We develop a simple model to examine the implications of prohibiting the use of credit histories in hiring practices. We empirically test the model using a recent law implemented in Chile. This law extended periods of unemployment for low-income workers, consistent with the pooling equilibrium in the market for talent predicted by our model. Moreover,
Abstract – In 1905-1935, the city of Los Angeles bought the water and land rights of the Owens Valley farmers and built an aqueduct to transfer the water to the city. The dark story is that Los Angeles bullied and isolated reluctant farmers to get cheap water. A map of the farmers ́ plots sold
Abstract –Firm agglomeration is positively correlated with productivity, and it exhibits significant heterogeneity across industries. Yet, the connection between agglomeration and corporate investment remains underexplored. We develop a model of information sharing which predicts that knowledge-intensive industries and industries with more uncertainty benefit the most from agglomeration due to the subsequent improvement in project selection.
Abstract – Consumers face a choice when evaluating financial contracts: study the fine print and incur a cognitive cost or ignore it and risk costly surprises in future. We use a pair of policy changes in Chile to contrast two measures to protect consumers from fine print: the first improves disclosure and the second standardizes
Abstract – We exploit a unique natural experiment to structurally estimate the information frictions associated with switching costs. Specifically, we study a Chilean policy that simplified and standardized the presentation of loan characteristics in contracts and quotes. Using administrative data from the banking regulator, we exploit how this pol- icy change affected the price-sensitivity in