taxes is still welfare-enhancing, but the average net benefit of the program almost disappears. 

· Download

https://users.ssc.wisc.edu/~hyoo36/JMP_YOO.pdf

· JMP

Should I Stay or Should I Grow? How Cities Affect Learning, Inequality and Productivity

· Abstract

The spatial concentration of talent is a robust pattern of modern economies. While the sorting of individuals into cities beget regional disparities, it may benefit aggregate productivity by fostering human capital accumulation. To study this equity-efficiency tradeoff, I develop a tractable model of learning across space. Heterogeneous workers learn by interacting with the other individuals in their city. Learning opportunities vary across space as workers sort into cities. Cities affect the stock of human capital by determining the frequency at which workers meet. I show that the tradeoff between productivity and spatial inequality hinges upon the shape of learning complementarities. I estimate the model on French administrative data. I recover learning complementarities from a local projection of future wages on present wages and the wages of nearby individuals. I find that workers employed in relatively skill-dense cities experience faster wage growth, in particular if they are skilled. I address endogeneity concerns by using skill-density variations within firms across neighborhoods driven by past productivity shocks. The model explains two-thirds of the between-city wage growth variance, and gives rise to a steep tradeoff between aggregate human capital accumulation and spatial inequality. I assess the implications of this tradeoff for the general equilibrium effects of moving vouchers. I find that large vouchers are effective at reducing spatial disparities in learning opportunities at the cost of decreased aggregate efficiency. 

· Download

https://www.hugolhuillier.com/files/papers/lhuillier2023should.pdf

· JMP

Sectoral Shocks and Labor Market Dynamics: A Sufficient Statistics Approach  

· Abstract

In this paper, we develop a sufficient statistics approach to evaluate the impact of sectoral shocks on labor market dynamics and welfare. Within a broad class of dynamic discrete choice models that allows for arbitrary persistent heterogeneity across workers, we show that knowledge of steady-state worker flows across sectors over different time horizons is sufficient to construct counterfactual predictions on labor reallocation and welfare changes, up to a first-order approximation. We also establish analytically that assuming away persistent worker heterogeneity, a common practice in existing literature, necessarily leads to overestimation of steady-state worker flows, resulting in systematic biases in counterfactual predictions. As an illustration of our sufficient statistics approach, we revisit the consequences of the rise of import competition from China. Using US panel data to measure steady-state worker flows prior to the shock, we conclude that the labor reallocation away from manufacturing is significantly slower, and the negative welfare effects on manufacturing workers are much more severe than those predicted by earlier models that abstract from persistent worker heterogeneity.

· Download

https://jaeeun-seo.github.io/files/Seo_JMP.pdf

· JMP

Market Concentration, Labor Quality, and Efficiency: Evidence from Barriers in the Real Estate Industry

· Abstract

This paper estimates the trade-off between quality and concentration due to occupational licensing and the consequences of entry restriction for market efficiency. In the real estate industry, entry-level “salespeople” must work for professional-level “brokers” in an apprenticeship structure. I exploit a policy reform in Texas in 2012 which provides quasi-exogenous variation in brokers' entry cost. A future increase in licensing cost should lead to an anticipatory spike in entry before a supply restriction, which has different implications in the short vs. long term. Using a novel dataset of the universe of licensees in a number of states matched with property listing data, I compare counties in Texas with similar counties in other states in a synthetic difference-in-difference estimation. The reform generates an unintended short-term increase in entry, leading to a 12% increase in the stock of brokers in the average county, before broker supply is restricted in the long term. The increased barrier does not increase broker quality, while market concentration persistently decreases by more than 25%, due to the unintended entry effect, suggesting minimal benefits to consumers of restricting entry. However, efficiency, i.e., average broker listing volume, decreases due to entry. This simple definition does not capture distributional effects of barriers: I find that costlier licensing leads to a smaller share of entering female and Hispanic brokers.

· JMP

Improving Access to Opportunity: Housing Vouchers and Residential EquilibriumJoonYup Pa

· Abstract

This paper examines the effects of improving low-income households’ access to high-rent, high- opportunity neighborhoods on the residential equilibrium. Amidst pervasive residential segrega- tion, I study the Small Area Fair Market Rents, a re-design of the rental voucher program that increased subsidies in high-rent neighborhoods and allowed voucher families to relocate there. I find that it led to a more polarized rental market: rents rose in high-rent areas but declined in low-rent areas. In contrast, it fostered a more egalitarian equilibrium in terms of income and racial composition. While high-income non-voucher households experienced a modicum of welfare loss due to increased living costs, low-income counterparts benefited from reduced rents in low-rent neighborhoods. However, I find that the institution of the voucher program itself led to a substantial welfare loss for low-income households, the very population this program aims to assist. This research illustrates the broader implications of housing vouchers, underscoring the need to balance affordable housing, societal integration, and overall welfare.

· Download

https://joonyup.github.io/pdfs/park_small_area_fair_market_rents.pdf

· JMP

A Streetcar City: Public transit expansion and neighborhood dynamics in early XXth century Chicago 

· Abstract

In this paper, I construct a novel spatial dataset of the entire streetcar network of Chicago for three decadal years i.e. 1900, 1910 and 1920. I investigate the impact of streetcar expansion on the rich and poor- who prefers to live in close proximity to streetcars?  I also study whether the rich or poor prefer to live close to the central business district and if the socioeconomic dynamics have changed during the time period covered. Using extinct horsecar lines as an instrument for streetcars, results indicate that as time progressed, richer people moved farther away from the central business district and the poor clustered close to the CBD. This coincided with the time of streetcar expansion. I find that poor people in the CBD live close to streetcars and individuals located farther from the CBD but near streetcar lines tend to be richer. I also find that richer neighborhoods are areas dominated by high total population, less black and immigrant population and a high share of people who own houses.

· JMP

Unequal Access: Racial Segregation and the Distributional Impacts of Interstate Highways in Cities

· Abstract

This paper investigates the impact of the largest infrastructure project in American history—the Interstate highway system—on racial inequality and the role of institutional segregation in its disparate incidence. To evaluate the distributional impacts, I develop a general equilibrium spatial framework that incorporates empirical estimates using novel disaggregated commute flows from Census microdata in 1960 and 1970 for 25 cities. I show that highways generated substantial costs from environmental harms on adjacent areas as well as benefits from reductions in commute times. In the urban core, costs outweigh benefits as proximity to highways is greater and commute time reductions are lower since connectivity improves predominantly in remote suburbs. I find the initial concentration of the Black population in central areas and their low mobility away are key contributors to their welfare losses from the interstate highway system. Exclusionary institutions, delineated using redlining maps, account for most of their concentration rather than sorting on housing prices or preferences for racial composition. These institutional barriers further inhibit their spatial mobility outwards. When barriers are eliminated and Black households are granted access beyond central neighborhoods, the racial gap in welfare closes by more than half and the Black population experiences gains of +1% rather than losses of -1% from interstate highways.

· Download

https://drive.google.com/file/d/1-7ybA6wTfN1E0PzgrIZG1ERL15lQLPEu/view

· JMP

Applicant choice in the allocation of social housing: evidence from France 

· Abstract

Although social housing is prevalent in many developed countries, there is no consensus over how to design allocation rules. Measuring the impact of a change in rules requires predicting how applicants will respond. In a context where rents are fixed, application data scarce, and allocation rules lack transparency, disentangling applicant preferences from their probability to receive an offer is challenging.  This paper develops a dynamic framework which makes use of a novel, comprehensive dataset of French social housing applications to separately identify preferences of applicants to social housing from their expectations over future offers and the allocation rules. This allows to compare the welfare impact of changes in the allocation rules. Results indicate that the current system favors households with French nationality, and disadvantages precarious households like single mothers compared to the rest of the population.

· Download

https://drive.google.com/file/d/1VXX7ZC2xiP1GgpDlDIP4dGA8_zcAK3pm/view

· JMP

Place-based industrial policies and local agglomeration in the long run

· Abstract

This paper studies a large place-based industrial policy (PBIP) aimed at establishing in- dustrial clusters in Italy in the 1960s and 1970s. Combining historical archives spanning one century with administrative data and leveraging exogenous variation in government intervention, we investigate both the immediate effects of PBIP and its long-term impli- cations for local development. We find that the policy led to agglomeration of workers and firms in the targeted areas persisting well after its termination. By promoting high- technology manufacturing, PBIP boosted demand for business services and favored the emergence of a skilled local workforce. Over time, this shifted the local economy towards high-skill industries and produced a spillover from manufacturing – the only sector targeted by the program – to services employment. We document a stark rise in knowledge- intensive services, which contribute significantly to the long-lasting employment effects of PBIP. Cost-benefit analysis indicates that the policy generated net gains in the long run.

· Download

https://lincoronato.github.io/files/jmp_incoronato.pdf

· JMP

Spatial Sorting and the Rise of Geographic Inequality

· Abstract

I show that unobserved sorting patterns of firms and workers across space can account for the tight link between rising aggregate wage inequality and rising spatial inequality in West Germany. Two-sided sorting patterns of workers and firms interact with a change in technology to produce a spatially concentrated increase in inequality, driving up regional disparities. These sorting patterns are determined jointly in equilibrium and depend on theoretical objects that are difficult to measure in the data. This paper develops a novel bi-clustering method to recover these objects empirically and uses these results to structurally estimate a dynamic spatial search model with two-sided sorting. I find that regional sorting of firms is more pronounced than regional sorting of workers and the former is an important determinant of workers' job ladders and lifetime values. Compensating differentials between regions are large, driven in part by better labor market outcomes in rich places. The model allows me to consider the redistributive effects of spatial policy, which I find to be strong.

· Download

https://lfmann.github.io/files/papers/2023/mann_jmp.pdf

· JMP

Why Are Labor Market Outcomes of Married Women Better in Detroit? The Role of Long and Variable Commutes?

· Abstract

This paper shows that for college-trained individuals, congestion and related uncertainty about how long a commute may take adversely affects the labor market outcomes of married women. This holds even after controlling for average commute times and other MSA-level attributes (including MSA size). These patterns are also present for both labor force participation (LFP) and the degree to which working individuals with professional training are employed in occupations for which they trained. Evidence affirms that larger MSAs enhance labor market opportunities, consistent with previous literature. New to this paper, average commute time has little effect on labor market outcomes. Instead, it is the volatility of commute times as proxied by rush hour congestion that discourages highly trained women from participating in the workforce, and which reduces the quality of their labor market match for those who are employed.

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https://drive.google.com/file/d/1WcNRtqDq32MQjzj5OdPTGIV5OGjI_mIB/view

· JMP

Specification Testing under General Nesting Spatial Model

· Abstract

Three decades ago Anselin et al. (1996) was unceremoniously published in the Regional Science and Urban Economics (RSUE) journal that literally changed the landscape of testing spatial regression models. By our last count, it has been cited by around 2,500 papers in applied spatial econometrics out of which more than 1,000 papers have explicitly used it's testing tool as the principal model selection technique. The crux of the paper was to identify the source of spatial dependence: lag and/or error. Since then much water has flown through the field of spatial econometrics. Over the last 28 years another source of dependence, namely the Durbin specification that takes account of the exogenous interaction effects among the cross-sectional units (locations) has become very popular in the econometrics literature. Elhorst (2017) pointed out that conducting statistical tests while ignoring the Durbin term may spuriously lead to strong evidence in favor of interaction effects among the dependent variable or among the error terms. He further cautioned that the tests in Anselin et al. (1996) or the analogous ones developed for the spatial panel set up in Elhorst (2010) may not be very helpful in finding the right model as they do not account for the exogenous interaction effects.  In this paper, we generalize Anselin et al. (1996) by including the Durbin specification and attempt to identify the three main sources of spatial dependence, namely, lag, error and Durbin. Additionally, we propose non-nested tests to select between two competing spatial models, both of which take account of the exogenous interaction effect.  This work can also be viewed as an extension of Koley and Bera (2023) that took account of lag and Durbin terms, but did not consider the spatial error dependence. We believe that the diagnostic checks and the non-nested model selection methodology suggested in this paper will be useful additions to the toolbox of spatial econometricians.

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https://drive.google.com/file/d/1jDAQEmczE7vlPPX1jKaYajD1VtmL4Zvh/view

· JMP

Public housing design, racial sorting and welfare: Evidence from New York City public housing 1930-2010

· Abstract

This paper investigates the long-run effect of public housing project design on neighborhood composition and rental prices in New York City from 1930 to 2010. Using a newly assembled dataset on the US census tract level and leveraging the staggered rollout of public housing, I document sizeable effects on racial composition. White population declined in tracts with public housing projects with significant spillover effects to adjacent tracts, while black population increased but only in public housing tracts. The effects on white and black population are driven by a specific project type called the “Tower in the park” – slim brick high-rises and vast green spaces in between. Moreover, rent prices fall by 26% within a 250m radius around “Towers”, indicating negative demand effects. In a cross-sectional analysis, I find that “Towers in the Park” are more associated with higher incarceration rates than non-Towers, though incarceration rates cannot entirely explain spillover effects on white population. Finally, I evaluate the welfare consequences of these externalities using a static neighborhood choice model. The model demonstrates that removing public housing or altering area ratios can increase amenity values and improve welfare.

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https://mguennewigmoenert.github.io/uploads/JMP_Moenert_Public_Housing.pdf

· JMP

Spatial Implications of Trade Cost Reduction with Resource Reallocation Frictions

· Abstract

How do changes in external trade costs and internal frictions interactively impact export growth? I build a dynamic spatial general equilibrium model that incorporates costs in trade of goods within and across borders, labor migration, and firms' borrowing. The model is calibrated using China's external and internal reforms from the early 2000s. I find that both external and internal reforms played a significant role in boosting export growth, with the latter having a more pronounced effect. Notably, domestic financial frictions are found to be the most important. Additionally, I observe a complementary relationship between external and internal factors, meaning that the reduction in external trade costs becomes more effective when internal frictions are mitigated. In the presence of internal frictions, labor misallocation and limited capital accumulation impede the effectiveness of trade cost reduction. The findings highlight the importance of accounting for financial frictions and capital accumulation, as their neglect leads to an underestimation of the impact of reducing internal frictions and its interaction with reducing external trade cost. 

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https://drive.google.com/file/d/1ocq7L-4qV90oyme98KKqK7pAnfqxKald/view

· JMP

Local Policies and Firm Location: The Role of Leaders’ Promotion Motives in China

· Abstract

This paper investigates the impact of local government competition on the spatial distribution of firms and the role of leaders' promotion motives in intensifying such competition. Local governments compete by offering city-wide policies, such as lowering tax rates, giving subsidies, providing financial support, or loosening environmental regulations. The difference between what is practiced and what is legally mandated is non-negligible, and many of these policies remain unobservable due to limited data accessibility. To address this issue, I introduce a novel method to quantify the net effect of various policies proposed by local governments. This net effect, referred to as the policy index, is identified using data from all manufacturing plant locations along with a spatial border design. When applying this method to Jiangsu, a province in China with 13 competitive cities, all ranked in the top 100 by GDP over th past decade, I find that geographically proximate cities tend to adopt similar industrial policies. I then incorporate the estimated policy index into a promotion competition framework to understand how policies are determined in equilibrium and how competition, in turn, affects the business landscape. Counterfactual simulations demonstrate that only 23% of firms would choose a different location if leaders' incentives were the same across all cities.

· Download

https://www.dropbox.com/scl/fi/tz1hhp8f32162wqunzhdq/lin_abstract.pdf?rlkey=atlxzjt71qok44hgb9x4f9tpw&dl=0

· JMP

Gone with the Wind: Renewable Energy Infrastructure, Welfare, and Redistribution 

· Abstract

Electricity production from wind and solar energy is projected to grow twelvefold until 2050. This paper studies the impact of renewable energy infrastructure on surrounding neighborhoods, its potential welfare costs for residents, and the implications for inequality. I focus on the wind energy expansion in Germany, 2000-2017. Using neighborhood data at 1-by-1 kilometer resolution and an IV strategy that exploits technology-induced changes in effective wind potential, I document that wind turbines decrease house prices and lead to residential sorting driven by the emigration of college-educated residents. Combined with a theory-consistent revealed preference argument, the reduced form results suggest that residents would be willing to pay between 0.9 and 1.4 percent of their income to avoid an additional wind turbine. I develop and estimate a quantitative spatial model in which wind turbines decrease amenities, residents can adapt, for example through sorting, and housing and labor markets respond in general equilibrium. The quantified model suggests that turbine disamenities cost residents 0.84 percent of welfare or 31 billion USD. Allocating wind turbines in neighborhoods with low willingness-to-pay substantially reduces welfare costs but also places the burden on rural, poorer, and less educated regions. Finally, I discuss Germany's wind development plans for 2030, and the implications for welfare and inequality.

· Download

https://drive.google.com/file/d/11FXuqvcjSJ6JfVuEGHAxa9DaJ0xvkO6F/view

· JMP

Place-based Policy, Migration Barriers, and Spatial Inequality 

· Abstract

This study quantifies the effects of two policies on spatial inequality in Vietnam, place-based tax incentives and the Ho Khau reform, which reduces migration barriers. To this end, I develop a dynamic spatial general equilibrium model incorporating workers’ and entrepreneurs’ choices. The model yields ambiguous effects of these policies on spatial inequality. Tax incentives attract firms but can reduce public services, while eased migration barriers can both offset and amplify the effects of place-based policies. I combine two decades of firm and household data with difference-in-differences designs to identify two key factors governing policy effects, the firm entry elasticity and migration costs associated with the Ho Khau reform. I find that place-based incentives have a minimal impact on spatial inequality, while the Ho Khau reform lowers migration costs significantly to poorer areas, boosting labor supply, firm entry, and increasing welfare there relative to wealthier ones.

· Download

https://nghiemhuynh.com/papers/Huynh_Nghiem_JMP.pdf

· JMP

Market coverage and network competition: Evidence from shared electric scooters

· Abstract

I quantify the welfare implications of competition and capacity constraints on the spatial allocation of supply in transportation markets. Using new data on shared electric scooters, I analyse the market using a dynamic spatial structural model incorporating the role of capacity constraints, economies of density, and dynamic externalities across locations on firms' decisions. Counterfactual simulations show that by internalizing the trade-off between business stealing and spatial differentiation, a monopolist would improve welfare by 27%. Imposed citywide capacity constraints have a regressive nature, causing distributional concerns between high and low-income areas. Finally, I find price subsidies to be more efficient than minimum supply quotas at increasing usage in low-income areas.

· JMP

Demographic Transition and Structural Transformation in China 

· Abstract
This paper examines the relationship between demographic transition and structural transformation in China from 1982 to 2000. I develop a dynamic economic geography model that incorporates dynamic fertility decision-making, multi-region and multi-sector settings, non-homothetic preferences, technology progress, and China-specific frictions. The mechanism involves changes in the total labour force along with disparities in sectoral factor intensities. After the implementation of One Child Policy (OCP), the total labour force expands in the short run due to a lower dependency ratio but contracts in the long run due to decreased fertility. Labour is channeled more towards the labor-intensive non-agricultural sector compared to the land-intensive agricultural sector due to factor intensity differences, resulting in struc-tural transformation. Empirical analysis utilizing regional variations in OCP confirms this relationship and its underlying mechanism. Counterfactual analysis from the model reveals that in the short run, the OCP leads to a 0.91 percentage point increase in the share of non-agricultural employment. However, in the long run, it results in a 2.7 percentage point decrease in the share of non-agricultural employment.

· Download

https://www.lse.ac.uk/economics/Assets/Documents/job-market-candidates-2023-2024/JMP-ningyuan-jia.pdf

· JMP

Commuting Infrastructure in Fragmented Cities

· Abstract

Cities are divided into local governments responsible for commuting infrastructure, which is often used by external commuters. In this paper, I study how metropolitan fragmentation affects the provision of commuting infrastructure and the distribution of economic activity. I develop a quantitative spatial model in which municipalities compete for residents and workers by investing in commuting infrastructure to maximize net land value in their jurisdictions. In equilibrium, relative to a central metropolitan planner, municipalities underinvest in areas near their boundaries and overinvest in core areas away from the boundary. Infrastructure investment in fragmented cities results in higher cross-jurisdiction commuting costs, more dispersed employment, and more polycentric patterns of economic activity. Estimating the model using data from Santiago, Chile, I find substantial gains from centralizing investment decisions. Centralization increases aggregate infrastructure investment and population. More importantly, for a given amount of investment, centralization yields large welfare gains due solely to more efficient infrastructure allocation.

· Download

https://www.oliviabordeu.com/papers/fragmented_cities_obordeu.pdf

· JMP

Value Pricing or Lexus Lanes? The Distributional Effects of Dynamic Tolling

· Abstract

This paper studies the welfare and distributional effects of dynamically priced highway toll lanes. To quantify the equilibrium effects of tolling, we develop and estimate a model of driver demand, the road technology, and the pricing algorithm. The demand model features heterogeneous drivers choosing both where and when to drive, as well as uncertainty about prices and travel times. A key welfare channel is the option value of tolling: even drivers who infrequently take the priced lanes can benefit from having the option but not the obligation to pay for speed. The model is estimated using data on toll transactions, historical traffic conditions, and driver characteristics from the I-405 Express Toll Lanes in Washington State. Relative to a world in which the same number of highway lanes are all free, status-quo tolling increases aggregate welfare and benefits drivers in all income quartiles, driven in large part by the option value. Moreover, we find that drivers in the bottom income quartile gain the most under status-quo tolling. Low-income drivers have the longest I-405 commutes and they face low prices relative to their time savings from the priced lanes. They also have high option values of tolling because they are more price-sensitive, so they are more likely to be marginal when deciding between the priced and unpriced lanes. Finally, we show how simple revisions to the pricing algorithm can increase aggregate welfare and achieve redistributive goals.

· Download

https://www.pearlzli.com/assets/pdf/pearlzli_jmp.pdf

· JMP

Economies of Scale and Scope in Railroading

· Abstract

To what extent do transportation costs depend on the amount shipped, and how does infrastructure investment shape these costs? We model railroads as multiproduct firms and estimate the link between capacity utilization and costs using firm choices, the network structure of production, and publicly available routing data. We find a U-shaped relationship between marginal costs and rail utilization: As utilization increases, costs decrease by 30% to a low point at 55% utilization, before increasing by another 30%. Increased congestion in the rail network can explain a third of the 50% increase in real rail prices observed since 2004. We use our framework to study two normative and one positive policy questions: First, we estimate the network externalities of rail infrastructure investment, finding that investment in Arizona provides the highest returns, but only 3% are captured by Arizona itself. Next, we evaluate the cost efficiencies that would arise from a merger between Union Pacific and Burlington Northern Santa Fe. We find that such a merger would reduce costs by 17.1% due to reduced misallocation and process innovation. Lastly, we study the effect of the China shock on freight costs. We show that the reallocation of imports toward the West Coast led to a 3% increase in shipment costs in Los Angeles and Chicago, with heterogeneous effects across space and firms.

· Download

https://drive.google.com/file/d/10Q0qx-NkyqpArZlOnmNfl5ve2V9cZI-Q/view

· JMP

The Size Distribution of Cities: Evidence from a Lab

· Abstract

In this paper, we bring fresh evidence on the city size distribution from a lab represented by the Bukhara region from 3rd B.C. to the 9th. This region was homogeneous in all respects (technology, amenities, climate, language, religion, etc.). Yet, cities had different size. We rationalize the city size distribution of this economy with only two elements: spatial centrality and cost of traveling. We embed these two elements in a discrete choice model of location. We estimate model parameters in the data using method of moments. Further statistical tests show that while city locations and number are not distinguishable from a random draw, population is larger in spatially central location. The silk road is the only element that perturbed the otherwise homogeneous space. The silk road crossed a number of cities but only those that were stopover places for merchant’s caravan have an abnormally larger population. The city size distribution passes the test of log normality and rank size relation is concave as predicted by stochastic growth theories though clearly the Bukhara region economy did not have any of the mechanisms of stochastic growth models.

· Download

https://drive.google.com/file/d/1uQEaBi1zGRNKXoEt9b_SPRQh13vlN6uy/view?usp=sharing

· JMP

Equilibrium Effects of Building Energy Efficiency Disclosure

· Abstract

Building energy efficiency is crucial for identifying energy-saving potential, yet such information was not publicly available in the past. This paper examines the equilibrium effects of a regulation in New York City that mandates increased public access to building energy efficiency information. I find that the salience of disclosed information is key to the effectiveness of disclosure policies in achieving desired market outcomes. I show that enhancing the visibility of building energy efficiency disclosures leads to the emergence of energy efficiency premiums and motivates buildings to make energy efficiency improvements. Particularly, luxury buildings exhibit more substantial responses. In addition, the study presents evidence that energy efficiency premiums cannot be fully explained by energy bill savings. I develop and estimate an equilibrium model of demand for homes and building energy efficiency, as well as buildings' choices of energy efficiency levels, to evaluate the welfare and distributional impact of the disclosure policies. 

· JMP

Under Control? Price Ceiling, Queuing, and Misallocation: Evidence from the Housing Market in China 

· Abstract

This paper develops a model to study the general equilibrium effect of price control policies. The government in Shanghai has imposed a price ceiling on new houses since 2017 to regulate the housing market. The proposed framework extends the existing literature by allowing consumers to be forward-looking. Consumers can choose to wait, pay the waiting cost, and re-enter the market if houses are not allocated to them currently due to excess demand. I assemble a new dataset that contains information about the sales, characteristics of new and existing houses, and the households' participation records of new house lotteries. The structural estimation results suggest that the welfare loss associated with the price ceiling is around 10.5 billion US dollars from 2018 to 2020. The waiting cost account for 37% of the total welfare loss. Comparing these estimates with those from a model with myopic consumers highlights several important biases that arise when forward-looking consumer considerations are ignored. I also use the model to study the implications of alternative policies, including increasing the new housing supply and imposing an additional price ceiling on existing houses.

· Download

https://drive.google.com/file/d/1CjkaOZH_oASWqV9z10EmDlkc8hO4GN6S/view

 · JMP

The Consequences of Mergers Between Real Estate Agencies and Mortgage Lenders

· Abstract

This paper studies the consequences of joint ownership between real estate agencies and mortgage lenders for consumers, lenders, and mortgage market structure. I construct a novel data set which matches home buyers' real estate agencies, lenders, and loan characteristics while tracking ownership of lenders and agencies over time. I hand-collect data for more than 100 mergers impacting real estate agencies or lenders and use a staggered differences-in-differences strategy to compare lender-agency pairs which merge to those that never merge. After merging, lenders double their loan share within jointly owned real estate agencies with little impact on a lender’s CBSA market share. Turning to consumer outcomes, buyers who use a lender jointly owned with their real estate agency pay interest rates 9 basis points higher, amounting to $225 more per year in interest on the average loan. However, I find no evidence that home buyers' credit characteristics, delinquency rates, or closing time on their mortgages change with these mergers. Finally, I develop a structural model of demand and supply for mortgages to study the welfare implications of mergers and run counterfactuals. I find that completely banning mergers harms consumers while more nuanced regulation preserves competition and improves consumer welfare. (Draft available upon request)

· JMP

Revealed Preferences for Residential Traffic Calming: Evidence from Low Traffic Neighborhoods

· Abstract

When road networks in urban areas become congested, drivers impose external costs on both other drivers and residents. Specifically, congestion imposes a time cost on all road users and can have negative welfare effects on residents. In a bid to avoid such congestion, drivers will utilize residential neighborhoods as alternative routes. However, in doing so they may induce or exacerbate disamentites in those neighborhoods, the costs of which are not borne by drivers. Policies preventing drivers from using residential streets as through-routes are gaining traction, but little is known about the willingness to pay (WTP) for such policies. In this paper, I exploit the staggered rollout of a “Low Traffic Neighborhood” (LTN) program in London to estimate the WTP for traffic reduction in residential areas using a difference-in-differences research design. I find that house prices within LTNs are 6.5% higher relative to untreated neighborhoods in the same borough post-LTN rollout. I find no evidence that this effect is driven by LTNs displacing traffic to nearby neighborhoods. I also investigate mechanisms that could be driving this effect and find that a substantial decrease in road accidents can explain at least 10% of the net effect on prices.

· Download

https://www.dropbox.com/scl/fi/ispnd68h1qzucg4v2yzxe/Low_Traffic_Neighborhoods_Draft.pdf?rlkey=oqap2d3pl6cokmbqtat4kwikw&dl=0

· JMP

Spatial Sorting of Workers and Firms

· Abstract

Why do productive workers and firms locate together in dense cities? I develop a new theory of two-sided sorting in which both heterogeneous workers and firms sort across space. Three forces are essential for generating spatial disparities: complementarity between worker and firm productivity, random matching within frictional local labor markets, and congestion costs. I demonstrate that the equilibrium exhibits excessive concentration of workers and firms, and dispersing them away from dense locations can mitigate congestion without reducing output. I then provide direct empirical evidence of two-sided sorting using German administrative microdata. An exogenous increase in the quality of the local workforce results in more productive firms choosing the same location. Finally, to quantify the implications of the model, I calibrate it to U.S. regional data and show that policies such as federal income taxes or local housing regulations, which relocate workers and firms toward less dense areas, can increase welfare.

· Download

https://ryunghaoh.github.io/files/RyunghaOh_JMP.pdf

· JMP

Output Market Power and Spatial Misallocation

· Abstract

Most product industries are local. In the U.S., firms selling goods and services to local consumers account for half of total sales and generate more than sixty percent of the nation's jobs. Competition in these industries occurs in local product markets: cities. I propose a theory of such competition in which firms have output market power. Spatial differences in local competition arise endogenously due to the spatial sorting of heterogeneous firms. The ability to charge higher markups induces more productive firms to overvalue locating in larger cities, leading to a misallocation of firms across space. The optimal policy incentivizes productive firms to relocate to smaller cities, providing a rationale for commonly used place-based policies. I use U.S. Census establishment-level data to estimate markups and to structurally estimate the model. I document a significant heterogeneity in markups for local industries across U.S. cities. Cities in the top decile of the city-size distribution have a fifty percent lower markup than cities in the bottom decile. I use the estimated model to quantify the general equilibrium effects of place-based policies. Policies that remove markups and relocate firms to smaller cities alleviate spatial misallocation, yielding sizable aggregate welfare gains.

· Download

https://francotabares.github.io/JMpacket/Franco_Santiago_JMP.pdf

· JMP

Collective Bargaining Networks, Rent-Sharing, and the Propagation of Shocks

· Abstract

I study the role of collective bargaining, a prevalent wage-setting institution in many countries, in determining the effects of economic shocks on workers and firms. To do so, I leverage novel administrative data which allows me to construct the network linking employers to collective bargaining agreements in Argentina. I exploit changes in world import demand between 2009 and 2013 to construct exogenous shocks to product demand and to study how these shocks propagate through the collective bargaining network. My findings indicate that a shock equivalent to a 10% rise in firm revenue leads to a 1.5% increase in wages, and a shock equivalent to a 10% rise in average revenue of firms under the same agreement leads to a 4.3% increase in wages. The evidence suggests that these effects are driven by changes in common wage floors, which means that bargaining extends the impact of economic shocks to firms and workers not directly affected. I develop a general equilibrium model of the labor market with collective bargaining and firm heterogeneity to quantify how the degree of centralization of bargaining affects the propagation of shocks. The estimated model indicates that the degree of shock propagation is hump-shaped in the degree of centralization, with highly decentralized or highly centralized bargaining structures leading to less propagation than intermediate levels of centralization.

· Download

https://santiagohermo.github.io/assets/pdf/Hermo_JMP_CollectiveBargaining.pdf

· JMP

The (Express)Way to Segregation: Evidence from Chicago

· Abstract

How do man-made barriers shape racial segregation within cities? I study the long-run effects of the construction of expressways in Chicago in the 1950s on racial segregation. These multilane roads (i) produce a local shock to residential amenities, and (ii) divide the areas they cross through, creating local barriers to the interaction of nearby communities. I find that expressways affect within-city racial segregation through two main channels. First, a price or disamenity channel: Racial segregation increases because of income differences between Black and white residents, which on average lead the two groups to react differently to changes in house prices induced by proximity to expressways. Second, a physical barrier channel: Racial sorting appears to be affected by expressway-induced changes in accessibility to different portions of the city and, in turn, to neighborhoods with different demographic compositions. Motivated by these findings, I build a structural urban model to study the link between urban barriers and racial preferences in shaping the allocation of people across space. The model is used to estimate racial preferences parameters and to undertake counterfactual experiments to inform current public policies targeting the social issues of transport infrastructures in U.S. cities.

· Download

https://drive.google.com/file/d/1f45RDOze8EiGvJVv1chgOp3cOPu5i_qn/view

· JMP

Financial Frictions and Geographical Diversification of National Homebuilders 

· Abstract

This paper examines the role of geographical diversification in the U.S. homebuild-ing industry. Despite being traditionally fragmented, the US homebuilding sector hasseen significant expansion of national builders over the past two decades. Using theuniverse of housing transaction data from the second half of the housing busts, I ex-amine how interdependent pricing decisions of national builders of single-family homesare influenced by the firm’s financial frictions and the local market structure. I designan equilibrium model for new housing markets wherein national builders set prices ineach market to offload existing investments and increase cash flow. I recover novelestimates of market-specific values of inventory and convex external financing costs.The model estimates suggest that financial frictions decreased profit margins for theaverage public builder by 20% in the sample period. Counterfactuals indicate thatbuilders operating acr oss diverse geographical markets are better protected againstlocal housing shocks, due to their capacity to adjust pricing strategies across localmarkets with varying economic conditions.

· Download

https://www.dropbox.com/scl/fi/yg44jpn3w8tana87whook/Kim-Seohee_draft.pdf?rlkey=eh8vl03b9uo6l0zgh1phpkqey&dl=0

· JMP

Housing Rent, Inelastic Housing Supply and International Business Cycles

· Abstract

Despite its distinctive features—such as large expenditure shares and inelastic supply—housing service has received scant attention in the international macroeconomics literature. To fill this gap, I examine the role of housing rent as a major component of the relative price levels of eurozone countries. I show that relative rents exhibit larger variations than the relative price of tradable and other nontradable items, both in cross-country and time series. In addition, relative rents contribute to more than half of the Balassa-Samuelson effect and the negative Backus-Smith correlation. By simulating a two-country model with a realistically calibrated housing sector via sectoral productivity shocks, I show that the cross-country distribution of sectoral productivities, inelastic housing supply, and its interaction with the wealth effect via incomplete markets are key to understanding the empirical moments of real exchange rates. Compared with the standard model, the model with the housing sector generates larger variations of the real exchange rate in both cross-country and time series, a stronger Balassa-Samuelson effect, and more realistic Backus-Smith correlations.

· Download

https://hansy1124.github.io/Han_JMP_2023_Draft.pdf

· JMP

Human Capital Production in Spatial Economy: A Quantitative Assessment of the Decentralized U.S. Education System

· Abstract

Human capital is a key determinant of regional economic development. In the U.S., the varying skill production efficiencies of state-specific education systems and the dynamics of worker migration shape regional human capital, influencing economic outcomes at both the state and national levels. This paper develops a novel dynamic spatial general equilibrium model with overlapping generation framework in which heterogeneous individuals accumulate human capital and move across regions. Calibrated to U.S., the model illustrates how variations in education efficiency lead to substantial cross-state income disparities and shows that internal migration can notably boost output in states with lower education efficiencies such as North Dakota and Oklahoma. At the national level, free mobility of workers yields a 6.9% output gain. Moreover, the model suggests that variations in human capital account for 46.6% of the state variation per capita output. Applying the calibrated model to analyze the Obama Administration's Race to the Top initiative finds that the $4.1 billion grant spurred a 0.2% increase in U.S. GDP, mostly benefiting the grant-winning states and their neighbors. Additionally, alternative grant allocation experiments show that strategic reallocation of education grants, considering regional skill production efficiencies, could further increase national GDP gains without necessarily worsening regional income disparities.

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https://sunhamkim.github.io/files/pdf/JMP_SKim.pdf

· JMP

The Concentration of Economic Activity Within Cities: Evidence from New Commercial Buildings

· Abstract

I explore the opening of large commercial buildings to study how local economic activity is affected by an employment shock. My methodology combines the typical ring approach, which involves comparing neighborhoods nearer and farther away, with a matching procedure to obtain samples of neighborhoods with a similar probability of observing a new building in their vicinity. I find that neighborhoods within 250 meters of a new building experience a 12.9% differential increase in employment, driven by high-skilled offices and local services. I estimate that for every two additional jobs created in high-skilled offices, one job is created in local services. I also present suggestive evidence that the productivity of high-skilled offices is affected. There is an increase in the share of college-educated workers and the wages in this sector, which seems to be driven to a good extent by the entry of new firms. Overall, my findings indicate that both productivity spillovers and local demand are crucial ingredients of urban concentration. New buildings increase the productivity of high-skilled offices nearby, attracting more firms in this sector and raising the demand for non-tradable goods provided by local services.

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https://thiagopatto.github.io/website/files/Concentration_of_Economic_Activity_Within_Cities___Evidence_from_New_Commercial_Buildings.pdf

· JMP

Rural-Urban Migration and Structural Change: A Reinterpretation

· Abstract

Structural change and rural to urban migration are often seen as a single reallocation process. However, using panel data on Indonesian workers spanning two decades, I present evidence that challenges this standard view. First, I document that workers switch from agriculture to non-agriculture within rural areas, and that most rural-urban migrants are not farmers. Second, I show that aggregate reallocation out of agriculture is primarily driven by the entry of younger cohorts into the labor market, rather than by workers who leave agriculture. Third, I provide evidence that rural-urban migration has intergenerational effects, as the offspring of migrants are less likely to work in agriculture, attain higher levels of education, and earn more. To uncover the forces and frictions giving rise to these patterns of employment reallocation and their aggregate implications, I build an overlapping generations model with two sectors and two locations. In the model, switching sector or location is costly, and access to education differs by location. First, different from the standard view, I find that rural-urban migration has little impact on structural change. The rural non-agricultural sector is able to absorb most of the workers that leave agriculture in rural areas, although this is detrimental for aggregate growth. Next, I uncover that sectoral switching costs, rather than differences in education, are the main driver of the cohort-level differences in sectoral employment shares. Finally, I show that intergenerational incentives for rural-urban migration are an important driver of urbanization and hence can have a large impact on economic growth.

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https://tomas-budi-ors.github.io/working_papers/BudiOrs_JMP.pdf

· JMP

Immigration and Economic Opportunity

· Abstract

How immigration affects children of U.S.-born—U.S.-born individuals with U.S.-born parents—is ambiguous and understudied. Uncovering the impact helps us understand the dynamic responses to immigration and the implications for intergenerational mobility. To study the impact, I link children of U.S.-born in the 1900-1920 U.S. censuses to their adulthood between 1910 and 1940. I instrument immigration’s destination choice by exploiting the disparities of pre-existing immigration settlement patterns and the variation in their arrivals during 1900-1920. I find that immigration motivates U.S.-born children to accumulate more human capital. However, children of higher-skilled fathers adapt better than their peers. Incentives to specialize can explain the skill upgrading; growing up in counties that experienced higher immigration inflows, U.S.-born children tend to work in higher-skilled and less immigrant-intensive occupations. The positive association between immigration and childhood county-level educational resources implies increased demand for education. Mobility expands specialization opportunities. Immigration-induced rural-to-urban migration makes higher-skilled jobs more accessible for the U.S.-born. The findings indicate that though immigration encourages skill upgrading, it exacerbates U.S.-born cross-generation skill persistence.

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https://www.dropbox.com/scl/fi/2cs9tx2yj71um8p4mff1j/immigration_opportunity_YJH.pdf?rlkey=89r61543rqr5fal8718d8hd7f&dl=0

· JMP

Beyond Lost Earnings: Job Displacement and the Cost of Commuting

· Abstract

This paper studies the scarring effect of job displacement on workers' commuting costs to subsequent jobs. Using matched German employee-employer data, geo-coordinates of workers' residences and workplaces, and a matched event study design, we estimate the response of workers' commuting distances to job displacement in mass layoffs. After displacement, workers take up jobs that require 21 percent longer commuting, and the effect persists in the subsequent 10 years. To quantify the monetary value of increased commuting, we develop an on-the-job search model and structurally estimate workers' willingness to pay to avoid commuting. The extra commuting cost amounts to one-fifth of the wage losses facing displaced workers, thereby exacerbating the total cost of job displacement.

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https://drive.google.com/file/d/1WoS6WEfFEkYfHNNzUgOHtVE17Uf93PVw/view

· JMP

To Follow the Crowd? Benefits and Costs of Migrant Networks 

· Abstract

Globally, migrant workers often cluster with hometown peers in the same sectors and locations. This paper quantifies two countervailing effects of clustering: learning benefits and labor market congestion costs, using data on millions of migrant workers from a large food delivery platform in China. First, I provide direct evidence of knowledge spillovers. New workers learn from their peers’ past delivery experiences, decreasing search time by 10%. Using quasi-random variation in workers' location choices induced by entry bonuses, I show that having one hometown peer nearby increases new workers' productivity (delivery speed) and earnings by 2%. Second, I quantify a cost of clustering due to correlated shocks. Migrant workers supply six additional hours weekly during adverse hometown shocks (floods and pandemic lockdowns). Due to inelastic consumer demand, clustering causes workers to compete for deliveries during such periods, and real wages decrease by 10% on average. I use a model to quantify the trade-off between the learning benefits and congestion costs. Worker utility increases (due to learning) and then falls (due to congestion) with clustering: an inverted U shape. Eliminating congestion costs through insurance doubles equilibrium clustering and increases productivity by 30%.

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https://www.dropbox.com/scl/fi/b5q76hc9t5ti6jegpizyf/clustereffectyulutang.pdf?rlkey=wig17xi3kb8cfz2b9b98q8agk&dl=0