Aggregate Nominal Wage Adjustments: New Evidence from Administrative Payroll Data

By John Grigsby, Erik Hurst, and Ahu Yildirmaz

American Economic Review, February 2021

Using administrative payroll data from the largest US payroll processing company, we measure the extent of nominal wage rigidity in the United States. The data allow us to define a worker's per-period base contract wage separately from other forms of comp...

Leadership in Social Movements: Evidence from the "Forty-Eighters" in the Civil War

By Christian Dippel and Stephan Heblich

American Economic Review, February 2021

This paper studies the role of leaders in the social movement against slavery that culminated in the US Civil War. Our analysis is organized around a natural experiment: leaders of the failed German revolution of 1848–1849 were expelled to the United St...

Intertemporal Labor Supply Substitution? Evidence from the Swiss Income Tax Holidays

By Isabel Z. Martínez, Emmanuel Saez, and Michael Siegenthaler

American Economic Review, February 2021

This paper estimates intertemporal labor supply responses to two-year long income tax holidays staggered across Swiss cantons. Cantons shifted from an income tax system based on the previous two years' income to a standard annual pay as you earn system, l...

The Nature of Firm Growth

By Vincent Sterk ⓡ Petr Sedláček ⓡ Benjamin Pugsley

American Economic Review, February 2021

About one-half of all startups fail within five years, and those that survive grow at vastly different speeds. Using Census microdata, we estimate that most of these differences are determined by ex ante heterogeneity rather than persistent ex post shocks...

Intergenerational Mobility of Immigrants in the United States over Two Centuries

By Ran Abramitzky, Leah Boustan, Elisa Jacome, and Santiago Perez

American Economic Review, February 2021

Using millions of father-son pairs spanning more than 100 years of US history, we find that children of immigrants from nearly every sending country have higher rates of upward mobility than children of the US-born. Immigrants' advantage is similar histor...

Speculative Fever: Investor Contagion in the Housing Bubble

By Patrick Bayer, Kyle Mangum, and James W. Roberts

American Economic Review, February 2021

Historical anecdotes abound of new investors being drawn into a booming asset market, only to suffer when the market turns. While the role of investor contagion in asset bubbles has been explored extensively in the theoretical literature, causal empirical...

Exchange Rates and Prices: Evidence from the 2015 Swiss Franc Appreciation

By Raphael Auer, Ariel Burstein, and Sarah M. Lein

American Economic Review, February 2021

We dissect the impact of a large and sudden exchange rate appreciation on Swiss border import prices, retail prices, and consumer expenditures on domestic and imported nondurable goods, following the removal of the EUR/CHF floor in January 2015. Cross-sec...

Testing the Waters: Behavior across Participant Pools

By Erik Snowberg and Leeat Yariv

American Economic Review, February 2021

We leverage a large-scale incentivized survey eliciting behaviors from (almost) an entire undergraduate university student population, a representative sample of the US population, and Amazon Mechanical Turk (MTurk) to address concerns about the external ...

A Theory of Chosen Preferences

By B. Douglas Bernheim, Luca Braghieri, Alejandro Martínez-Marquina, and David Zuckerman

American Economic Review, February 2021

We propose and develop a dynamic theory of endogenous preference formation in which people adopt worldviews that shape their judgments about their experiences. The framework highlights the role of mindset flexibility, a trait that determines the relative ...

Japan's Financial Crisis and Economic Stagnation

[Symposium: Japan's Economy]

By Takeo Hoshi and Anil K. Kashyap

Journal of Economic Perspectives, Winter 2004

We survey the macroeconomic stagnation and financial problems in Japan. The financial sector assessment includes separate analyses of the commercial banks, the life insurance companies and the government's fiscal investment and loan program (FILP). We est...

What Makes a Rule Complex? Erratum

By Ryan Oprea

American Economic Review, February 2021

Front Matter

American Economic Journal: Microeconomics, February 2021

Strategic Experimentation with Congestion

By Caroline D. Thomas

American Economic Journal: Microeconomics, February 2021

This paper considers a two-player game of strategic experimentation with competition. Each agent faces a two-armed bandit problem where she continually chooses between her private, risky arm and a common, safe arm. Each agent has exclusive access to her p...

Liability Insurance: Equilibrium Contracts under Monopoly and Competition

By Jorge Lemus, Emil Temnyalov, and John L. Turner

American Economic Journal: Microeconomics, February 2021

In liability lawsuits (e.g., patent infringement), a plaintiff demands compensation from a defendant, and the parties often negotiate a settlement to avoid a costly trial. Liability insurance creates bargaining leverage for the defendant in this settlemen...

Sequential Preference Revelation in Incomplete Information Settings

By James Schummer and Rodrigo A. Velez

American Economic Journal: Microeconomics, February 2021

Strategy-proof allocation rules incentivize truthfulness in simultaneous move games, but real world mechanisms sometimes elicit preferences sequentially. Surprisingly, even when the underlying rule is strategy-proof and nonbossy, sequential elicitation ca...

Full Implementation under Ambiguity

By Huiyi Guo and Nicholas C. Yannelis

American Economic Journal: Microeconomics, February 2021

This paper introduces the maxmin expected utility framework into the problem of fully implementing a social choice set as ambiguous equilibria. Our model incorporates the Bayesian framework and the Wald-type maxmin preferences as special cases and provide...

Dynamic Persuasion with Outside Information

By Jacopo Bizzotto, Jesper Rüdiger, and Adrien Vigier

American Economic Journal: Microeconomics, February 2021

A principal seeks to persuade an agent to accept an offer of uncertain value before a deadline expires. The principal can generate information, but exerts no control over exogenous outside information. The combined effect of the deadline and outside infor...

A Generalized Model of Advertised Sales

By Sandro Shelegia and Chris M. Wilson

American Economic Journal: Microeconomics, February 2021

To better understand temporary price reductions or "sales," this paper presents a generalized "clearinghouse" framework of advertised sales and explores some applications. By viewing the firms as competing in utility and amending the conventional tiebreak...

Social Clubs and Social Networks

By Chaim Fershtman and Dotan Persitz

American Economic Journal: Microeconomics, February 2021

We present a strategic network formation model based on membership in clubs. Individuals choose affiliations. The set of all memberships induces a weighted network where two individuals are directly connected if they share a club. Two individuals may also...

Connecting Disconnected Financial Markets?

By Milena Wittwer

American Economic Journal: Microeconomics, February 2021

In most financial markets, securities are traded in isolation. Such a disconnected market design can be inefficient if agents trade more than one security. I assess welfare effects of connecting markets by allowing orders for one security to depend on pri...