This incredible paper uncovers massive collusion between Indian textile firms to hold down wages. This collusion is enabled by "pro-worker" laws making it hard to hire and fire. Instead, a higher minimum wage would actually increase output and wages. 1/ Identifying collusion is one of the perennial problems of industrial organization, and we have not come to a satisfactory general test. The problem is that you cannot easily identify the way in which firms compete without knowing their costs.

Auctions are surprisingly infrequent, given that under many perfectly reasonable conditions they are the optimal mechanism. This paper provides a partial explanation -- if participation is costly, then sequentially shopping around is actually better for everyone. 1/ Let's get some context first. If you have some number of risk-neutral bidders with independent valuations who draw their valuations from known distributions and face no cost of bidding, the optimal mechanism is an auction with a reserve price at the midpoint of the distribution.

It is consistently the case the productivity is correlated with competition. But why? Some think that it's due to bad firms being chased out, because wouldn't every firm want to maximize profit? And yet, that's not what we see. Competition simply makes companies better. 1/ The correlation between competition and productivity is one of the most thoroughly documented findings in all of economics. We'd really like to know why this is the case, though. There are two main hypotheses:

Women bus and train drivers in Boston earn less than men, even in a unionized work place where conditions are all identical. It is difficult to think of this as being due to anything other than different preferences. Equalizing wages would make us worse off. 1/ The MBTA is a service with which I have gained great familiarity. They operate three subway lines (Red, Orange, and Blue), a partially underground set of tram lines (Green), bus rapid transit (Silver), and a thick network of 173 buses.

This team of researchers built an AI algorithm to recommend jobs to 2 million users . It substantially increased employment of the people who got to use it, at little cost to the people unable to use it. The biggest benefits went to poorer and less educated workers. 1/ This is exciting, because it's not necessarily clear whether better recommendation algorithms increase employment on net. This is a core problem for any sort of active labor market policy -- how do you know you haven't just pushed out another worker?

I see this line of thought brought up a lot when trying to reason about monetary policy. Unfortunately, it's completely wrong, but understanding *why* it is wrong will likely be useful. The short version is this: the price level is an outcome, not a causal primitive.

https://twitter.com/online_entropy/status/2039161343429808624

The idea is that if you expect prices to fall, then you won't spend now, which in turn will cause prices to fall. Suppose money is fixed. Why is the price level falling? If buyer and seller are symmetric, there's no reason to lower your prices in a second period.

Do you care about market power in the ready-to-eat cereal market? Probably not. I get that. But that's okay, that's not the point of this paper. The point is to understand market power in markets with differentiated products. You cannot evaluate mergers without it! 1/ The ready-to-eat cereal market is largely the breakfast cereal market with which you are familiar from childhood -- Cheerios and Raisin Bran and Frosted Flakes. It's dominated by a few large firms which produce many different products. Do they possess market power? How much?

In Brazil, investments into research doubled the productivity of agriculture in that country, a 17 fold return on investment. The case for public R&D is incredibly strong -- let's look at on great example. 1/ In Brazil, yields per acre had been flat for decades. In spite of its vast land, it was a net importer of food, and even needed donations from abroad. To solve this, the Brazilian government created Embrapa, an agricultural research group, in 1973.

Fertility has fallen in the United States. At the same time, housing has gotten substantially more expensive. Are these related? How so? Benjamin Couillard attributes fully half of the fertility decline of the 2000s and 2010s to housing prices, a loss of 13 million children! 1/ The paper is a substantial improvement over the reduced form approach to estimating the effect of housing prices on fertility. Using local variation is not ideal, because housing supply changes somewhere affect prices everywhere. We're not really sure what we're measuring.

Being able to sue your doctor for negligence increases costs by 5% while having no effect whatsoever on patients outcomes. All liability laws cause is ass-covering. 1/ "Defensive medicine" is ordering extra tests and procedures so that nobody can accuse you, after the fact, of not doing enough. This may look like a doctor ordering a cancer test needlessly, or perhaps an unnecessary biopsy.

It turns out that public transit is extremely important for reducing traffic. Because the relationship of traffic and congestion is extremely non-linear, a shutdown of transit can cause massive increases in congestion -- justifying substantial subsidies for trains and buses. 1/ tThis is a methodologically simple paper, but very clean. In October 2003, the LA public transit workers went on strike for 35 days. We can consider the change in congestion, after sanity testing it, to be the effect of the MTA.

What killed the local newspaper? Craigslist. The actual reporting function of the newspaper was never what made it profitable -- it was simply a way to get people to look at the classified advertisements. With that gone, the work with positive externalities died. 1/ This is a classic staggered roll-out paper -- if you are willing to buy the assumption that Craigslist expanded to different markets in a way that is unrelated to future trends, conditional on basic demographic controls, then you buy the paper.

Why we so often behave as though the world is zero-sum when it isn't? This paper shows that even the slightest bit of asymmetric information is sufficient to cause us to go away from the optimal outcome, and lead to people to vote for things they don't want in expectation! 1/ Consider three voters, Alice, Bob and Carol. They are deciding whether to enact policy P, and policy P*. P is a payoff of zero to all people. Policy P* gives two voters a pay off of 2, and one voter a payoff of -3. Which voter loses depends on the state of the world.

The marginal propensity to consume (or MPC) is one of the most important parameters to know if we want to estimate the effect of fiscal stimulus. Yet, we may not be able to know the real effect -- even from perfectly identified studies! Stimulus is less effective than we think.1/ Previous micro work on the MPCs take two basic paths. With Parker et al (2013), the identifying variation is coming from random variation in which people actually received their checks.

This paper is an absolutely monumental piece of work. Given incredibly detailed data on how people travel in Chicago, can one calculate the optimal prices of vehicles, roads, and public transport? It turns out -- free buses are correct! And we need massive taxes on vehicles. 1/ To simplify the analysis, we will skip over endogenous reallocation of people, and we are only dealing with pricing the modes which we have now. People are taken to flow between each of the 77 Chicago neighborhoods -- we are not getting more granular than this.

Replacing hospital managers who are doctors with MBAs reduced mortality by 8%. That works out to two fewer deaths per every thousand patients. Managerial quality really does matter, and their pay is justified by the value created. 1/ In 2003, Chile began selecting executives for public programs through an open and competitive process. This would go on to be used to fill 3,400 roles.

Uber famously changes prices in response to demand, hiking prices when more people want the service. Who benefits? The consumer. Drivers lose out slightly compared to a world where Uber sets a uniform price. Total surplus goes up. We shouldn't be afraid of higher prices! 1/ It is not ex ante obvious whether surge pricing will be better or worse for the consumer, or even overall. One can imagine a world where the demand elasticity is changing over time, and so dynamic pricing let's the company charge bigger total markups.

A serious problem in the developing world is that the moment anyone makes anything, their family and relations show up demanding a claim. The "social tax" is so large that 60% of workers take a bank account they can't use for months, just to keep others from knowing! 1/ The experiment is at a cashew processing plant, where workers scrape the plant husk off the nut. The compensation scheme is a pure piece-rate system -- workers are paid by the kilogram. These are almost entirely women.

There's a reason Bukele is so celebrated in El Salvador -- the gangs, MS-13 and Barrio-18, were so awful that they reduced the wages of the people who lived in their zone by more than 50%! People were too afraid of being shot to leave their zone for better jobs. 1/ The El Salvadorean gang situation was an accidental creation of the United States -- when we dumped hundreds of gang members hardened by the streets of 90s Los Angeles, El Salvador could not keep up.

This is *the best* study we have on the effect of phones on academic performance, and an absolute must read. It's really bad for you! It reduces grades and lowers wages coming out of school, with doubling app usage reducing wages by 1.5%, or $135 a year. 1/ It's historically been difficult to measure the effect of videogame usage because it's endogenous. Someone who is already less attentive might play videogames in class -- but who is to say whether it is the videogames causing it, or the inattention which caused both?

The basis of Silvio Berlusconi's political power was his TV network Mediaset. Using the staggered roll-out of the network, the authors find that watching television made young people stupider -- and thus, more likely to vote for Berlusconi. 1/ The fundamental argument behind the paper is that the places where transmitters were placed, conditional upon controls like population and income, were unrelated to future propensity to vote for him.