Doing Freedom

Kevin Lewis

August 11, 2021

The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market
Evan Mast
Journal of Urban Economics, forthcoming


I illustrate how new market-rate construction loosens the market for lower-quality housing through a series of moves. First, I use address history data to identify 52,000 residents of new multifamily buildings in large cities, their previous address, the current residents of those addresses, and so on for six rounds. The sequence quickly reaches units in below-median income neighborhoods, which account for nearly 40 percent of the sixth round, and similar patterns appear for neighborhoods in the bottom quintile of income or percent white. Next, I use a simple simulation model to roughly quantify these migratory connections under a range of assumptions. Constructing a new market-rate building that houses 100 people ultimately leads 45 to 70 people to move out of below-median income neighborhoods, with most of the effect occurring within three years. These results suggest that the migration ripple effects of new housing will affect a wide spectrum of neighborhoods and loosen the low-income housing market.

Do People Like Mandatory Rules? The Choice Between Disclosures, Defaults, and Mandatory Rules in Supplier-Customer Relationships
Ori Katz & Eyal Zamir
Journal of Empirical Legal Studies, June 2021, Pages 421-460


In recent years, numerous empirical studies have examined the prevailing attitudes toward nudges, but hardly any have examined the prevailing attitudes toward mandatory rules. To fill this gap, this article describes five studies (N = 3,103) - mostly preregistered studies conducted with representative samples of the U.S. population - which tested people's attitudes toward mandatory rules in contractual settings. We found that in supplier-customer relationships, people tend to rate mandatory rules as more desirable than disclosure duties and default rules. People's judgments in this regard depend on the relative effectiveness of the various types of rules in protecting customer's interests and their expected impact on the price, but there is considerable support for mandatory rules even if they are only slightly or moderately more effective than the alternatives, and even when they entail some price increase. People tend to believe that mandatory rules in this sphere enhance customers' freedom of contract - which may explain why these judgments are not correlated with people's ideological inclinations (liberal or conservative).

The Social and Institutional Contexts Underlying Landlords' Eviction Practices
Henry Gomory
Social Forces, forthcoming


This article examines how and why landlords vary in their uses of eviction filings. Drawing on over four million property tax records, business filings, and court-ordered eviction documents over fifteen years in Boston, Massachusetts, I show that large landlords file evictions at two to three times the rates of small landlords, and this disparity is not driven by the characteristics of the tenants they rent to. Not only do large landlords file more often, but also over less money owed and more often as a rent collection strategy. Drawing on analyses of the interpersonal conflict during eviction and a range of landlord characteristics, I show that these divergent eviction practices derive from the disparate social and institutional contexts within which landlords make eviction decisions. For small landlords, organizational informality and personal relationships with tenants make eviction a morally fraught decision, while for large landlords, formal decision-making and arms-length relationships with tenants make eviction a routine business practice. By showing both how and why landlords use evictions differently, this article contributes to the sociological understanding of residential instability and of landlord behavior.

Do US Firms Have an Incentive To Comply With the FLSA and the NLRA
Anna Stansbury
Harvard Working Paper, June 2021


To what extent do US firms have an incentive to comply with the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA)? I examine this question through a simple comparison of the expected costs of noncompliance (in terms of legal sanctions) to the profits firms can earn through noncompliance. In the case of the FLSA minimum wage and overtime provisions, typical willful violators are required to pay back wages owed and in some cases additional penalties, if detected by the Department of Labor (DOL). Based on available data on the penalties levied, a typical firm would need to expect a chance of at least 78-88 percent that its violation would be detected in order to have an incentive to comply with the FLSA. In practice, the probability of detection many firms can expect to face is likely much lower than this. In the case of the NLRA, a firm that fires a worker illegally is required to reinstate the worker with back pay if the violation is detected. Based on empirical estimates of the effect of unionization on firm profits, a typical firm may have an incentive to fire a worker illegally for union activities if this illegal firing would reduce the likelihood of unionization at the firm by as little as 0.15-2 percent. These analyses illustrate that neither the FLSA nor the NLRA penalty and enforcement regimes create sufficient incentive to comply for many firms. In this context, the substantial evidence of minimum wage and overtime violations, and of illegal employer behavior toward unions, is not surprising.

The Evolution of Market Power in the US Auto Industry
Paul Grieco, Charles Murry & Ali Yurukoglu
NBER Working Paper, July 2021


We construct measures of industry performance and welfare in the U.S. car and light truck market from 1980-2018. We estimate a differentiated products demand model for this market using product level data on market shares, prices, and product characteristics, and consumer level data on demographics, purchases, and stated second choices. We estimate marginal costs under the conduct assumption of Nash-Bertrand pricing. We relate trends in consumer welfare and markups to industry trends in market structure and the composition of products, like the rise of import competition, the proliferation of SUV's, and changes in vehicle characteristics. We find that although prices rose over time, concentration and market power decreased substantially. Consumer welfare increased over time due to improving product quality and falling marginal costs. The fraction of total surplus accruing to consumers also increased.

The distributional consequences of rent-seeking
Angelos Angelopoulos et al.
Economic Inquiry, forthcoming


We analyze the distributional effects of rent-seeking via the financial sector in a model calibrated to US data. Rent-seeking implies a misallocation of resources that increases wealth inequality among non-rent-seekers and for the whole economy. A deterioration in institutional quality implying more rent-seeking leads to welfare losses for non-rent-seekers, especially for those with higher earnings and initial wealth, because they are most affected by the deterioration of the aggregate economy. On the other hand, welfare gains are larger for rent seekers with higher earnings and wealth, who have an increased resource extraction capacity.

Networks, Property, and the Division of Labor
Emily Erikson & Hirokazu Shirado
American Sociological Review, forthcoming


We use a simulation-based method to consider the effect of different network structures on the propensity for economic producers to develop a complementary division of labor. We use a graph-coloring game, in which nodes are given incentives to find a color that does not match their nearest neighbors, to represent the interdependent coordination problems inherent to the division of labor. We find that a decentralized development of a division of labor is difficult, particularly when too many specializations are chosen. Counterintuitively, a division of labor is more likely to evolve when the ability of agents to specialize is more constrained. The ability to store property also facilitates the development of a division of labor.

Uber and Alcohol-Related Traffic Fatalities
Michael Anderson & Lucas Davis
NBER Working Paper, July 2021


Previous studies of the effect of ridesharing on traffic fatalities have yielded inconsistent, often contradictory conclusions. In this paper we revisit this question using proprietary data from Uber measuring monthly rideshare activity at the Census tract level. Most previous studies are based on publicly-available information about Uber entry dates into US cities, but we show that an indicator variable for whether Uber is available is a poor measure of rideshare activity - for example, it explains less than 3% of the tract-level variation in ridesharing, reflecting the enormous amount of variation both within and across cities. Using entry we find inconsistent and statistically insignificant estimates. However, when we use the more detailed proprietary data, we find a robust negative impact of ridesharing on traffic fatalities. Impacts concentrate during nights and weekends and are robust across a range of alternative specifications. Overall, our results imply that ridesharing has decreased US alcohol-related traffic fatalities by 6.1% and reduced total US traffic fatalities by 4.0%. Based on conventional estimates of the value of statistical life the annual life-saving benefits range from $2.3 to $5.4 billion. Back-of-the-envelope calculations suggest that these benefits may be of similar magnitude to producer surplus captured by Uber shareholders or consumer surplus captured by Uber riders.

The Geography of Ridesharing: A Case Study on New York City
Chungsang Tom Lam, Meng Liu & Xiang Hui
Information Economics and Policy, forthcoming


Despite the popularity of ridesharing, there is limited empirical evidence on how ridesharing activities differ across regions with different levels of accessibility and the implication for consumers. In this paper, we study the market for rides across New York City neighborhoods. We construct a novel data set that contains massive API queries on route-specific estimates of pricing, wait time, and travel time of Uber, Lyft, and the public transit. After linking this data with actual trip records of taxis, Uber, and Lyft, we document a strong pattern that ridesharing has a larger market share relative to taxis in neighborhoods with lower accessibility, defined either in terms of geographic distance to Midtown Manhattan or "economic distance" to job opportunities. Next, we estimate a discrete-choice model of demand for rides and interpret the geography of ridesharing through the lens of the model. We find that consumer surplus from ridesharing varies drastically across geography: passengers that are 5 to 15 miles (resp. more than 15 miles) from Midtown experience a 60% (resp. 19%) larger consumer surplus relative to passengers that are within 5 miles from Midtown. Over half of these gains comes from reduced wait time.

The Impact of Local Residential Land Use Restrictions on Land Values Across and Within Single Family Housing Markets
Joe Gyourko & Jacob Krimmel
Journal of Urban Economics, forthcoming


We provide estimates of the impact of restrictive residential land use environments on the price of land across major American housing markets. Using micro data on vacant land purchased to develop single family housing, we implement a new empirical strategy for estimating so-called 'zoning taxes' - the amount by which land prices are bid up due to supply side regulations. Our results are broadly consistent with previous findings that zoning taxes are especially burdensome in large coastal markets. However, our more recent data indicates that price impacts in the big west coast markets now are the largest in the nation. In the San Francisco, Los Angeles, and Seattle metropolitan areas, the price of land everywhere within those three markets having been bid up by amounts that at least equal typical household income. Finally, we show that our zoning tax estimates are strongly positively correlated with a new measure of local housing market supply constraint (the Wharton Residential Land Use Regulatory Index of 2018). This relationship is not mechanically driven as the regulatory index is constructed from survey data that do not incorporate land or house price data in any way.

Playlisting Favorites: Measuring Platform Bias in the Music Industry
Luis Aguiar, Joel Waldfogel & Sarah Waldfogel
International Journal of Industrial Organization, forthcoming


Platforms are growing increasingly powerful, raising questions about whether their power might be exercised with bias. While bias is inherently difficult to measure, we identify a context within the music industry that is amenable to bias testing. Our approach requires ex ante platform assessments of commercial promise - such as the rank order in which products are presented - along with information on eventual product success. A platform is biased against a product type if the type attains greater success, conditional on ex ante assessment. Theoretical considerations and voiced industry concerns suggest the possibility of platform biases in favor of major record labels, and industry participants also point to bias against women. Using data on Spotify curators' rank of songs on New Music Friday playlists in 2017, we find that Spotify's New Music Friday rankings favor independent-label music, along with some evidence of bias in favor of music by women. Despite challenges that independent-label artists and women face in the music industry, Spotify's New Music curation appears to favor them.

Anticompetitive effects of horizontal acquisitions: The impact of within-industry product similarity
Maryam Fathollahi, Jarrad Harford & Sandy Klasa
Journal of Financial Economics, forthcoming


Theory predicts that horizontal acquisitions can effectively increase incumbent firms' market power in concentrated industries with high product similarity. Using a novel measure for industry product similarity, we show that in such industries firms' propensity to make horizontal acquisitions is greater and that the acquisitions result in more positive announcement returns for the acquirer and rival firms and in a larger premium paid for the target. Also, the deals harm dependent customer and supplier firms and they are more likely to be challenged by antitrust authorities. Overall, by emphasizing the importance of product similarity, our results help explain mixed empirical findings on whether horizontal acquisitions are used to reduce competition intensity.


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