research

Working Papers

• Bridging the Gap: Information, Returns and Choices PDF
  Abstract: How much of the gap in choices across social groups is driven by differences in returns or the ability to predict these returns? To address this question, we employ a decomposition exercise, based on a structural model, to quantify the roles of information quality and differences in returns in driving this gap, focusing on the college attendance decisions of White and Hispanic high school students in Texas. We find that the average monetary returns from college are almost zero for Hispanics, in contrast to being high for Whites. We then estimate the extent to which differences in returns and information quality contribute to the gap in choices. Our findings indicate that differences in information quality across the two groups help mitigate the choice gap, whereas differences in returns drive the gap. Finally, we use our model to show that achieving parity in choice between the two groups would require policymakers to provide highly accurate additional information, potentially explaining between 24\% and 49\% of the variance in post-college earnings.
• It’s Not Who You Are, It’s What They Know: Wage Gaps and Informational Frictions PDF
  Abstract: Can informational asymmetries among firms account for all observed wage gaps across social groups? We confirm this through a parsimonious common-value auction model in the labor market with unspecified information structures. Firms with identical characteristics encounter workers with unobserved productivity and extend wage offers based on their information about worker productivity and competing offers. Using 2010 American Community Survey data, we show that wage disparities among both Black and White men and women can be explained using a common productivity distribution for all social groups and differences in what firms know, if the mean of this common productivity distribution ranges between $48,000 and $132,800. Our results emphasize the importance of understanding what firms know in shaping wage distributions and explaining wage disparities
• Uncovering Latent Types in Sequential Choice Data Using Text Embedding Algorithm PDF
  Abstract: In economic analyses of agents making a series of discrete choices, deciding what constitutes an alternative is crucial. This paper introduces a technique for categorizing similar alternatives in contexts where forward-looking agents make a series of decisions. The proposed method groups options that are equivalent from the perspective of the agents, using the renowned word2vec algorithm (Mikolov et al., 2013b, Mikolov et al., 2013a) from the Natural Language Processing literature. The paper discusses the link between the word2vec method and the underlying dynamic optimization problem of the agent.
• Linear Regression in a Nonlinear World PDF
  Abstract: The interpretation of coefficients from multivariate linear regression relies on the assumption that the conditional expectation function (CEF) is linear in the variables. However, in many cases the underlying data generating process is nonlinear. This paper examines how to interpret regression coefficients under nonlinearity. We show that if the relationships between the variable of interest and other covariates are linear, then the coefficient on the variable of interest represents a weighted average of the derivatives of the outcome CEF with respect to the variable of interest. Interestingly, if these relationships are nonlinear, the regression coefficient becomes biased relative to this weighted average. We show that this bias is interpretable, analogous to the biases from measurement error and omitted variable bias under the standard linear model.

Work in Progress

• Quantifying Uncertainty over the Lifecycle Slides
  Abstract: We examine the welfare implications of income uncertainty, specifically its differential impact across social groups. Leveraging a new lifecycle metric for uncertainty costs, we compare utility outcomes from both expected and optimal consumption profiles under certainty. To perform this analysis, we employ a new approach that uses a Generative AI model (Normalized Flow) for the estimation and simulation of future consumption and income trajectories. Utilizing comprehensive household survey data from India, our findings reveal small but persistent disparities in uncertainty costs across different castes, under the assumption of homogeneous utility functions. The study suggests that, in the absence of preference heterogeneity, income-to-welfare mapping may be adequately performed without considering uncertainty.
• Content Vs Form: What Drives Differences in Test Scores Across Different Socioeconomic Status with Maria Goldshtein
  Abstract: Differences in test scores across various socioeconomic statuses (SES) often hinge on more than just the academic content; they also reflect variances in communication styles. This study explores the dual aspects of content and form in academic self-expression and their impact on evaluation outcomes. We investigate how students’ ability to adapt their style and expression to diverse audiences, a skill variably acquired across different SES, influences their test scores. Employing methodologies from Text Style Transfer literature and decomposition techniques from labor economics, the study quantifies the extent to which differences in the ideas students present and the styles they use contribute to score discrepancies. This approach provides a nuanced understanding of how SES-related factors shape academic performance, underscoring the importance of both substance and style in educational assessments.
• Integrating Minority Perspectives: An Analysis of Women’s Induction into the Field of Economics
• Can complementarity explain path dependence in innovation? Evidence from the secondary market of patents

Publications

• On the Interpretation of the Intergenerational Elasticity and the Rank-Rank Coefficients for Cross Country Comparison. Economics letters (2024) PDF Proofs
  Abstract: This paper investigates Intergenerational Elasticity (IGE) and Rank-Rank coefficients, employing Yitzhaki’s theorem (Yitzhaki, 1996) to express them as weighted averages of underlying causal mechanisms driving mobility. We highlight the challenges of interpreting cross-country comparisons using IGE or Rank-Rank coefficients due to the regression weighting scheme. We also show that, while the Rank-Rank coefficient is more interpretable for positional mobility, it lacks insights into the underlying mechanisms driving mobility across countries. The analysis demonstrates potential drawbacks of using linear regression coefficients as summary statistics in the context of intergenerational mobility comparisons.
• Network-Mediated Knowledge Spillovers in ICT/Information Security. Review of Network Economics (2021) with Neil Gandal and Lee Branstetter Link
  Abstract:: A large literature has used patent data to measure knowledge spillovers across inventions but few papers have explicitly measured the impact of the collaboration networks formed by inventors on the quality of invention. This paper develops a method to measure the impact of collaboration networks of inventors on invention quality. We apply this methodology to the information and communication technology (ICT) and information security sectors in Israel and find that the quality of Israeli inventions are systematically linked to the structure of the collaborative network in these sectors.
• The High-Tech Sector, Chapter 17, The Israeli Economy, 1995–2017: Light and Shadow in a Market Economy. with Neil Gandal and Stefania Gandal Link