Lines of Code
Federal Regulation and Mortality in the 50 States
James Broughel & Dustin Chambers
George Mason University Working Paper, January 2021
Previous research speculates that some regulations are counterproductive in the sense that they increase (rather than decrease) mortality risk. However, few empirical studies have measured the extent to which this phenomenon holds across the regulatory system as a whole. Using a novel US state panel dataset spanning the period 1995 to 2014, we estimate the impact of US federal regulation on state-level mortality. We find that a 1 percent increase in binding federal regulations increases our mortality index by between 0.53 and 1.35 percent. These findings are highly robust to the form of mortality measure, choice of covariates, and the inclusion/exclusion of various regions and states. This paper therefore fills an important gap in the empirical literature and boosts the credibility of mortality risk analysis, whereby public policymakers weigh both the expected lives saved and lost due to a proposed regulation.
Wage Inequality and Labor Rights Violations
Ioana Marinescu, Yue Qiu & Aaron Sojourner
NBER Working Paper, February 2021
Wage inequality does not fully capture differences in job quality. Jobs also differ along other key dimensions, including the prevalence of labor rights violations. We construct novel measures of labor violation rates using data from federal agencies. Within local industries over time, a 10% increase in the average wage is associated with a 0.15% decrease in the number of violations per employee and a 4% decrease in fines per dollar of pay. Reduced labor market concentration and increased union coverage rate are also associated with reductions in labor violations. Overall, labor violations are regressive: they increase inequality in job quality.
Price Comparison Websites
International Economic Review, forthcoming
The large and growing industry of price comparison websites (PCWs) or "web aggregators" is poised to benefit consumers by increasing competitive pricing pressure on firms by acquainting shoppers with more prices. However, these sites also charge firms for sales, which feeds back to raise prices. I find that introducing any number of PCWs to a market increases prices for all consumers, both those who use the sites, and those who do not. I then use my framework to identify ways in which a more competitive environment could be achieved.
Banking deregulation and homeownership
Zhenguo Lin, Yingchun Liu & Jia Xie
Journal of Housing Economics, forthcoming
This paper studies how banking deregulation affects homeownership. Exploiting the U.S. intra-state and inter-state banking deregulations from 1980s to early 1990s, we find that an exogenous expansion of bank branches increases renters likelihood of becoming homeowners as much as 8.7 percentage points. In addition, the impact is larger on households with low income and high debt-to-income ratios. Our estimated impacts are larger than those estimated from state-level data, suggesting that the heterogeneous effects among households are important towards home ownership. Our findings are robust to potential sample selection bias and functional misspecifications.
Does CFPB Oversight Crimp Credit?
Andreas Fuster, Matthew Plosser & James Vickery
Federal Reserve Working Paper, January 2021
We study how regulatory oversight by the Consumer Financial Protection Bureau (CFPB) affects mortgage credit supply and other aspects of bank behavior. We use a difference-in-differences approach exploiting changes in regulatory intensity and a size cutoff below which banks are exempt from CFPB scrutiny. CFPB oversight leads to a reduction in lending in the Federal Housing Administration (FHA) market, which primarily serves riskier borrowers. However, it is also associated with a lower transition probability from moderate to serious delinquency, suggesting that tighter regulatory oversight may reduce foreclosures. Our results underscore the trade-off between protecting borrowers and maintaining access to credit.
Bank Concentration and Product Market Competition
Farzad Saidi & Daniel Streitz
Review of Financial Studies, forthcoming
This paper documents a link between bank concentration and markups in nonfinancial sectors. We exploit concentration-increasing bank mergers and variation in banks' market shares across industries and show that higher credit concentration is associated with higher markups and that high-market-share lenders charge lower loan rates. We argue that this is due to the greater incidence of competing firms sharing common lenders that induce less aggressive product market behavior among their borrowers, thereby internalizing potential adverse effects of higher rates. Consistent with our conjecture, the effect is stronger in industries with competition in strategic substitutes where negative product market externalities are greatest.
The Congestion Costs of Uber and Lyft
Journal of Urban Economics, forthcoming
I study the impact of transportation network companies (TNC) on traffic delays using a natural experiment created by the abrupt departure of Uber and Lyft from Austin, Texas. Applying difference in differences and regression discontinuity specifications to high-frequency traffic data, I estimate that Uber and Lyft together decreased daytime traffic speeds in Austin by roughly 2.3%. Using Austin-specific measures of the value of travel time, I translate these slowdowns to estimates of citywide congestion costs that range from $33 to $52 million annually. Back of the envelope calculations imply that these costs are similar in magnitude to the consumer surplus provided by TNCs in Austin. Together these results suggest that while TNCs may impose modest travel time externalities, restricting or taxing TNC activity is unlikely to generate large net welfare gains through reduced congestion.
Driving Up Repayment: The Impact of the Gig-Economy on Student Debt
Washington University in St. Louis Working Paper, November 2020
Using individual level credit information, I estimate the impact of access to ride-sharing on student debt repayment and take-up. I find that following the introduction of ride-sharing services in a city, individuals decrease their student debt balance and probability of default. These results are primarily driven by former students, who are 0.4pp more likely to finish repaying their student loans and are 0.8pp less likely to default in their student debt in the three years after ride-sharing arrives. This effect is absent for current students. For potential students, I find that access to ride-sharing increases the likelihood of getting a first student loan by 0.5pp. This suggests that there is a willingness to attend higher education that is not met given the structure of the current labor market, and that having access to the gig-economy is allowing individuals that would otherwise chosen not to enroll to do so. Taken together, results suggest that access to the flexible work improves student loan repayment rates, while simultaneously fostering enrollment.
Do Digital Platforms Reduce Moral Hazard? The Case of Uber and Taxis
Meng Liu, Erik Brynjolfsson & Jason Dowlatabadi
Management Science, forthcoming
Digital platforms provide a variety of technology-enabled tools that enhance market transparency, such as real-time monitoring, ratings of buyers and sellers, and low-cost complaint channels. How do these innovations affect moral hazard and service quality? We investigate this problem by comparing driver routing choices and efficiency on a large digital platform, Uber, with traditional taxis. The identification is enabled by matching taxi and Uber trips at the origin-destination-time level so they are subject to the same underlying optimal route, by exploiting characteristics of the pricing schemes that differentially affect the incentives of taxi and Uber drivers in various circumstances, and by examining changes in behavior when drivers switch from taxis to Uber. We find that (1) taxi drivers route longer in distance than matched Uber drivers on metered airport routes by an average of 8%, with nonlocal passengers on airport routes experiencing even longer routing; (2) no such long routing is found for short trips in dense markets (e.g., within-Manhattan trips) or airport trips with a flat fare; and (3) long routing in general leads to longer travel time, instead of saving passengers time. These findings are consistent with digital platform designs reducing driver moral hazard, but not with competing explanations such as driver selection or differences in driver navigation technologies. We also find evidence of Uber drivers' long routing on airport trips in times of surge pricing, suggesting that the tech-enabled market designs may not be binding in our setting.
The Effects of Leverage on Investments in Maintenance: Evidence from Apartments
University of Texas Working Paper, January 2021
This paper studies the sensitivity of investment in apartment building maintenance to building debt levels. I use a novel data set combining housing code violations from 45 US cities with apartment financing information to show that highly leveraged buildings tend to incur more code violations. I then exploit a natural experiment that effectively increased building leverage for some New York City rent stabilized buildings, but not others. Following the shock, violations increased for affected buildings relative to unaffected buildings. This change in violations was concentrated among more highly leveraged buildings. The results are consistent with a theory that debt reduces investment in maintenance.
Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D
Management Science, forthcoming
I examine how patent enforcement affects corporate research and development (R&D), exploiting the legal changes induced by the Supreme Court decision eBay v. MercExchange. This ruling increased courts' flexibility in remedying patent cases and effectively lowered the potential costs of patent litigation for defendants. For identification, I compare innovative activity across firms differentially exposed to patent litigation before the ruling. Across several measures, I find that the decision led to a general increase in innovation. This result confirms that the changes in enforcement induced by the ruling reduced some of the distortions caused by patent litigation. Exploring the channels, I show that patent litigation negatively affects investment because it lowers the returns from R&D and exacerbates its financing constraints.
How Does Liability Affect Prices? Railroad Sparks and Timber
Colin Doran & Thomas Stratmann
International Review of Law and Economics, forthcoming
This paper analyzes how judicially-determined liability assignments affect valuations and prices. On two occasions in 2007, a railway company caused a fire to break out in the State of Washington. The two fires burned down some of the neighboring properties' timber. These two incidents led to two companion court cases that made it all the way to the Washington Supreme Court. The court rulings, both made on May 31, 2012, hold that the railway company was not liable for timber damages under Washington's timber trespass statute, despite having acted negligently. As a consequence of these decisions, economic theory predicts a decrease in the value of timber in those areas associated with higher risk of fire, and an increase in the value of Washington railway companies. Using a triple difference model and an event study, we test and find evidence supporting this prediction.