Human Capital and Racial Inequality in the US Labor Market

By Owen Thompson

Journal of Economic Literature

If racial gaps in measures of human capital like educational attainment and standardized test scores were eliminated, what would happen to racial disparities in wages, employment, and other labor market outcomes? A credible answer to this question is foun...

Front Matter

American Economic Journal: Macroeconomics, October 2025

The Dynamics of Development: Innovation and Reallocation

By Francisco J. Buera and Roberto N. Fattal-Jaef

American Economic Journal: Macroeconomics, October 2025

This paper proposes a quantitative model of endogenous firm dynamics to study growth-acceleration episodes triggered by reforms. We find that reversals of entry distortions lead to persistent growth in TFP and declining average firm size, as in the experi...

The Consumption Origins of Business Cycles: Lessons from Sectoral Dynamics

By Christian Matthes and Felipe Schwartzman

American Economic Journal: Macroeconomics, October 2025

We measure the impact of household consumption shocks on aggregate fluctuations. These shocks affect household consumption directly, and production and prices indirectly through their impact on aggregate consumption. We show how to identify such shocks us...

GDP-B: Accounting for the Value of New and Free Goods

By Erik Brynjolfsson, Avinash Collis, W. Erwin Diewert, Felix Eggers, and Kevin J. Fox

American Economic Journal: Macroeconomics, October 2025

The welfare contributions of new goods and free goods are not well-measured in standard statistical agency metrics like GDP or productivity. We derive explicit terms for the contributions of these goods and introduce a new framework and metric, GDP-B, whi...

Real Exchange Rates and Endogenous Productivity

By Nils Gornemann, Pablo A. Guerrón Quintana, and Felipe Saffie

American Economic Journal: Macroeconomics, October 2025

Two-thirds of the real exchange rate's (RER's) volatility occurs at low frequencies. We provide empirical evidence that links movements in the RER to changes in research and development spending and patents. A two-country real business cycle model with en...

Time to Say Goodbye: The Macroeconomic Implications of Termination Notice

By Tomer Ifergane

American Economic Journal: Macroeconomics, October 2025

Insuring households against unemployment risk is a cornerstone of modern economic policy. Many countries provide unemployment insurance partly by employment protection mandates, most commonly using termination notice mandates. Unlike unemployment insuranc...

Cyclical Attention to Saving

By Alistair Macaulay

American Economic Journal: Macroeconomics, October 2025

I explore the business-cycle implications of household inattention to savings product choices. In a model with heterogeneous banks, savers pay more attention to their bank choice when the marginal utility of income is high. Consistent with this, in data f...

Market Segmentation and International Bond Prices: The Role of ECB Asset Purchases

By Ester Faia, Juliana Salomao, and Alexia Ventula Veghazy

American Economic Journal: Macroeconomics, October 2025

We estimate euro-dollar yields differences, hedged and unhedged, with euro area confidential corporate bond holdings data. We find that euro yields significantly decline relative to dollar yields—more for securities in the portfolios of investors that p...

Temporary Layoffs, Firm Entry and Exit Dynamics, and Aggregate Fluctuations

By Sanjay K. Chugh and Alan Finkelstein Shapiro

American Economic Journal: Macroeconomics, October 2025

We build a model to study how the countercyclicality of temporary layoffs affects unemployment, firm entry and exit, and macroeconomic fluctuations. The model can quantitatively generate the rich cyclical dynamics of temporary layoffs, unemployment, and f...

AEA Meeting Minutes

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Optimal Taxation and Market Power

By Jan Eeckhout, Chunyang Fu, Wenjian Li, and Xi Weng

American Economic Review

Should optimal income taxation change when firms have market power? We analyze how the planner can optimally set taxes on the labor income of workers and on the profits of entrepreneurs to induce a constrained-efficient allocation. Our theory derives opti...

Gender-Biased Technological Change: Milking Machines And the Exodus of Women from Farming

By Philipp Ager, Marc Goñi, and Kjell G. Salvanes

American Economic Review

This paper studies how gender-biased technological change in agriculture affected women’s work in 20th-century Norway. In the 1950s, dairy farms began widely adopting milking machines to replace milking cows by hand, a task typically performed by you...

Take the Goods and Run: Contracting Frictions and Market Power in Supply Chains

By Felipe Brugués

American Economic Review

This paper studies the efficiency of self-enforced relational agreements, a common solution to contracting frictions, when sellers have market power and contracts cannot be externally enforced. To this end, I develop a dynamic contracting model with li...

Risk Preferences and Field Behavior: The Relevance of Higher-Order Risk Preferences

By Sebastian O. Schneider and Matthias Sutter

American Economic Review

Using new methods, we measure the intensities of higher-order risk preferences (prudence and temperance) in an incentivized experiment with 658 adolescents. Aligned with theory, we find that higher-order risk preferences are strongly related to field b...

Bias in academic networking

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A social media field experiment suggests that gender, race, and university affiliation influence the formation of professional relationships among economists.

Front Matter

American Economic Review, October 2025

Intermediated Asymmetric Information, Compensation, and Career Prospects

By Ron Kaniel and Dmitry Orlov

American Economic Review, October 2025

Adverse selection benefits firms able to identify talent. An informed intermediary expropriates agents' ability by threatening to fire and expose them to undervaluation of their skill. An agent's track record gradually reduces intermediary's information a...

Place-Based Redistribution

By Cecile Gaubert, Patrick Kline, Damian Vergara, and Danny Yagan

American Economic Review, October 2025

We study optimal income taxation in a spatial equilibrium model with heterogeneous locational preferences, labor supply decisions, and competitive housing and labor markets. Expressions characterizing the optimal tax schedule in each community are provide...

Consistent Evidence on Duration Dependence of Price Changes

By Fernando Alvarez, Katarína Borovičková, and Robert Shimer

American Economic Review, October 2025

We develop a linear GMM estimator of the discrete-time mixed proportional hazard (MPH) model of duration with an arbitrary distribution of unobserved heterogeneity. We allow for competing risks, observable characteristics, and censoring. We prove our esti...