Research
Market Concentration, Labor Quality, and Efficiency: Evidence from Barriers in the Real Estate Industry (Job Market Paper)
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. I exploit a policy reform in Texas in 2012 which provides quasi-exogenous variation in the cost of entry that real estate salespeople face in order to become brokers. 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.
Publications
Household Mobility, Networks, and Gentrification of Minority Neighborhoods in the US, with Fernando Ferreira and Benjamin Smith
Journal of Labor Economics (2024); vol. 42, issue S1, pp. S61-S94.
Abstract: We investigate the impact of recent gentrification shocks on minority neighborhoods in the 50 largest US labor markets. We show that household moves from a given neighborhood are concentrated to few destinations with similar minority shares and strong network ties, but those neighborhoods are farther away from downtown. Gentrification affects Black neighborhoods by raising house prices, reducing the proportion of Black households, and increasing the share of movers going to neighborhoods with network ties. However, gentrification has negligible effects on Hispanic neighborhoods. Overall labor market area segregation decreases after a gentrification shock because highly Black neighborhoods become less segregated.
Appraising Home Purchase Appraisals, with Paul Calem, Lauren Lambie-Hanson, and Leonard Nakamura
Real Estate Economics (2021); vol. 94, issue S1, pp. 134-168.
Abstract: Home appraisals are produced for millions of residential mortgage transactions each year. In addition to preventing fraudulent transactions, an important benefit of appraisals when they report a value below the contract price is that they help borrowers renegotiate prices with sellers. However, appraised values are rarely below the purchase contract price: Some 30% of appraisals in our sample are exactly at the home price (with less than 10% of them below it). We construct a simple but intuitive model to explain how appraisers’ incentives within the institutional framework that governs mortgage lending lead to information loss in appraisals (i.e., appraisals set equal to the contract price). We also present new empirical findings relevant to the issue of appraisal accuracy, based on analysis of appraisal and contract price data and analysis of mortgage default patterns. One new finding—that the frequency of appraisal equal to contract price increases at the loan-to-value boundaries (notches) typical of mortgage pricing schedules—is, in fact, implied by our model. In addition, consistent with information loss or, more broadly, with the view that appraisals often artificially confirm the contract price, we find that mortgages with appraised value equal to the contract price are more likely to default.
Working Papers
Agents and Gender Differences in Negotiations, with Tomer Mangoubi
Abstract: Gender differences in negotiation strategies and outcomes are widely documented. However, the effect of agents (e.g., talent agents, real estate agents, lawyers, etc.) on these gender differences remains under-explored. Using a bargaining experiment with over 2,300 subjects, we investigate the impact of agents on the propensity of men versus women to utilize aggressive strategies in negotiation. We find that, absent agents, men make more aggressive demands than women. Introducing agents who negotiate on behalf of their clients entirely closes this gender gap. Belief elicitations suggest that agents do not anticipate that men will reward agents for adopting more aggressive negotiation strategies.
Do Collective Bargaining Laws Change the Financing of Public Section Pensions?
Draft available upon request
Abstract: Despite the growing public employee pension obligations nationwide, there is little empirical knowledge about the role of labor union bargaining power as a determinant of pension financing. This paper tests if the passage of state-level laws legalizing collective bargaining for public employees affects employer and employee contributions and benefit payments. The empirical work uses a newly updated database of collective bargaining laws for various public sector employee groups in each state, and applies a triple difference design based on variation by state, time, and union occupation. Using the universe of pension plans from 1987 onward, I find that collective bargaining laws fail to have a significant impact on plan revenues and expenditures. Event study evidence also shows that the financing of public pension plans for employees who eventually get collective bargaining rights progresses similarly to plans for employees who do not.