Gallen and Wasserman estimate gender differences in access to informal information regarding the labor market. They conduct a large-scale field experiment in which real college students seek information from working professionals about various career paths, and they randomize whether a professional receives a message from a male or a female student. The researchers focus the experimental design and analysis on two career attributes that prior research has shown to differentially affect the labor market choices of women: the extent to which a career accommodates work/life balance and has a competitive culture. When students ask broadly for information about a career, the researchers find that female students receive substantially more information on work/life balance relative to male students. This gender difference persists when students disclose that they are concerned about work/life balance. In contrast, professionals mention workplace culture to male and female students at similar rates. After the study, female students are more dissuaded from their preferred career path than are male students, and this difference is in part explained by the greater emphasis on work/life balance to female students. Since the experimental design incorporates real students, the researchers are able to elicit students' preferences for professionals and assess whether average gender differences in information provision are attenuated by students' choices of whom to contact. The findings suggest that gender differences in information provision persist after accounting for student selection of professionals.
How does stakeholder involvement in corporate governance affect firm performance? Harju, Jäger, and Schoefer study the 1991 introduction of shared governance with workers (“codetermination”) in firms with at least 150 workers. The size-dependent introduction permits a difference-in-differences design pre-post reform, and a regression discontinuity design in firm size. The researchers find that codetermination has no negative effects on firm performance, such as on firm survival, productivity, or capital formation, in contrast to the disinvestment predictions of hold-up theories. Codetermination does not reduce the capital share nor does it affect firms’ wage policies (AKM firm fixed effects), with some evidence for a more compressed wage structure and a reduction in executive compensation. These limited effects may be explained by workers’ gaining little authority from minority (20%) board representation, consistent with survey evidence we gather suggesting that workers view the institution as primarily fostering information exchange and cooperation. It may also reflect the Finnish institutional design of granting the workers’ a right to, rather than imposing a mandate of, codetermination.
Using a daily survey of US households, Kugler, Farooq, and Muratori study how the Federal Reserve's announcement of its new strategy of average inflation targeting affected households' expectations. Starting with the day of the announcement, there is a very small uptick in the minority of households reporting that they had heard news about monetary policy relative to prior to the announcement, but this effect fades within a few days. Those hearing news about the announcement do not seem to have understood the announcement: they are no more likely to correctly identify the Fed's new strategy than others, nor are their expectations different. When the researchers provide randomly selected households with pertinent information about average inflation targeting, their expectations still do not change in a different way than when households are provided with information about traditional inflation targeting.
Ganong, Jones, Noel, Farrell, Greig, and Wheat study the consumption response to typical labor income shocks and investigate how these vary by wealth and race. First, they estimate the elasticity of consumption with respect to income using an instrument based on firm-wide changes in monthly pay. While much of the consumption-smoothing literature uses variation in unusual windfall income, this instrument captures the temporary income variation that households typically experience. In addition, because it can be constructed for every worker in every month, it allows for more precision than most previous estimates. The researchers implement this approach in administrative bank account data and find an average elasticity of 0.23, with a standard error of 0.01. This increased precision also allows them to address an open question about the extent of heterogeneity by wealth in the elasticity. They find a much lower consumption response for high-liquidity households, which may help discipline structural consumption models. Second, the researchers use this instrument to study how wealth shapes racial inequality. An extensive body of work documents a substantial racial and ethnic wealth gap. However, less is known about how this gap translates into differences in welfare on a month-to-month basis. They combine the instrument for typical income volatility with a new dataset linking bank account data with race and Hispanicity. They find that black (Hispanic) households cut their consumption 50 (20) percent more than white households when faced with a similarly-sized income shock. Nearly all of this differential pass-through of income to consumption is explained in a statistical sense by differences in liquid wealth. Combining the empirical estimates with a model, the researchers show that temporary income volatility has a substantial welfare cost for all groups. Because of racial disparities in consumption smoothing, the cost is at least 50 percent higher for black households and 20 percent higher for Hispanic households than it is for white households.
Does flexible pay increase the gender wage gap? To answer this question Biasi and Sarsons analyze the wages of public-school teachers in Wisconsin, where a 2011 reform allowed school districts to set teachers' pay more flexibly and engage in individual negotiations. Using quasi-exogenous variation in the timing of the introduction of flexible pay driven by the expiration of pre-existing collective-bargaining agreements, the researchers show that flexible pay increased the gender pay gap among teachers with the same credentials. This gap is larger for younger teachers and absent for teachers working under a female principal or superintendent. Survey evidence suggests that the gap is partly driven by women not engaging in negotiations over pay, especially when the counterpart is a man. This gap is not driven by gender differences in job mobility, ability, or a higher demand for male teachers. The researchers conclude that environmental factors are an important determinant of the gender wage gap in contexts where workers are required to negotiate.
Growing reliance on student loans and repayment difficulties have raised concerns of a student debt crisis in the United States. However, little is known about the effects of student borrowing on human capital and long-run financial well-being. Black, Denning, Dettling, Goodman, and Turner use variation induced by recent expansions in federal loan limits, together with administrative schooling, earnings, and credit records, to identify the effects of increased student borrowing on credit-constrained students' educational attainment, earnings, debt, and loan repayment. Increased student loan availability raises student debt and improves degree completion, later-life earnings, and student loan repayment while having no effect on homeownership or other types of debt.
In addition to the conference paper, the research was distributed as NBER Working Paper w27658, which may be a more recent version.
Price, Michelman, and Zimmerman study social success at elite universities: who achieves it, how much it matters for students' careers, and whether policies that increase interaction between rich and poor students can integrate the social groups that define it. The setting is Harvard University in the 1920s and 1930s, where students compete for membership in exclusive social organizations known as final clubs. The researchers combine within-family and room-randomization research designs with new archival and Census records documenting students' college lives and career outcomes. They find that students from prestigious private high schools perform better socially but worse academically than others. This is important because academic success does not predict earnings, but social success does: members of selective final clubs earn 32% more than other students, and are more likely to work in finance and to join country clubs as adults, both characteristic of the era's elite. The social success premium persists after conditioning on high school, legacy status, and even family. Leveraging a scaled residential integration policy, the researchers show that random assignment to high-status peers raises rates of final club membership, but that overall effects are driven entirely by large gains for private school students. Residential assignment matters for long-run outcomes: more than 25 years later, a 50-percentile shift in residential peer group status raises the rate at which private school students work in finance by 37.1 percent and their membership in adult social clubs by 23.0 percent. The researchers conclude that the social success premium in the elite labor market is large, and that its distribution depends on social interactions, but that the inequitable distribution of access to high-status social groups resists even vigorous attempts to promote cross-group cohesion.