Labor Markets

We use a dynamic spatial general equilibrium model of international investment and production to investigate the real implications of the last five decades of financial globalization. We introduce a wedge accounting framework to estimate country- and time-varying measures of outward and inward Revealed Financial Openness (RFO). These wedges are meant to capture all impediments to cross-border investment, rather than explicit policy measures alone.

We examine whether the adoption of the Current Expected Credit Losses (CECL) model, which incorporates forward-looking information in loan loss provisions (LLPs), enhances banks’ information production. Consistent with better information production, we document significant changes in both financial reporting and operational outcomes following CECL adoption. First, CECL banks’ LLPs become timelier and better reflect future local economic conditions. Second, CECL banks experience lower rates of loan defaults.

Using linked employer-employee data from Brazil, we document a significant gender pay gap, which is largely attributed to women working at lower-paying employers. To interpret this fact, we develop an equilibrium search model with endogenous firm pay, amenities, and hiring. We provide a constructive proof of identification of all model parameters. The estimated model suggests that amenities are important for both men and women, and that compensating differentials account for half of the gender pay gap.

One common explanation for the gender wage gap is that women have less favorable negotiation outcomes than men in labor markets. Yet, women might also start out with lower offers upon which negotiations occur. A challenge in examining the latter explanation has been that salaries, not salary offers, have been previously available to researchers. In this study, we overcome this empirical challenge by obtaining data on more than 700,000 initial salary offers provided to job candidates in the United States from 2017 to 2020.

In theory, a cost of capital channel can incentivize green investments like a carbon tax. This channel requires that firms perceive the cost of green capital as lower than that of brown capital. Using hand-collected data, we show that green firms have indeed perceived their cost of capital to be 1 percentage point lower since 2016, when climate concerns by financial investors and governments surged. Moreover, some energy firms have used a lower cost of capital for their green divisions.

Women and minorities are underrepresented in top leadership roles. Besides “supply-side” explanations that focus on the applicant pool, we offer a novel “demand-side” explanation through perceptual imprinting. Using the reverse correlation method, we found that people’s visual templates of leaders are perceptually imprinted by White male leaders. Across 15 studies (N = 3929), we examine what people expect leaders to look like. As demonstrated by the reverse correlation method, compared to followers, people expected leaders to look more White and male.

Multinational enterprises are at the centre of policy debates in low- and middle-income countries. As some of the most productive and innovative firms in the world, which are at the core of global supply chains, multinational enterprises (MNEs) can accelerate development in the countries hosting them, both directly with their presence, and indirectly through linkages to local economic actors.

Multinational enterprises are at the centre of policy debates in low- and middle-income countries. As some of the most productive and innovative firms in the world, which are at the core of global supply chains, multinational enterprises (MNEs) can accelerate development in the countries hosting them, both directly with their presence, and indirectly through linkages to local economic actors.

Many state and local governments incentivize new business creation. I analyze local growth policy in a setting where firm entry and expansion choices exhibit local complementarities, creating dynamic misallocation at the aggregate level. Optimal entry subsidies would speed the transition of Rust-belt workers to the South and Mountain West by an extra 10 million people by 2035, raising real incomes by 4%. Actual subsidies substantially worsen misallocation, lowering welfare by 3%, 6 times the size of the subsidies themselves.