Working Papers

Fewer players, fewer homes: concentration and the new dynamics of housing supply. R&R at Regional Science and Urban Economics.
We investigate the impact of increasing concentration in local residential construction markets on housing cycle dynamics. We show that the increase in concentration has led to greater unit price volatility, less production, and fewer vacant unsold units. Our results imply that the greater concentration has decreased the annual value of new housing production by $144 billion. Because housing is a determinant of the business cycle these findings provide further evidence that the secular decline in competitive intensity in the American economy is altering macroeconomic dynamics. Previous draft circulated as Market Concentration in Homebuilding. Also see a press release, media coverage, the slides presented at the AEA meetings, and a recent presentation at the ReCapNet 2020. Find here my testimony on competition in housing markets based on this work, and my participation in the hearing Examining Competition and Consumer Rights in Housing Markets. Senate Judiciary Committee, Subcommittee on Competition Policy, Antitrust, and Consumer Rights, October 23, 2023. on CSPAN.

Does Rent Regulation Affect Tenant Unemployment? Evidence from New York City. with Hanchen Jiang and Xi Yang. R&R at Journal of Urban Economics.
This paper examines the impact of rent regulation on tenants' unemployment in New York City. We provide evidence that rent stabilization increases tenants' unemployment by over five percentage points using data from 2002 and 2017. To address endogeneity concerns, we employ an instrumental variable strategy that exploits the local historical availability of rent-stabilized units when tenants move in as an exogenous source of variation for occupying a rent-stabilized unit. We also develop a job-search model to explain the underlying mechanisms of rent regulation's unemployment effects. Our findings underscore the need for policymakers to consider the unintended consequences of rent regulation.

The Long and Winding Roads: Roads, Inequality, and Growth in Colombia. with Guillermo Sinisterra.
Evaluating the impact of roads on economic outcomes is challenging because infrastructure is not exogenously allocated in space. We estimate the impact of a large scale investment that transformed road infrastructure in Colombia from 1993 to 2012, addressing endogeneity in different ways that take into account the accidented topography of the country. We develop instruments that vary with the likelihood of receiving a road improvement based on the location pre-colonial roads, on least-cost paths that take into account local road construction costs based on detailed topography, and on quasi-random changes in market access stemming from exposure to markets of incidental cities. We find that roads, through changing market access, increase local GDP and improve municipal development indicator scores. We also find that roads increase land value which results in accelerated concentration of land ownership fewer hands.

The Financial Fragility of For-Profit Hospitals: Evidence from the COVID-19 Pandemic with Ge Bai, Daniel Jiménez, Phillip Phan, and Alessandro Rebucci. R&R at Journal of Financial Stability.
We estimate the likelihood of financial distress of U.S. hospitals in 2020 due to the COVID-19 pandemic using AHA Annual Survey data for 2011-2019 and smartphone mobility data for 2020. We find that while the average likelihood of distress across all hospitals is 28.53 % in 2020, slightly increasing from 2019, for-profit hospitals are much more likely to be distressed. Their average likelihood of financial distress is 39.13 %---a 6.93 percentage point increase from 2019. For-profit hospitals are the main providers of specialty health care services, such as psychiatric and acute long-term care, so their increased likelihood of distress poses a risk to service provision in these specialty areas, and particularly in rural communities. Our prediction model based on mobility data performs very well in sample against actual data and can potentially help policymakers and hospital administrators to monitor financial distress in real-time when case mixes change, or other large shocks materialize.

MCMC Approach to Classical Estimation with Overidentifying Restrictions. Under Review.
I extend the Laplace estimators approach proposed by Chernozhukov and Hong (2003) for an overidentified system by decomposing the m moments into the identifying and overidentifying space, and using both to construct a transformed criterion function for a new just-identified system. Parameters and test statistics are estimated simultaneously using the entire equation do- main, not only the global minimum. As in Chernozhukov and Hong (2003), Markov-Chain Monte Carlo (MCMC) avoids the curse of dimensionality in this method. It is also applicable to non-smooth criterion functions. Incorporating the ORs in the objective function amounts to using economic theory as criterion for estimate selection when facing multiple local solutions. The proposed estimators outperform counterparts in simulation of an asset-pricing model in Hall and Horowitz (1996).

Urban Decline in an Urbanizing World, with Paula Restrepo.
This article presents evidence on the striking phenomenon of population decline in Eastern Europe and Central Asia (ECA) using a novel dataset that spans more than 3 decades for all cities in the countries of the region. To explain the observed patterns of population redistribution in a context of strong population decline, we present a modified gravity migration model based on Brezis and Krugman (1997) model on life cycle of cities. Under a negative population shock, the model predicts concentration of population in larger cities, driven by a temporary wedge between productivity and living costs. We test these predictions and find that indeed population distribution across the city distribution increased its concentration. In particular, there is a negative causal effect on population growth of having access to larger labor markets, and a causal positive effect of having a larger local market. This research was awarded the ECA Academy award 2020.

The Efficacy of a Pre-Algebra Cognitive Tutor in Chile and Mexico, with Jason Imbrogno, Ignacio Casas, and Paul Goodman.
A math cognitive tutor (MCT) system widely used throughout the U.S. was adapted for use in Chilean and Mexican public middle schools. The curriculum requires the use of computers for individual students to progress through an extended pre-algebra program. We show that students enrolled in schools which were randomly assigned to adopt the MCT significantly im- proved their standardized math test scores as compared to control group peers. However, the implementation of the changes in the schools and classrooms was not perfect. Those schools which were better prepared to make changes, especially those with sufficient computers and technical support services, saw their students master more of the software part of the curriculum. Students and teachers generally viewed the MCT positively. Knowledge from this study regarding the structure and implementation required for schools to successfully exploit the unique teaching capabilities of the MCT should guide the future diffusion of this specific technology.

Stopping Asset Market Bubbles.

We test a policy that changes the information and payoff structure in a double auction experiment in order to prevent bubbles from forming. This cash out policy gives the investor all his asset holding (game money) and dividends at the end of each transaction period in the form of real cash. This intends to change the reference point and make the investor realize gains or losses as real. The results of the experiments support the hypothesis that, at least partially, the creation of bubbles is affected by mental accounting and framing. These phenomena affect investors’ willingness to hold or demand assets whose prices are unrealistically above its fundamental value. We have experiments with 3 groups of subjects (inexperienced, experienced, and mixed). The largest bubbles are formed for the inexperienced subjects, although bubbles do form in all groups. In all cases where strong bubbles are present, the cash out policy seems to have a strong effect in reducing or preventing the bubble formation.

Projects in Progress

Redevelopment and housing prices (with Jacob Cosman)

Here Comes the Neighborhood: The microstructure of housing supply. (with Caitlin Gorback).