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Report
The Welfare Effects of Encouraging Rural-Urban Migration
This paper studies the welfare effects of encouraging rural-urban migration in the developing world. To do so, we build and analyze a dynamic general-equilibrium model of migration that features a rich set of migration motives. We estimate the model to replicate the results of a field experiment that subsidized seasonal migration in rural Bangladesh, leading to significant increases in migration and consumption. We show that the welfare gains from migration subsidies come from providing better insurance for vulnerable rural households rather than correcting spatial misallocation by relaxing ...
Working Paper
Floating Population: Migration With(Out) Family and the Spatial Distribution of Economic Activity
This paper argues that migrants’ decision to bring their dependent family members shapes their consumption behavior, their choice of destination, and their sensitivity to migration barriers. We document that in China: (i) rural migrants disproportionately move to expensive cities; (ii) in these cities they live without their family and in poorer housing conditions; and (iii) they remit more, especially when living without their family. We then develop a quantitative general equilibrium spatial model in which migrant households choose whether, how (with or without their family), and where to ...
How Is the Challenge of Finding Childcare Affecting Labor Force Participation? Perspectives from Employers Across the Seventh District
Through the Chicago Fed Survey of Economic Conditions (CFSEC) and during roundtable discussions with business, nonprofit, and government leaders, the Chicago Fed asked employers from a variety of sectors for their perspectives on how childcare access has affected labor force availability.1 These survey and roundtable findings contribute to the Chicago Fed’s Spotlight on Childcare—an effort to increase our understanding of how the lack of access to childcare impedes labor force participation in the Seventh Federal Reserve District. In this article, we summarize the responses from over 100 ...
Working Paper
Labor Substitutability among Schooling Groups
Knowing the degree of substitutability between schooling groups is essential to understanding the role of human capital in income differences and to assessing the economic impact of such policies as schooling subsidies, immigration systems, or redistributive taxes. We derive a lower bound for the substitutability required for worldwide growth in real GDP from 1960 to 2010 to be consistent with a stable wage premium for schooling despite the rapid growth in schooling, assuming no exogenous worldwide regress in the technology frontier for workers with only primary schooling. That lower bound ...
Discussion Paper
Mitigating Benefits Cliffs for Low-Income Families: District of Columbia Career Mobility Action Plan as a Case Study
The structure of the United States social safety net features the phaseout of public assistance as household income increases, which functions as an effective marginal tax on wage gains and is commonly referred to as a "benefits cliff." This presents a disincentive for some low-income workers, especially those with children, to accept higher-paying jobs or promotions. Workforce development programs focused on helping low-income workers must contend with the challenges that benefits cliffs present to the career advancement of their clients. In this paper, we describe the overall structure of ...
Report
Spatial Wage Gaps and Frictional Labor Markets
We develop a job-ladder model with labor reallocation across firms and space, which we design to leverage matched employer-employee data to study differences in wages and labor productivity across regions. We apply our framework to data from Germany: twenty-five years after the reunification, real wages in the East are still 26 percent lower than those in the West. We find that 60 percent of the wage gap is due to labor being paid a higher wage per efficiency unit in West Germany, and quantify three distinct barriers that prevent East Germans from migrating west to obtain a higher wage: ...
Working Paper
Work from Home and Interstate Migration
Interstate migration by working-age adults in the US declined substantially during the Great Recession and remained subdued through 2019. We document that interstate migration rose sharply following the 2020 Covid-19 outbreak, nearly recovering to pre-Great recession levels, and provide evidence that this reversal was primarily driven by the rise in work from home (WFH). Before the pandemic, interstate migration by WFH workers was consistently 50% higher than for commuters. Since the Covid-19 outbreak, this migration gap persisted while the WFH share tripled. Using quasi-panel data and ...
Report
Credit and Entrepreneurs’ Income
Small business entrepreneurs facing credit-constraints may have significantly different future income paths compared to unconstrained entrepreneurs. We quantify this difference using uniquely detailed loan application data and a regression discontinuity design based on a bank’s credit score cutoff rule employed in the decision to grant loans. We find that application acceptance increases recipients’ income five years later by 11 percent compared to rejected loan applicants. This effect survives in a large battery of robustness tests and is driven by the use of borrowed funds to make ...
Working Paper
Should the government sell you goods? Evidence from the milk market in Mexico
Governments spend considerable resources providing goods directly. We show that such behavior may increase welfare when private suppliers have market power. We do this by studying the staggered rollout of hundreds of government milk “ration stores” in Mexico using a proprietary panel of household food purchases. The rollout lowered the price per liter of privately supplied milk by 2.4% and increased household consumption. To compare directprovision with budget-neutral alternatives, we develop and estimate an equilibrium model of the market that accounts for quality differences. Direct ...
Report
Crime, house prices, and inequality: the effect of UPPs in Rio
We use a recent policy experiment in Rio de Janeiro, the installation of permanent police stations in low-income communities (or favelas), to quantify the relationship between a reduction in crime and the change in the prices of nearby residential real estate. Using a novel data set of detailed property prices from an online classifieds website, we find that the new police stations (called UPPs) had a substantial effect on the trajectory of property values and certain crime statistics since the beginning of the program in late 2008. We also find that the extent of inequality among residential ...