LINK to most recent version; SSRN
Abstract: This paper studies the impacts of labor market entry barriers by exploiting a novel dataset of U.S. real estate licensees and a policy change which provides quasi-exogenous variation in licensing costs for brokers. Using a synthetic difference in-difference estimation, I show that broker entry increased by 50% in anticipation of the increased barrier and decreased after it went into effect. On net, the policy resulted in a long-term increase in the stock of brokers. For consumers, the influx of brokers leads to decreased market concentration but also lower service quality. For laborers, the increased barrier leads to a smaller share of minority entrants. Brokers shift from listing productivity to management productivity in that the mean broker oversees more agents. The results underscore the anticipatory effects of entry barrier policies and highlight the importance of accounting for heterogeneity in worker role when analyzing labor market efficiency.
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.
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.
(Under Review)
LINK to most recent version; SSRN
Previously Agents and Gender Gaps in Negotiation
Abstract: Oftentimes people have others (i.e., “agents’’) negotiate on their behalf, whether formally or informally. This paper explores the impact of agents on gender differences in negotiation and how this varies with common incentive structures. Using a bargaining experiment with over 2,300 subjects, we find that, absent agents, males make more aggressive demands than females. Introducing agents who negotiate on behalf of the players entirely closes this gap. Although agent incentives affect overall aggressiveness, they do not induce gender gaps. Belief elicitations suggest that this is because agents underestimate reservation prices for both men and women and incorrectly believe that they have the same threshold for rewarding aggressive behavior. While males and females have similar expected outcomes, agents close a risk exposure gap by making proposals across genders that are more equally likely to be accepted.
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.