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Working Paper
Diverging Trends in National and Local Concentration
Using U.S. NETS data, we present evidence that the positive trend observed in national product-market concentration between 1990 and 2014 becomes a negative trend when we focus on measures of local concentration. We document diverging trends for several geographic definitions of local markets. SIC 8 industries with diverging trends are pervasive across sectors. In these industries, top firms have contributed to the amplification of both trends. When a top firm opens a plant, local concentration declines and remains lower for at least seven years. Our findings, therefore, reconcile the ...
Briefing
Are Markets Becoming Less Competitive?
National markets in many U.S. industries seem to be increasingly dominated by large companies. Some policymakers have argued that this growing market concentration is a sign of weakening competition, but concentration by itself does not necessarily translate into market power. It may be too soon to reach a decisive conclusion about whether market power, not simply market concentration, is on the rise.
Briefing
Sectoral Multipliers and Technology Adoption as Insight Into Growth
In a multisector model with technology adoption and rich network structures, what policy instruments best reduce distortions and promote economic development? This article discusses a framework showing that technology adoption has important effects on both the magnitude and relative effectiveness of sectoral industrial policies. After applying the framework to data on the Indian economy, adoption subsidies prove the most cost-effective instrument with high sectoral multipliers and relatively lower fiscal costs of implementation. Particularly promising sectors emerge that stand to foster the ...
Working Paper
Equilibrium Price Dispersion Across and Within Stores
We develop a search-theoretic model of the product market that generates price dispersion across and within stores. Buyers differ with respect to their ability to shop around, both at different stores and at different times. The fact that some buyers can shop from only one seller while others can shop from multiple sellers causes price dispersion across stores. The fact that the buyers who can shop from multiple sellers are more likely to be able to shop at inconvenient times induces price dispersion within stores. Specifically, it causes sellers to post different prices for the same good at ...
Briefing
Switching Occupational Categories
Worker mobility, across jobs and across state lines, has fallen in recent decades. Changing jobs is one way workers gain new skills and improve their wages. New research also suggests that switching between white-collar and blue-collar occupations enables workers to learn valuable information about their abilities and the types of jobs they are best suited for. Any frictions inhibiting the ability of workers to switch occupations would be costly, particularly for young workers.
Briefing
Community College as a Steppingstone
This article explores a model based on a theory of education in which high school students face three choices upon graduation: Join the workforce, enroll in a two-year college or enroll in a four-year university. In this model, academic two-year colleges can act as a steppingstone. Students enrolled in these two-year colleges can learn about their academic skills in a less expensive environment and transfer to a four-year university with a portion of their credits. This model finds that the options such as transferring and dropping out explain a large portion of the return to enrollment in ...
Briefing
The Role of Option Value in College Decisions
Despite the large and persistent wage premium earned by college graduates, college enrollment and graduation rates remain relatively low, particularly for students from lower-income families. Economic models that highlight the role of risk and option value in higher education decisions can help explain these trends.
Working Paper
Learning and Life Cycle Patterns of Occupational Transitions
Data reveal that individuals experience a high number of occupational switches. Over 40% of high school graduates transition between white and blue collar occupations more than once between the ages of 18 and 28. This paper develops a life cycle model of occupational choices based on workers learning about their type and sorting themselves to the best job match. Documenting life cycle patterns of occupational choices using data from the NLSY79 supports key predictions from the model. Initial characteristics are predictive of future patterns of occupational switching, including the timing and ...
Working Paper
Sectoral Development Multipliers
How should industrial policies be directed to reduce distortions and foster economic development? We study this question in a multi-sector model with technology adoption, where the production of goods and modern technologies features rich network structures. We provide simple formulas for the sectoral policy multipliers, and provide insights regarding the power of alternative policy instruments. We devise a simple procedure to estimate the model parameters and the distribution of technologies across sectors, which we apply to Indian data. We find that technology adoption greatly amplifies the ...