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Working Papers

Fewer players, fewer homes: concentration and the new dynamics of housing supply. R&R at Regional Science and Urban Economics.

We investigate the impact of increasing concentration in local residential construction markets on housing cycle dynamics. We show that the increase in concentration has led to greater unit price volatility, less production, and fewer vacant unsold units. Our results imply that the greater concentration has decreased the annual value of new housing production by $144 billion. Because housing is a determinant of the business cycle these findings provide further evidence that the secular decline in competitive intensity in the American economy is altering macroeconomic dynamics. Previous draft circulated as Market Concentration in Homebuilding. Also see a press release, media coverage, the slides presented at the AEA meetings, and a recent presentation at the ReCapNet 2020.

Measuring the Value of Rent Stabilization and Understanding its Implications for Racial Inequality: Evidence from New York City with Ruoyu Chen, Hanchen Jiang. 2nd R&R at Regional Science and Urban Economics.

Assessing rent discounts implied by rent regulation is challenging because the counterfactual rents of regulated units in the unregulated market are not observed. We estimate these counterfactual rents and predict the quality-adjusted rent discount for each rent-stabilized unit in New York City (NYC) using novel data from 2002 to 2017. We find robust average rent discounts of $410 per month (34% of contract rents of stabilized units). The aggregate size of these discounts in NYC is between 4 to 5.4 billion USD per year, roughly 10-14% of the federal budget on means-tested housing programs. We document that discounts: (1) increase linearly with housing tenure; (2) are not progressively distributed; (3) are larger in Manhattan and increasing in gentrifying neighborhoods; and (4) are three times larger for households correctly aware of being beneficiaries. We find that rent stabilization has disproportionately benefited White tenants. Not only are they more likely to occupy rent-stabilized units conditional on observables, but they also receive higher discounts. On average, Black stabilized tenants get $150, Hispanics $135, and AAPI $43 less on monthly rent discounts than White stabilized tenants. This racial gap, which has shrunk over time, is mainly explained by the uneven sorting of households of different races across locations. GLO Discussion Paper, No. 1102

Staggered Health Policy Adoption: Spillover Effects and Their Implications. with Vadim Elenev, Alessandro Rebucci and Emilia Simeonova. R&R at Management Science.

This paper investigates the direct and spillover effects on mobility caused by the staggered
adoption of Stay-at-Home orders (SHOs) implemented by U.S. counties to contain the spread of
COVID-19. We find that mobility in neighboring counties declines by a third to a half as much
as in the counties that first implement the SHOs. Further, these spillovers are concentrated
in counties that share media markets with treated counties. Using directional mobility data,
we find that declines in internal mobility in the neighbor counties account for a much larger
proportion of the overall decline in mobility than decreases in traffic originating in the treated
county and headed to the neighbor. Together, these results provide strong evidence that SHOs
operate through information sharing and voluntary social distancing. Based on our estimates
and a simple model of staggered SHO adoption, we construct counterfactual scenarios that
separate the impact of policy coordination from that of adoption timing. We demonstrate that
staggered implementation of SHO policies can yield mobility reductions that are larger than
coordinated but delayed SHO policy adoption. See it in the NBER's Research Spotlight.

Does Rent Regulation Affect Tenant Unemployment? Evidence from New York City. with Hanchen Jiang and Xi Yang.

This paper examines the impact of rent regulation on tenants' unemployment in New York City. We provide evidence that rent stabilization increases tenants' unemployment by over five percentage points using data from 2002 and 2017. To address endogeneity concerns, we employ an instrumental variable strategy that exploits the local historical availability of rent-stabilized units when tenants move in as an exogenous source of variation for occupying a rent-stabilized unit. We also develop a job-search model to explain the underlying mechanisms of rent regulation's unemployment effects. Our findings underscore the need for policymakers to consider the unintended consequences of rent regulation.

Social Mobility Restrictions on and off American Indian Reservations: Effects on Health Care Access and Utilization During COVID-19.  with Randall Akee and Emilia Simeonova. Under Review. 

We estimate healthcare utilization changes in response to non-pharmaceutical interventions by using cell phone traffic data and a new dataset on social mobility restrictions on and off Native American reservations. Our findings suggest that reservation residents experienced a smaller reduction in visits to healthcare facilities compared to off-reservation residents. This can be attributed to the lack of alternative healthcare options and more acute health conditions prevalent among American Indian populations. Interestingly, we observed a stronger reaction from reservation residents to casino closures than to stay-at-home orders issued by their respective counties, highlighting the importance of considering reservation-specific policies in public health policy analysis. Our study sheds light on critical health issues faced by a vulnerable population that is often overlooked due to the lack of appropriate data. By using an alternative data source that accurately represents reservations, we contribute towards tackling the problem of undercoverage of this population in traditional surveys.

The Long and Winding Roads: Roads, Inequality, and Growth in Colombia. with Guillermo Sinisterra. 

We measure road improvement and road construction on production and inequality in Colombia from 1993 to 2012, taking into account network effects using a market access approach. We found that roads, by changing market access, have an important effect on GDP growth and all the sectors. We also find that GDP increases with distance to the intervention. We address endogeneity in multiple ways. We use exogenous variation based on the likelihood of receiving a road improvement based on pre-colonial (indigenous) roads least-cost cost path counterfactual road networks that use estimated construction costs; we also build alternative market access measures that focus on quasi-random market access changes stemming from exposure to markets of smaller cities. We find that roads concentrate the land close to that infrastructure in fewer hands. Also, roads have an important effect on municipal development indicators. Roads also seem to have important spillover effects on municipalities located at 35km or closer to the intervention.

The Financial Fragility of For-Profit Hospitals: Evidence from the COVID-19 Pandemic with Ge Bai, Daniel Jiménez, Phillip Phan, and Alessandro Rebucci. R&R at Journal of Financial Stability.

We estimate the likelihood of financial distress of U.S. hospitals in 2020 due to the COVID-19 pandemic using AHA Annual Survey data for 2011-2019 and smartphone mobility data for 2020. We find that while the average likelihood of distress across all hospitals is 28.53 % in 2020, slightly increasing from 2019, for-profit hospitals are much more likely to be distressed. Their average likelihood of financial distress is 39.13 %---a 6.93 percentage point increase from 2019. For-profit hospitals are the main providers of specialty health care services, such as psychiatric and acute long-term care, so their increased likelihood of distress poses a risk to service provision in these specialty areas, and particularly in rural communities. Our prediction model based on mobility data performs very well in sample against actual data and can potentially help policymakers and hospital administrators to monitor financial distress in real-time when case mixes change, or other large shocks materialize.

MCMC Approach to Classical Estimation with Overidentifying Restrictions. Under Review.

I extend the Laplace estimators approach proposed by Chernozhukov and Hong (2003) for an overidentified system by decomposing the m moments into the identifying and overidentifying space, and using both to construct a transformed criterion function for a new just-identified system. Parameters and test statistics are estimated simultaneously using the entire equation do- main, not only the global minimum. As in Chernozhukov and Hong (2003), Markov-Chain Monte Carlo (MCMC) avoids the curse of dimensionality in this method. It is also applicable to non-smooth criterion functions. Incorporating the ORs in the objective function amounts to using economic theory as criterion for estimate selection when facing multiple local solutions. The proposed estimators outperform counterparts in simulation of an asset-pricing model in Hall and Horowitz (1996).

Urban Decline in an Urbanizing World, with Paula Restrepo.

This article presents evidence on the striking phenomenon of population decline in Eastern Europe and Central Asia (ECA) using a novel dataset that spans more than 3 decades for all cities in the countries of the region. To explain the observed patterns of population redistribution in a context of strong population decline, we present a modified gravity migration model based on Brezis and Krugman (1997) model on life cycle of cities. Under a negative population shock, the model predicts concentration of population in larger cities, driven by a temporary wedge between productivity and living costs.  We test these predictions and find that indeed population distribution across the city distribution increased its concentration. In particular, there is a negative causal effect on population growth of having access to larger labor markets, and a causal positive effect of having a larger local market. This research was awarded the ECA Academy award 2020

The Efficacy of a Pre-Algebra Cognitive Tutor in Chile and Mexico, with Jason Imbrogno, Ignacio Casas, and Paul Goodman.

A math cognitive tutor (MCT) system widely used throughout the U.S. was adapted for use in Chilean and Mexican public middle schools. The curriculum requires the use of computers for individual students to progress through an extended pre-algebra program. We show that students enrolled in schools which were randomly assigned to adopt the MCT significantly im- proved their standardized math test scores as compared to control group peers. However, the implementation of the changes in the schools and classrooms was not perfect. Those schools which were better prepared to make changes, especially those with sufficient computers and technical support services, saw their students master more of the software part of the curriculum. Students and teachers generally viewed the MCT positively. Knowledge from this study regarding the structure and implementation required for schools to successfully exploit the unique teaching capabilities of the MCT should guide the future diffusion of this specific technology.

Stopping Asset Market Bubbles.

We test a policy that changes the information and payoff structure in a double auction experiment in order to prevent bubbles from forming. This cash out policy gives the investor all his asset holding (game money) and dividends at the end of each transaction period in the form of real cash. This intends to change the reference point and make the investor realize gains or losses as real. The results of the experiments support the hypothesis that, at least partially, the creation of bubbles is affected by mental accounting and framing. These phenomena affect investors’ willingness to hold or demand assets whose prices are unrealistically above its fundamental value. We have experiments with 3 groups of subjects (inexperienced, experienced, and mixed). The largest bubbles are formed for the inexperienced subjects, although bubbles do form in all groups. In all cases where strong bubbles are present, the cash out policy seems to have a strong effect in reducing or preventing the bubble formation.

Projects in Progress

  • Here Comes the Neighborhood: The microstructure of housing supply.  (with Caitlin Gorback).

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