Working Papers 2024
Working paper 1-2024
Matching Workers
Espen R. Moen, Eran Yashiv
Abstract
This paper studies the matching of workers within the firm when the productivity of workers depends on how well they match with their co-workers. The firm acts as a coordinating device and derives value from this role. It is shown that a worker's contribution to firm value changes over time in a non-trivial way as co-workers are replaced by new workers. The paper derives optimal hiring and replacement policies, including an optimal stopping rule, and characterizes the resulting equilibrium in terms of worker ows, firm output and the distribution of rm values. Simulations of the model reveal a rich pattern of worker turnover dynamics and their connections to the resulting firm values distribution. The paper stresses the role of horizontal di¤erences in worker productivity, which are di¤erent from vertical, assortative matching issues. It derives the rent from organizational capital, with worker complementarities playing a key role. We compare the model to match-specific productivity models and explore the essential differences, with the emphasis laid on worker interactions and complementarities.
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Working paper 2-2024
The uneven effect of the COVID-19 pandemic on US fatal road accidents
Maya Fuks, Keith Gandal, Neil Gandal
Abstract
One of the lesser-known categories of excess deaths of the COVID-19 pandemic in the US was that of fatal car crashes went up despite the fact that driving decreased due to the lockdowns. Remarkably, then, while there was significantly less traffic in 2020 compared to 2019—the total miles traveled by car decreased by 11% in 2020—there was at the same time a 6.8% increase in fatal car crashes. This meant that the fatality rate per vehicle miles traveled increased by 21% from 2019 to 2020.
But the increase was not uniform: states that voted for Biden in 2020 had a much larger percentage increase in fatal car accidents per miles driven during the March to June 2020 period (the first four months of the pandemic) relative to the same period in 2019. In the case of states that voted for Biden, the average percentage increase in fatal car accidents per miles driven per state was 45 percent while the increase was just 22 percent in states that voted for Trump. During the next four months of the pandemic (July – October 2020), when COVID-19 was less prominent in the news and lockdowns had eased, the differences in the percentage increase in fatal car accidents per miles driven between Biden and Trump states was much smaller: 29% for Biden states versus 25% for states that voted for Trump.
Using regression analysis, we show that a higher percentage vote for Biden in 2020 is associated with a statistically significant increase in fatal accidents per vehicle miles travelled during the first four months (March – June 2020) of the pandemic relative to the same period in 2019. On the other hand, there is no statistical difference between the next four months of the pandemic (July-October 2020) relative to 2019.
Published in Medical Research Archives, Vol 12 No 2 (2024)
Working paper 3-2024
Clerks
Kfir Eliaz, Daniel Fershtman, Alexander Frug
Abstract
We study the optimal dynamic scheduling of workers to tasks when task-completion is privately observed (hence, workers can delay the release of completed tasks), and when idle time is the only means of providing incentives. Our main result characterizes a scheduling rule, and the equilibrium it induces, maximizing the expected discounted output subject to workers’ incentive constraints. When workers are inherently slow, a simple rotation scheme suffices to attain first-best output, but when they are more productive, optimal scheduling alternates between phases with and without delay. Our analysis highlights a trade-off between the quality and size of workforce.
Working paper 4-2024
Money Under The Mattress: Inflation and Lending of Last Resort
Gadi Barlevy, Daniel Bird, Daniel Fershtman, David Weiss
Abstract
This paper examines whether the two key functions of central banks—ensuring price stability and lending during crises—necessarily conflict. We develop a nominal model of bank runs à la Diamond and Dybvig (1983) in which individuals can store the money they withdraw “under the mattress.” In this setting, lending of last resort need not be inflationary. Whether it is depends on the interest rates the central bank charges on its loans. Our results suggest that the central bank must not charge a rate that is too low if it wants to ensure price stability, and must charge a high rate if it wants to robustly attain the ex-ante efficient outcome. These rationales for charging high interest rates on loans during a crisis are distinct from the arguments Bagehot originally relied on to advocate for a similar rule.
Working paper 5-2024
Similarity Nash Equilibria in Statistical Games
Rossella Argenziano and Itzhak Gilboa
Abstract
A statistical game is a game in which strategic interaction is mediated via a binary outcome y , coupled with a prediction problem where a characteristic x of the game may be used to predict its outcome y based on past values of (x, y) . In Similarity Nash Equilibria, players combine statistical and strategic reasoning, using an estimate of y as a coordination device. They predict y by its similarity- weighted frequency and learn the optimal notion of similarity from the data. We prove that the model captures the importance of precedents and the endogenous formation of sunspots.
Published in American Economic Journal: Microeconomics 2023, 15(3): 354–386
Working paper 6-2024
Free universal preschool and the next birth
Noa De La Vega, Analia Schlosser
Abstract
This paper examines how economic incentives in the form of free universal preschool affect fertility decisions, leveraging the fact that the year a child starts preschool is a discontinuous function of the child’s date of birth. Using a regression discontinuity design, we compare fertility patterns of women whose children were born just before or after the preschool entry cutoff date. To address potential seasonality concerns, we utilize an additional source of exogenous variation: a change in Israel's preschool entry cutoff. By incorporating a cohort of women who gave birth within the same time window prior to the preschool cutoff change, we estimate the effects using a difference-indifferences regression discontinuity research design. Our findings reveal that access to free universal preschool shortens births intervals and increases the likelihood of having additional children among Jewish families for whom the alternative is costly childcare arrangements. Conversely, among Arab families, where alternative paid childcare services are limited, access to free universal preschool has no effect on fertility.
