Research

We study the role of European Immigration on local and aggregate economic growth in the United States between 1880 and 1920. We employ a big data approach and link, at the individual-level, information from the Population Census, the universe of patents and millions of historical immigration records. We find that immigrants were more prolific innovators than natives, and document large differences in innovation potential across nationalities and regions in the United States. To measure the importance of immigrants for the creation of new ideas and economic growth, we develop a new spatial model of growth through dissemination of knowledge and workers’ mobility. The model allows us to use our micro and regional empirical findings to measure immigrants’ innovation human capital and the degree of knowledge diffusion which regulates scale effects. We quantitatively analyze the effects of imposing major immigration restrictions on American economic growth in the 19th and early 20th century. We find large, accumulating, losses from these restrictions. Both the scale effects and the exclusion of high-human capital immigrants contribute significantly to these losses.

The Paycheck Protection Program (PPP) extended 669 billion dollars of forgivable loans in an unprecedented effort to support small businesses affected by the COVID-19 crisis. This paper provides evidence that information frictions and the “first-come, first-served” design of the PPP program skewed its resources towards larger firms and may have permanently reduced its effectiveness. Using new daily survey data on small businesses in the U.S., we show that the smallest businesses were less aware of the PPP and less likely to apply. If they did apply, the smallest businesses applied later, faced longer processing times, and were less likely to have their application approved. These frictions may have mattered, as businesses that received aid report fewer layoffs, higher employment, and improved expectations about the future.

This note provides new evidence on how small business owners have been impacted by COVID-19, and how these effects have evolved since the passage of the CARES Act. As part of a broader and ongoing project, we collected survey data from more than 8,000 small business owners in the U.S. from March 28th, one day after the CARES Act was passed, through April 20th. The data include information on firm size, layoffs, beliefs about the future prospects of their businesses, as well as awareness of existing government relief programs. We provide three main findings. First, by the time the CARES Act was passed, surveyed small business owners were already severely impacted by COVID-19-related disruptions: 60% had already laid off at least one worker. Second, business owners’ expectations about the future are negative and have deteriorated throughout our study period, with 37% of respondents in the first week reporting that they did not expect to recover within 2 years, growing to 46% by the last week. Third, the smallest businesses had the least awareness of government assistance programs, the slowest growth in awareness after the passage of the CARES Act, and never caught up with larger businesses. The last finding indicates that small businesses may have missed out on initial Paycheck Protection Program funds because of low baseline awareness and differential access to information relative to larger firms.

The coronavirus disease 2019 (COVID-19) pandemic is leading to social (physical) distancing policies worldwide, including in the USA. Some of the first actions taken by governments are the closing of schools. The evidence that mandatory school closures reduce the number of cases and, ultimately, mortality comes from experience with influenza or from models that do not include the effect of school closure on the health-care labour force. The potential benefits from school closures need to be weighed against costs of health-care worker absenteeism associated with additional child-care obligations. In this study, we aimed to measure child-care obligations for US health-care workers arising from school closures when these are used as a social distancing measure. We then assessed how important the contribution of health-care workers would have to be in reducing mortality for their absenteeism due to child-care obligations to undo the benefits of school closures in reducing the number of cases.

We estimated that, combined with reasonable parameters for COVID-19 such as a 15·0% case reduction from school closings and 2·0% baseline mortality rate, a 15·0% decrease in the health-care labour force would need to decrease the survival probability per percent health-care worker lost by 17·6% for a school closure to increase cumulative mortality. Our model estimates that if the infection mortality rate of COVID-19 increases from 2·00% to 2·35% when the health-care workforce declines by 15·0%, school closures could lead to a greater number of deaths than they prevent.

School closures come with many trade-offs, and can create unintended child-care obligations. Our results suggest that the potential contagion prevention from school closures needs to be carefully weighted with the potential loss of health-care workers from the standpoint of reducing cumulative mortality due to COVID-19, in the absence of mitigating measures.

We show that unexpected changes in the trajectory of COVID-19 infections predict US stock returns, in real time. Parameter estimates indicate that an unanticipated doubling (halving) of projected infections forecasts next-day decreases (increases) in aggregate US market value of 4 to 11 percent, indicating that equity markets may begin to rebound even as infections continue to rise, if the trajectory of the disease becomes less severe than initially anticipated. Using the same variation in unanticipated projected cases, we find that COVID-19-related losses in market value at the firm level rise with capital intensity and leverage, and are deeper in industries more conducive to disease transmission. These relationships provide important insight into current record job losses. Measuring US states' drops in market value as the employment weighted average declines of the industries they produce, we find that states with milder drops in market value exhibit larger initial jobless claims per worker. This initially counter-intuitive result suggests that investors value the relative ease with which labor versus capital costs can be shed as revenues decline.

As children reach adolescence, peer interactions become increasingly central to their development, whereas the direct influence of parents wanes. Nevertheless, parents may continue to exert leverage by shaping their children's peer groups. We study interactions of parenting style and peer effects in a model where children's skill accumulation depends on both parental inputs and peers, and where parents can affect the peer group by restricting who their children can interact with. We estimate the model and show that it can capture empirical patterns regarding the interaction of peer characteristics, parental behavior, and skill accumulation among US high school students. We use the estimated model for policy simulations. We find that interventions (e.g., busing) that move children to a more favorable neighborhood have large effects but lose impact when they are scaled up because parents' equilibrium responses push against successful integration with the new peer group.

We used a randomized experimental vignette study to assess the effects of sunset clauses and conditional sunset clauses on support for proposed legislation, perceived legitimacy of legislation, and perceived good faith of legislators. In general, we hypothesized that including both types of sunset clause would increase support for legislation, increase perceived legitimacy, and increase perceived good faith. We also varied the political valence of legislation to identify whether the impact of sunset clauses varies depending on whether the legislation aligns with political viewpoint. We hypothesized that sunset clauses may increase support for laws that run contrary to political views. Our sample included 1639 adults from throughout the U.S. Participants tended to be more supportive of neutral laws compared to laws with liberal or conservative valence. Across all participants, we found that adding a sunset clause or a conditional sunset clause did not significantly affect overall support for the law, holding political valence and topic area constant. Our findings, however, showed consistently that the sunsets tended to increase support for conservative laws more than they increased support for laws that were liberal or neutral in valence. Pairwise comparisons showed that when the policy was conservative, a sunset clause and a conditional sunset clause each significantly increased support compared to no sunset. Among Liberal participants, adding either type of sunset significantly increased support for a conservative policy (p<0.05). Among Conservative participants, we found that sunsets did not affect support for liberal policies, but they marginally increased support for laws that were already conservative. Overall, sunset clauses tended to induce a broader range of compromise beliefs and significantly more compromise support for conservative legislation, compared to liberal legislation.

When physicians whom patients do not choose and cannot avoid can bill out of network for care delivered within in-network hospitals, it exposes patients to financial risk and undercuts the functioning of health care markets. Using data for 2015 from a large commercial insurer, we found that at in-network hospitals, 11.8 percent of anesthesiology care, 12.3 percent of care involving a pathologist,
5.6 percent of claims for radiologists, and 11.3 percent of cases involving an assistant surgeon were billed out of network. The ability to bill out of network allows these specialists to negotiate artificially high in-network rates. Out-of-network billing is more prevalent at hospitals in concentrated hospital and insurance markets and at for-profit hospitals. Our estimates show that if these specialists were not able to bill out of network, it would lower physician payments for privately insured patients by 13.4 percent and reduce health care spending for people with employer-sponsored insurance by 3.4 percent (approximately $40 billion annually).

Social movements are associated with large societal changes, but evidence of their causal effects is limited. We study the effect of the MeToo movement on reporting sex crimes to the police. We construct a new dataset of crimes reported in 31 OECD countries and employ a triple-difference strategy between crime types, across countries, and over time. The movement increased the reporting of sex crimes by 10%. Using rich US data, we find that in contrast to a common criticism of the movement, the effect is similar across socioeconomic groups, and that the movement also increased arrests for sexual assault. The increased reporting reflects a higher propensity to report sex crimes and not an increase in crime incidence. The mechanism most consistent with our findings is that victims perceive sexual misconduct to be a more serious problem following the movement. Our results demonstrate that social movements can rapidly and persistently affect high-stakes decisions.