What Have We Learned from Structural Models?

By Richard Blundell

American Economic Review, May 2017

A structural economic model is one where the structure of decision making is incorporated in the model specification. Structural models aim to identify three distinct, but related, objects: (i) structural "deep" parameters; (ii) underlying mechanisms; (ii...

Economic Research Evolves: Fields and Styles

By Joshua Angrist, Pierre Azoulay, Glenn Ellison, Ryan Hill, and Susan Feng Lu

American Economic Review, May 2017

We examine the evolution of economics research using a machine-learning-based classification of publications into fields and styles. The changing field distribution of publications would not seem to favor empirical papers. But economics' empirical shift i...

Abducting Economics

By James J. Heckman and Burton Singer

American Economic Review, May 2017

Abduction is the process of generating and choosing models, hypotheses, and data analyzed in response to surprising findings. All good empirical economists abduct. Explanations usually evolve as studies evolve. The abductive approach challenges economists...

The Impact of Entrepreneurship Programs on Minorities

By Elizabeth Lyons and Laurina Zhang

American Economic Review, May 2017

We document the impact of an entrepreneurship training program on startup activity of minorities (females and non-Caucasians). We compare entrepreneurial activity between applicants who are accepted into the program with applicants who are program finalis...

Gender Gap in High-Growth Ventures: Evidence from a University Venture Mentoring Program

By Erin L. Scott and Pian Shu

American Economic Review, May 2017

We track high-growth ventures from the idea stage to commercialization and investigate the nature of the gender gap early in the venture lifecycle. Using data on 651 venture ideas that collectively attracted over $700 million in venture financing, we find...

Which Entrepreneurs Are Coachable and Why?

By Kevin A. Bryan, András Tilcsik, and Brooklynn Zhu

American Economic Review, May 2017

Is coachability a usable concept for startups? Using a dataset on high-growth startups in a prominent university incubator, we show that firm characteristics do predict which firms are likely to follow advice but that these "coachable" firms are not more ...

Endogenous Appropriability

By Joshua S. Gans and Scott Stern

American Economic Review, May 2017

Most approaches to entrepreneurship assume that entrepreneurial control over their inventions is critical for success and, in turn, for incentives. Such control is usually supported by regulations that protect intellectual property including patents, copy...

Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown

By Ryan A. Decker, John Haltiwanger, Ron S. Jarmin, and Javier Miranda

American Economic Review, May 2017

A large literature documents declining measures of business dynamism including high-growth young firm activity and job reallocation. A distinct literature describes a slowdown in the pace of aggregate labor productivity growth. We relate these patterns by...

Immigration and the Rise of American Ingenuity

By Ufuk Akcigit, John Grigsby, and Tom Nicholas

American Economic Review, May 2017

We build on the analysis in Akcigit, Grigsby, and Nicholas (2017) by using US patent and census data to examine the relationship between immigration and innovation. We construct a measure of foreign born expertise and show that technology areas where immi...

Transferability of Skills across Sectors and Heterogeneous Displacement Costs

By Moises Yi, Steffen Mueller, and Jens Stegmaier

American Economic Review, May 2017

We use rich German administrative data to estimate new measures of skill transferability between manufacturing and other sectors. These measures capture the value of workers' human capital when applied in different sectors and are directly related to work...

Trade and Manufacturing Jobs in Germany

By Wolfgang Dauth, Sebastian Findeisen, and Jens Suedekum

American Economic Review, May 2017

The German economy exhibits rising service and declining manufacturing employment, but this decline is much sharper in import-competing than export-oriented branches. We first document the individual-level job transitions behind those trends. They are not...

A Context-Robust Measure of the Disincentive Cost of Unemployment Insurance

By Johannes F. Schmieder and Till von Wachter

American Economic Review, May 2017

This paper proposes a new measure of the disincentive cost of unemployment insurance (UI): the ratio of the behavioral cost (BC) to the mechanical cost (MC) of a UI reform. This measure represents the labor supply distortion relative to the additional (me...

Composition and Aggregate Real Wage Growth

By Mary C. Daly and Bart Hobijn

American Economic Review, May 2017

Aggregate real wages exhibit less procyclicality than most macroeconomic models predict. We use 35 years of Current Population Survey data to confirm that the puzzling behavior of wages largely owes to changes in the composition of the employed over the b...

Do Job-to-Job Transitions Drive Wage Fluctuations over the Business Cycle?

By Fatih Karahan, Ryan Michaels, Benjamin Pugsley, Ayşegül Şahin, and Rachel Schuh

American Economic Review, May 2017

We investigate the importance of job-to-job (JJ) transitions for cyclical wage dynamics. By exploiting cross-state variation, we find that wage growth is tightly linked to variation in the JJ transition probability, and conditional on this, the job findin...

Job-to-Job Flows and Earnings Growth

By Joyce K. Hahn, Henry R. Hyatt, Hubert P. Janicki, and Stephen R. Tibbets

American Economic Review, May 2017

The US workforce has had little change in real wages, income, or earnings since the year 2000. However, even when there is little change in the average rate at which workers are compensated, individual workers experienced a distribution of wage and earnin...

The Relative Power of Employment-to-Employment Reallocation and Unemployment Exits in Predicting Wage Growth

By Giuseppe Moscarini and Fabien Postel-Vinay

American Economic Review, May 2017

We study the cyclical comovement nominal wage growth (either monthly earnings or hourly wage rate) and labor market flows. We use microdata from the Survey of Income and Program Participation over 1996-2013 to purge composition effects in worker and job c...

Heterogeneous Scarring Effects of Full-Year Nonemployment

By Fatih Guvenen, Fatih Karahan, Serdar Ozkan, and Jae Song

American Economic Review, May 2017

Drawing on administrative data from the Social Security Administration, we find that individuals that go through a long period of non-employment suffer large and long-term earnings losses (around 35-40 percent) compared to individuals with similar age and...

Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data

By Niklas Engbom and Christian Moser

American Economic Review, May 2017

We use administrative US matched employer-employee data merged with detailed information on individuals' academic records to assess the extent to which returns to education are mediated by the sorting of workers across firms. We present three results. Fir...

Wage Inequality and Firm Growth

By Holger M. Mueller, Paige P. Ouimet, and Elena Simintzi

American Economic Review, May 2017

We discuss firm-level evidence based on UK data showing that within-firm pay inequality--wage differentials between top- and bottom-level jobs--increases with firm size. Moreover, within-firm pay inequality rises as firms grow larger over time. Lastly, us...

The Role of Firms in Gender Earnings Inequality: Evidence from the United States

By Isaac Sorkin

American Economic Review, May 2017

This paper documents that in the US, men are more likely than women to work in both high-wage firms and high-wage industries. I then ask why this sorting occurs. I consider two main explanations: men and women have different preferences, and men and women...