Subject index to volume 4a
A
Abcedarian Project, 144
Adding-up property
OB and, 26
path dependence and, 27
reweighting and, 85
RIF and, 26
Additive errors, 340n16
binary choice problem and, 365
DCDP and, 357, 358
HM and, 370
marriage and, 390
Additive linearity, 29
detailed decomposition and, 40
Additive separability, 383
married woman’s labor force participation and, 345n26
Additive shocks
joint distributions of, 371
normally distributed, 343–348
Adverse selection, 289, 294
dedication and, 747–750
equilibrium
with lawyers, 724
in rat race model, 723
Affirmative action
laboratory experiments and, 310–312
laws, 258
with schooling, 448, 449
in tournaments, 263, 310, 311
AFQT. See Armed Forces Qualification Test
Agency, 253, 263. See also Principal-agent/effort
applications and, 703
behavior and, 701–766
best response effort and, 716
binary choice and, 332
CEO compensation and, 708–711
communication and, 261, 266
conformism and, 751–753
consumption and, 246
efficiency wage and, 720
extrinsic rewards and, 705–720, 751–753
gender and, 744n47
heterogeneity and, 746, 747
intrinsic motivation and, 750
labor markets and, 701–766
segmentation of, 719–721
personnel policies and, 711–715
profit maximization and, 717
risk neutral with, 254, 711n7
social preferences and, 751–753
unemployment and, 715–719
Aggregate decompositions, 5
composition effects and, 66, 67t
counterfactuals and, 16, 17, 23
covariates and, 22
detailed decomposition and, 25–33
dummy covariates and, 7
going beyond the mean and, 7
identification of, 21–24
restrictions on, 18–21
ignorability and, 22
IPW and, 7
LPM and, 75
overlapping support with, 17, 18, 22
reweighting and, 68, 73, 86
solved problem and, 7
structural form and, 15, 16
structural models and, 94, 95
zero conditional mean and, 91
Aggregate productivity shocks, 651
Aggregate shock, 653
Alternative hypothesis
experiments and, 124
randomization and, 142
Alternative-specific value functions, 344–346
Altruism, 201n70, 728n27
collusion and, 194
social preferences and, 195
Always-takers, 576
The American Economic Review, 132
Amplification, search models and, 653–656
Animal labor supply experiments, 246, 247
Applications
agents and, 703
with DCDP, 371–452
of MTE, 578–582
Approximation, 363
DCDP and, 354, 355
male labor supply and, 403, 404
by polynomials, 539
RIF and, 8
self-approximation, 356
Taylor, 509
Arcesilaus, 149
ARIMA process, 351, 354
Aristotle, 106
Armed Forces Qualification Test (AFQT), 165, 166, 440, 745, 746
race and, 166
Artefactual field experiments, 119–121
on firms, 178n40
replication in, 127
Assignment process
RD and, 480
research designs and, 479–516
Assignment variables, RD and, 501, 502, 507, 508, 510, 512, 513
Asymmetry
with inequality aversion, 729
of information, 705
race and, 705
with reciprocity, 705
with unemployment, 678
At the money stock options, 734
ATE. See Average Treatment Effect
ATT. See Average Treatment effect on the Treated
Attrition bias, 116
framed field experiments and, 123
Audit studies, 170, 174
Auditions, 163, 164
Autonomy, 763n72
Average Treatment Effect (ATE), 467. See also Local Average Treatment Effect
ex ante program evaluation and, 495–500
generalized Roy model and, 569, 570
identification at infinity and, 569
vs. LATE, 497–500
LATE and, 480, 499t
leading term and, 488
for RD, 505, 506
simple random assignment and, 481
weighted, 491, 492
Average Treatment effect on the Treated (ATT), 6, 33
covariates and, 7
omitted groups and, 9
structural models for, 92
Average Treatment Effects (ATE), weighted, 491, 492
RD and, 502
B
Backwards recursion, 363
with DCDP job search, 429
Bandwidths, RD research design and, 513
Bargaining. See also Nash bargaining
emotions and, 737
in households, 209
in laboratory experiments, 294–298
other regarding preferences and, 294
wage rigidity and, 660, 661
Bargaining power, elasticity and, 650
BART. See San Francisco Bay Area Rapid Transit
Baseline covariates, 502
RD research design and, 513, 514
Bayes’ rule, 64, 65, 504, 572, 573
for type probability function, 353
Bayesian approach, for DCDP, 367–370
Bayesian equilibrium
with principal-agent/effort, 712
unemployment and, 716
Beauty, laboratory experiments and, 309, 310
Becker, Gary, 131, 728n27
Behavior
agency and, 701–766
by employer, discrimination and, 160, 161
intrinsic motivation and, 727–747
labor markets and, 701–766
reciprocal, in principal-agent/effort experiments, 250, 251
reference points and, 728n28
in search models, 621
social preferences and, 728
Bellman equation, 344, 356, 368
counterfactuals and, 606
for DCDP occupational choices, 436
identification with, 604–606
observables and, 605
state variables and, 605
unobservables and, 605
utility function and, 605
value function and, 605
Best response effort, 708
agency and, 716
profit maximization and, 717
Between vs. within decomposition, 53
social experiments and, 116
structural models and, 93
Between-subjects design, for laboratory experiments, 241
Beveridge curve, 637
BFF. See Brown, Falk, and Fehr
Bias. See also Omitted variable bias
attrition, 116
framed field experiments and, 123
conflict of interest and, 741
included variable, 522–526
present-bias, 425, 426
proxy variable, omitted variable bias and, 417
randomization, 114
framed field experiments and, 123
selection, OLS and, 381, 387
bias, substitution, 116, 117
framed field experiments and, 123
Binary choice, 357
additive errors and, 365
agency and, 332
non-full solution method for, 370, 371
in Roy model, 545, 603
Binary covariates, 68
DFL and, 82–84
reweighting and, 82–84
Binary variables, 492, 498n27
Binned local averages, for RD research designs, 513
Binomial test, for within-subjects design, 245
Bins, outcome variables into, 70
Bivariate Probit models, 564–567
Blinder/Oaxaca exercise, 527
Blocking, 107
BLS. See Bureau of Labor Statistics
Bonuses, 304, 305
contracts for, 253, 253n37, 269
piece rates and, 254, 255, 254n40
Bottom line, decomposition methods and, 3
Box-Cox transformation, 358n50
Bridgestone/Firestone, 733
Brown, Falk, and Fehr (BFF), 303, 304
Bureau of Economic Analysis, Fixed Asset Table of, 651n26
Bureau of Labor Statistics (BLS), 624n4
unemployment and, 630n9, 632n12
Business cycle
calibration for, 650–652
hours and, 668
match-specific rents and, 659n36
results for, 652–658
search models and, 621–663
facts about, 623–644
shocks in, 622, 652, 653
theory of, 644–658
C
Calibration
for business cycle, 650–652
HKV and, 688, 689
in laboratory experiments, 241, 242
Capital. See also Human capital
marginal value of, 648
Capital-labor ratio, 647
Career concerns
with principal-agent/effort experiments, 272–274
rat race model and, 724
Career decisions, DCDP and, 445, 446
Categorical variables, OB and, 43
Caterpillar, 733
Catholic schools, 564–567
schooling and, 566t
Caudate, 737n36
Causality
decomposition methods and, 33–36
economic theory and, 476
ex post program evaluation and, 474
in field experiments, 122
internal validity and, 481, 482
in laboratory experiments, 232, 237
in principal-agent/effort experiments, 243
RD and, 508
weighted average of causal impacts, 505
CCTs. See Conditional Cash Transfer programs
CDF, 71, 75, 76
CEOs
compensation of, 200n68, 272
agency and, 708–711
elasticity of, 708
incentives and, 709
luck and, 711
multi-tasking and, 725
principal-agent/effort and, 708–711
profit maximization and, 711
limited liability of, 709
CFVM. See Chernozhukov, Fernandez-Val, and Melly
Charter schools, treatment effects with, 148
Cheap-talk game, 287, 294
Chernozhukov, Fernandez-Val, and Melly (CFVM), 67t, 73, 74
Chief Operating Officer (COO), 191
Child care, 337n10, 338
Childhood investments, DCDP and, 451
Choice models. See also Discrete choice dynamic programming models
estimation of choice model, 549
finite time dynamic discrete choice model, 606
Roy model and, 553, 554
Chosen effort, 243
with principal-agent/effort experiments, 247n28
Classroom size, 142, 143
Cobb-Douglas matching function, 638, 640, 646
Coefficient of discrimination, 157
Collusion
altruism and, 194
in principal-agent/effort tournaments, 261, 262
in tournaments, 261n45, 263
Commitment problem, 736
Communication. See also Miscommunication
agency and, 261, 266
ex ante and, 210
in households, 211
principal-agent/effort experiments and, 293, 294
race and, 172
in teams, 266n53, 268
trust from, 250n33
The Community Game, 240
Comparative advantage, labor market and, 438
Competence, 763n72
Competing risks model, 591–596
Compilers, 576
Complete collection, of linear conditional quantiles, 32
Composition effect
aggregate decomposition and, 66, 67t
covariates and, 83
detailed decomposition for, 87
MM and, 82
OB and, 37
structural model and, 95
unobservables and, 26
Conditional Cash Transfer programs (CCTs), 146
Conditional distribution
advantages of, 77
assumptions/properties of, 12t
binary covariates and, 83
counterfactuals and, 19, 20
detailed decomposition and, 75, 76
advantages of, 75
limitations of, 75, 76
estimations of, 57, 69–74
ignorability and, 35
invariance of, 12t
limitations of, 73, 74
reweighting and, 58
unit price to unobservables and, 33
Conditional expectation function, 89, 90
Conditional independence
field experiments and, 119
groups and, 24
ignorability and, 21, 24, 25
Conditional mean, 8
non-linearity and, 48
structural models and, 93
Conditional participation probabilities, 383
Conditional quantiles, 8, 53, 60–63
advantages of, 63
conditional rank preservation and, 31
detailed decomposition and, 87
limitations of, 62, 63
linear, complete collection of, 32
Conditional rank preservation, 12t
detailed decomposition and, 30–32
Conditional variance, 55
Conflict of interest, 740, 741
bias and, 741
Conformism
agency and, 751–753
norms and, 753
separating equilibrium and, 752
Conscience, 736
Constant returns, to unobservables, 29
Consumption
agency and, 246
hours and, 642, 643f
by households, 209, 645, 646
leisure and, 639
non-linearity with, 340n16
search models and, 658
wage rigidity and, 661
Consumption-output ratio, 641
employment and, 654t
labor wedge and, 642
from Penn World Tables, 642
productivity and, 653n29
Contamination effects, 130
with social incentives, 191n60
in tournaments, 258
Continental Airlines, 738n38
Continuity, in labor market models, 543–545
Contract disputes, retribution in, 732, 733
Control variables, 89, 522
COO. See Chief Operating Officer
Cooperators, 736n35
Cost of control, 756
Counterfactuals
aggregate decomposition and, 16, 17, 23
Bellman equation and, 606
conditional distribution and, 19, 20
conditional rank preservation and, 31
DCDP job search and, 429
estimations for, 57, 58
female labor supply and, 398, 399
Fisher and, 107
homoscedasticity and, 30
identification restrictions on, 21
invariance and, 22, 23
LATE and, 25
linearity and, 59
logit models and, 71
LPM and, 71
medians, 72
non-linearity and, 52
OB and, 37, 47, 48
probit models and, 71
quantiles, 71
rank preservation and, 59
reweighting and, 58, 63, 66, 85
RIF and, 77
treatment effect and, 47
unit price to unobservables and, 33
unobservable characteristics and, 17
Covariates
aggregate decomposition and, 22
ATT and, 7
baseline, 502
RD research design and, 513, 514
binary, 68
DFL and, 82–84
reweighting and, 82–84
composition effect and, 83
dummy, aggregate decomposition and, 7
endogeneity of, 90, 91
general, reweighting and, 84–86
identification and, in labor market model, 541, 542
identification problem and, 9
OB and, 37
observable, 582
omitted groups and, 9
reweighting and, 49n36, 86
RIF and, 77
structural models and, 93
unobservables and, 28
CPS. See Current Population Survey
Credit markets, schooling and, 439, 440
Cross-equation restrictions, with DCDP, 424
Crowding out. See Motivational crowding out
CRRA, 377, 382
female labor supply and, 401
flow utility and, 422
Cumulative distribution function, RIF and, 8
Current Population Survey (CPS), 150, 163, 433, 624n4
unemployment and, 630n9
Curse of dimensionality. See Dimensionality
D
DCDP. See Discrete choice dynamic programming models
D-conditions, 466, 516, 530
Decentralization, employment and, 649–659
Decomposition methods, 2–97. See also Specific methods
causality and, 33–36
estimations with, 13–36
limitations of, 3
maintained assumptions/properties of, 11, 12t
regression-based, 3
treatment effects and, 33–36
Dedication, adverse selection and, 747–750
Deferred compensation policy, 721
Defiers, 576
Demand effects, 237
The Design of Experiments (Fisher), 107
Detailed decomposition, 74–87
additive linearity and, 40
aggregate decomposition and, 25–33
for composition effect, 87
conditional distribution and, 75, 76
advantages of, 75
limitations of, 75, 76
conditional quantiles and, 63, 87
conditional rank preservation and, 30–32
functional form restrictions on, 29
going beyond the mean and, 7, 8
homoscedasticity and, 30
identification restrictions for, 26
linear conditional quantiles and, 32
for mean, 78
MM and, 63n48
monotonicity and, 28
nonparametric identification and, 27, 28
OB and, 43–47
omitted groups and, 10
path dependence and, 27, 85
reweighting and, 68, 82–87
advantages of, 86
limitations of, 87
RIF and, 8, 76–82
advantages of, 81
limitations of, 81, 82
structural functions and, 27, 28
structural models and, 92, 93
triple differences decomposition and, 48
DFL. See DiNardo, Fortin and Lemieux
DGP, 491
DI. See Disability Insurance
Difference-aversion models, 277
Difference-in-difference, 517–519
assessment of, 519
Dimensionality, 355n45
married woman’s labor force participation and, 354–357
randomization and, 357
DiNardo, Fortin and Lemieux (DFL), 58, 63–69, 67t
binary covariate and, 82–84
structural models and, 93, 94
Direct inputs
human capital and, 141–144
natural field experiments and, 141, 142
Disability Insurance (DI), MTE and, 579–581
Disabled, discrimination against, 175–177, 177f
Disappointment aversion, 280
Discount factor, 348
Discouragement effect, 262
Discrete choice dynamic programming models (DCDP). See also Two period discrete choice dynamic models
additive error and, 357, 358
applications with, 371–452
approximation and, 354, 355
Bayesian approach for, 367–370
childhood investments and, 451
credibility of, 452–454
cross-equation restrictions with, 424
discretization and, 372n71
estimations and, 331–455
extreme value assumption and, 349, 350
female labor supply and, 372, 373
models for, 385–400
fertility and, 334
independent type-1 extreme value errors and, 348–350
interpolation and, 355
job search and, 407–429
backwards recursion with, 429
counterfactuals and, 429
finite horizon model for, 413, 414, 421
identification in, 418
infinite horizon model for, 411–413
layoffs and, 422–425
likelihood function with, 419–422
measurement error with, 421
models for, 422–429
nonparametric estimation (NP) for, 414–417
partial equilibrium for, 408, 409, 421
schooling and, 428, 429
search intensity with, 425–427
structural model estimations for, 418, 419
UI and, 427–429
job training and, 450, 451
labor markets and, 446–448
labor supply and, 372–407
Mincer’s life cycle model for, 373
non-full solution method for, 374–385
latent variables and, 335, 336, 344
male labor supply and, 372n71, 400–407
marriage and, 445, 446
for married woman’s labor force participation, 342–357
matching model and, 433
multinomials, 357–371
occupational choice and, 429–452
Bellman equation for, 436
general equilibrium of, 441–445
initial conditions for, 435
models of, 432–445
observables for, 437
partial equilibrium and, 433–441
shocks with, 435, 437
state variables for, 436
unobservable heterogeneity and, 434, 437
randomization and, 355, 356
schooling and, 429–452
general equilibrium of, 441–445
human capital and, 441
models of, 432–445
NLSY and, 438
partial equilibrium and, 433–441
race and, 438, 439
unobservable heterogeneity and, 438
state variables and, 359
unobserved, 350–353
teachers and, 447, 448
unobserved state variables and, 350–353
validation for, 454
value functions and, 333
Discrete time Markov transition matrix, eigenvalues of, 633n14
Discretization, 354, 355
DCDP and, 372n71
Discrimination, 305n94
coefficient of, 157
against disabled, 175–177, 177f
endogeneity and, 168, 169
field experiments on, 128, 169–177
framed field experiments on, 174
in labor market, 149–177
data patterns with, 150–156, 151t
in labor markets
empirical methods with, 161–177
observational data on, 161–169
regression-based decomposition methods for, 161–169
laboratory experiments and, 233
medians and, 167
natural field experiments on, 170–173
nepotism and, 308
90th percentile and, 167
optimal employer behavior and, 160, 161
pre-market, 162
probit models for, 172
social custom of, 150
statistical, 157–160
for profit maximization, 175
race and, 164, 165
taste-based, 156
10th percentile and, 167
theories of, 156–161
third-degree price discrimination, 157
Dismissal barriers, 304
Distribution. See also Conditional distribution; Joint distributions
cumulative distribution function, RIF and, 8
inverse conditional distribution, 63
methods for, 52–74
Pareto, 418, 419, 429n135
preferences for, reciprocity and, 279
Disutility-of-effort, 261
Double duty, 703, 704
for extrinsic rewards, 721–727
of incentives, 722
intrinsic motivation and, 747–764
inequality aversion and, 730
multi-tasking and, 725–727
in rat race model, 723
Drug companies, 740, 741
Drug treatment, treatment effects for, 568
Dual labor markets, 719
effort norms and, 738
Dual purpose incentives. See Double duty
Dummy covariates, aggregate decomposition and, 7
Dummy variables, 13, 71
Duration models, 591–596
Dynamic generalized Roy model, 606–609
error term identification for, 609
identification at infinity for, 608
identification for, 607–609
E
Early stopping, loss aversion and, 300
Earnings equation, identification of, 608
Easterlin paradox, 729n30
Econometrica, 132
Economic theory
causality and, 476
ex post program evaluation and, 475–477
Educare, 144
Education. See Schooling
EE. See Employer-to-employer
Efficiency
in household experiments, 210–212
matching and, 652
principal-agent/effort and, 705
Efficiency wage, 715, 721
agency and, 720
gift exchange and, 734
labor market segmentation and, 720
race and, 745
Effort. See also Principal-agent/effort; Real-effort experiments
best response effort, 708
agency and, 716
profit maximization and, 717
chosen effort, 243
with principal-agent/effort experiments, 247n28
disutility-of-effort, 261
emotions and, 736
ex ante and, 260
minimum wage and, 289
piece rates and, 247–249
reciprocity and, 734
supply of effort experiments, 239
Effort norms
dual labor markets and, 738
equilibrium unemployment and, 738
gift exchange and, 738
incentives and, 734–738
Effort-regulation model, 720
Eigenvalues, of discrete time Markov transition matrix, 633n14
Elasticity
bargaining power and, 650
of CEO compensation, 708
of female labor supply, 397, 398
Frisch, 376, 377, 380, 381, 383, 639, 641
Hicks, 379, 383
in labor supply, 394, 641
Marshallian, 379, 397
matching and, 655
short-run, 397
Ellingsen-Johannesson model, 754–756
Emotions
bargaining and, 737
effort and, 736
other regarding preferences and, 280
peer effects and, 737
Empirical methods, 138, 139t
with labor market discrimination, 161–177
Employer-to-employer (EE)
recessions and, 636
unemployment and, 635, 636
Employment. See also Unemployment
consumption-output ratio and, 654t
decentralization and, 649–659
equilibrium wage and, 718f
firm experiments and, 202–207
laissez-faire and, 684
marginal value of, 648
planners and, 646–649
productivity and, 653n29
search frictions and, 621
search models and, 624–628
shocks to, 651, 715n16
UI and, 685
Employment exit probability, 631–633, 631f, 654
Employment-labor force ratio, 672f, 673f
Employment-population ratio
hours and, 628f
standard deviation for, 629f
Endogeneity
of covariates, 90, 91
discrimination and, 168, 169
instrumental variables for, 91
panel data and, 91, 92
of policy placement, 141
structural models and, 95
zero conditional mean and, 87–91
Epanechnikov kernel, 65n52
Equal Credit Opportunity Act, 156n37
Equal opportunity laws, 258
Equilibrium unemployment, 717–719
effort norms and, 738
Equilibrium wage, employment and, 718f
Errors
additive, 340n16
binary choice problem and, 365
DCDP and, 357, 358
HM and, 370
marriage and, 390
fatal, in laboratory experiments, 242
independent type-1 extreme value errors, 348–350
measurement
with DCDP job search, 421
with hours, 358n53
monotonicity and, 28
primary data collection and, 60
rank preservation and, 60
specification, 50
Type I, 124
Type II, 124
Error terms
homoscedasticity and, 55
identification of, 609
mean and, 29
schooling and, 88
two period discrete choice dynamic models and, 603, 604
Esteem model, 756, 757
Estimation of choice model, 549
Estimations
of conditional distribution, 57, 69–74
for counterfactuals, 57, 58
DCDP and, 331–455
with decomposition methods, 13–36
of female labor supply, 394
of long-run discount factor, 427
from matching, 467, 527, 528
NP, 338
for DCDP job search, 414–417
logit models, 65
omitted variable bias and, 417
for RD research designs, 511, 512
for Roy model, 552–557
NS, 338
in OB, 36
for proportions, 72
from quasi-experiments, 516
for RD, 500
research designs, 510–514
with reweighting, 65n51, 68
in Roy model, 548–552
of short-run discount factor, 427
with structural model, for DCDP job search, 418, 419
with variance decomposition, 56
of variance matrix of residuals, 551, 552
Ethical guidelines, for field experiments, 127, 128
Ethnicity, 308, 309
identity and, 744, 744n48
Euler equation, 400
Euler’s constant, 349
Ex ante
communication and, 210
effort and, 260
evaluation problem, 465
labor markets and, 150
predictions, ex post program evaluation for, 479
program evaluation, 470, 471t
ATE and, 495–500
LATE and, 495–500
leading term and, 510
parameter of interest and, 477–479, 488
predictions with, 485–489
RD and, 508–510
TOT and, 508–510
RUM and, 470
search models and, 596
Ex post
evaluation problem, 465
labor markets and, 150, 243
LATE and, 467
with principal-agent/effort, 715
program evaluation, 469, 470, 471t
causality and, 474
challenges of, 472–477
economic theory and, 475–477
for ex ante predictions, 479
external validity and, 478
internal validity and, 475–477
PSM and, 473
randomization and, 466
Exclusion restrictions, 89, 607n28, 608n29
in generalized Roy model, 569
identification and, 333
of Roy model, 545, 546, 556, 558–560
in search models, 597
two period discrete choice dynamic models and, 603
Expected future return to experience, 383
Expected profit, 707
“An Experimental Study of the Negative Income Tax” (Ross), 111
Experiments, 103–213. See also Specific experiments and experiment types
alternative hypothesis and, 124
field experiments, 117–131
on firms, 177–208
in Hawthorne plant, 108–111
on households, 208–213
efficiency in, 210–212
in labor market discrimination, 149–177
large-scale social experiments, 111–114
null hypothesis and, 124
outcome variables in, 125
randomization in, 502
research design and, 483–485
RD and, 502
research and, 131–140
rules of thumb for, 123–126
sample size in, 125, 126
science and, 106–108
treatment effects and, 125, 126
Explanatory variables, 46
Exponential discounting, 425
Exponential variables, 542
External control, 746
External validity, 475
ex post program evaluation and, 478
of field experiments, 130
of laboratory experiments, 237
Extreme value assumption, 383
DCDP and, 349, 350
Extrinsic motivation, 763n71
Extrinsic rewards, 701–766
agency and, 705–720, 751–753
double duty for, 721–727
principal-agent/effort and, 721–727, 753–757, 760f
reputation and, 757–762
F
Fairness, negative reciprocity and, 205
Fairness-concerns model, 734
Family Support Act of 1988, 113
Fatal errors, in laboratory experiments, 242
Feedback, 187, 188, 188n53
field experiments and, 199–202
in principal-agent/effort
experiments, 262n48–49
tournaments, 262, 263
quantiles and, 199–202
teams and, 199–202
Fee-for-service, 739
Fehr, Kirchsteiger, and Riedl (FKR), 243, 303, 304
Fehr, Klein, and Schmidt (FKS), 253
Fehr-Schmidt, 732
Female labor supply, 743
counterfactuals and, 398, 399
CRRA and, 401
DCDP and, 372, 373
models for, 385–400
elasticity of, 397, 398
estimations of, 394
fertility and, 385, 386, 391
human capital and, 385, 386
marriage and, 391
race and, 398
rat race model and, 723
state dependence and, 385, 386
unobserved heterogeneity and, 392, 393
welfare and, 395
elimination of, 399
Fertility, 144n33, 146, 154, 354
DCDP and, 334
female labor supply and, 385, 386, 391
labor supply and, 358
race and, 154
rat race model and, 723
FES, 385
FFL. See Firpo, Fortin, and Lemieux
FFL-RIF-OLS, 67t
Field experiments, 117–131. See also Artefactual field experiments; Framed field experiments; Natural field experiments
bridge, 119f
definition of, 118–120
detailed typology of, 120–123, 121t
on discrimination, 128, 169–177
ethical guidelines for, 127, 128
external validity of, 130
feedback effects and, 199–202
in firms, 178n40, 179
heterogeneity and, 126n24
on incentive effects, 182
informed consent for, 127, 128
with labor market discrimination, 149, 150
laboratory experiments and, 236–238
limits of, 128–131
on monetary incentives, 183, 184
primary data collection in, 130, 131
replication and, 126, 127
self-selection and, 126n25, 129
social context and, 237n12
use of, 134–140
50th percentile, counterfactuals and, 66
Financial services markets, conflict of interest in, 741
Fines, piece rates and, 254, 255
Finite horizon model, 343n22, 345
for DCDP job search, 413, 414, 421
hazard function and, 422
layoffs and, 422–425
likelihood function for, 421
reservation wage in, 414
Finite time dynamic discrete choice model, 606
Firms
boundaries of, 727n26
CEO compensation in, 708–711
experiments with, 177–208
employment relationship and, 202–207
monetary incentives in, 178–186
non-monetary incentives in, 186–202
primary data collection for, 179
theoretical framework for, 180–184
field experiments in, 178n39, 179
production by, 646
profit for, 709
recruiting by, 645, 646
search frictions and, 410
Firpo, Fortin, and Lemieux (FFL), decomposition methods, 79, 80t
Fisher, Ronald, 107
Fixed Asset Table, of Bureau of Economic Analysis, 651n26
Fixed costs, labor supply and, 379, 380
FKR. See Fehr, Kirchsteiger, and Riedl
FKS. See Fehr, Klein, and Schmidt
Flow utility, CRRA and, 422
Folk theorem, 232, 241
Forcing contracts, 264, 268
Foster care, MTE of, 581, 582
Framed field experiments, 119, 122, 123
attrition bias and, 123
on discrimination, 174
on household efficiency, 210–212, 210n76
randomization bias and, 123
replication in, 127
substitution bias and, 123
Framing, in laboratory experiments, 240
Franklin, Rosalind, 106
Free proportionality parameter, 660
Free-ride, 737
Frictionless model
HKV and, 686–688
LS and, 683–685
Friedman, Milton, 111
Frisch elasticity, 376, 377, 380, 381, 383, 639, 641
Full support, 542
Functional form restrictions
in generalized Roy model, 564–567
mean decomposition and, 29
G
Gainsharing, 264
Galileo Galilei, 106
Game theory, 232
Gaussian kernel, 65n52
Gaynor, Martin, 714, 739
Gender. See also Discrimination; Female labor supply; Male labor supply; Married woman’s labor force participation
agency and, 744n47
households and, 211
identity and, 742–744
laboratory experiments and, 306–308
orchestra auditions and, 163, 164
personal characteristics by, 155t
rent sharing and, 744
tournaments and, 743
wage inequality with, 2–92
General covariates, reweighting and, 84–86
General equilibrium, 16
of DCDP
occupational choice, 441–445
schooling, 441–445
by HLT, 443
General Social Survey (GSS), 167, 212
Generalized Roy model, 560–567. See also Dynamic generalized Roy model
ATE and, 569, 570
exclusion restrictions in, 569
functional form restrictions in, 564–567
identification of, 561–564
joint distribution identification in, 564
probit models and, 564–567
reduced form version of, 572
treatment effects and, 568–571
Gift exchange, 202–205, 204f, 232
efficiency wages and, 734
effort norms and, 738
mapping of, 290–293
minimum wage and, 287, 288
in piece rates, 255n42
in principal-agent/effort experiments, 250, 252, 253, 255n42, 281–285
Gini coefficient, 6
counterfactuals and, 66
limitations of, 56
Gittens index, 434n143
Global inversion, RIF and, 77
GMAT. See Graduate Management Admissions Test
Going beyond the mean
aggregate decomposition and, 7
assumptions/properties of, 11–12t
detailed decomposition and, 7, 8
Goodness-of-fit, 427, 438
for RD research designs, 512
Graduate Management Admissions Test (GMAT), 724
Groups
conditional independence and, 24
ignorability and, 24
unobservables and, 24
Groves, Theodore, 714
GSS. See General Social Survey
Guilt, 280, 737
aversion to, 280, 281, 294
Guilt-from-blame, 280
H
Habitat for Humanity, 748, 757
Hawthorne plant
absence of effect at, 235n7
experiments in, 108–111
as framed field experiment, 122
Hazard function, 69
finite horizon model and, 422
infinite horizon model and, 422
search models and, 596, 597
UI and, 413
Hazard model, 58
probit model and, 70
proportional hazard model, 69n
Head Start, 144
Health Maintenance organizations (HMOs)
incentive contracts in, 714
professional norms and, 739, 740
Heckman, Lochner and Taber (HLT), 442, 443
Heraclitus, 149
Heterogeneity
agency and, 746, 747
field experiments and, 126n24
labor wedge and, 643n21
monetary incentives and, 184
in reservation wage, 734
in treatment effects, 95, 96, 465
in unemployment, 664
unobservables and
DCDP occupational choice and, 434, 437
DCDP schooling and, 438
female labor supply and, 392, 393
likelihood function for, 426
Heterogeneous returns, to observables, 32
Hicks elasticity, 379, 383
Hidden costs of control, 252
Hierarchical pay structures, 713, 730
HKV. See Hornstein, Krusell, and Violante
HLT. See Heckman, Lochner and Taber
HM. See Hotz and Miller
HMOs. See Health Maintenance organizations
Hold-up problem, 274–276
Holmstrom’s model, 264, 265
Home production, 336, 434, 548n5
Homoscedasticity
detailed decomposition and, 30
error terms and, 55
in Roy model, 546
variance decomposition and, 55
Hornstein, Krusell, and Violante (HKV), 686–689
calibration and, 688, 689
frictionless model and, 686–688
Nash bargaining and, 688
search frictions and, 688, 689
Hotz and Miller (HM), 370
estimation algorithm of, 383
extension of, 371n69
Hours
business cycle and, 668
consumption and, 642, 643f
employment-population ratio and, 628f
measurement error with, 358n53
search models and, 624–628
standard deviation for, 626f
trends in, 668–672, 669f, 671f
unemployment and, 668–672, 674f
Households
bargaining in, 209
communication in, 211
consumption by, 209, 645, 646
experiments on, 208–213
efficiency in, 210–212
formation and dissolution of, 212, 213
gender and, 211
labor supply and, 645, 646
search frictions and, 645
state space of, 337
unitary model for, 209
Human capital, 140–149
accumulation, 358n50
DCDP schooling and, 441
direct inputs and, 141–144
female labor supply and, 385, 386
frictionless model and, 683, 684
job training and, 431
laissez-faire and, 684
layoffs and, 682
lifetime earnings and, 431, 451
LS and, 683, 684
male labor supply and, 400, 401
schooling and, 140–149, 431–432
teachers and, 725
quality of, 144–147
Humility, 758n64
Hyperbolic discounting, 425
identification and, 426
reservation wage with, 426
for welfare, 427
I
ICF. See Incomplete contracts
Identification
with Bellman equation, 604–606
covariates and, in labor market model, 541, 542
in DCDP job search, 418
for dynamic generalized Roy model, 607–609
of earnings equation, 608
of error terms, 609
exclusion restrictions and, 333
of generalized Roy model, 561–564
hyperbolic discounting and, 426
at infinity, 555
ATE and, 569
dynamic generalized Roy model and, 608
two period discrete choice dynamic models and, 602
of joint distributions, 545–547, 557
in generalized Roy model, 564
in labor market models, 539–542
non-linearity and, 599n24
non-parametric
detailed decomposition and, 27, 28
structural models and, 94
problem with
covariates and, 9
in job training programs, 147
OB and, 13
restrictions on
on aggregate decomposition, 18–21
on counterfactuals, 21
for detailed decomposition, 26
of Roy model, 545, 546, 552–557
with schooling, 608, 609
of search models, 599
of slope, in Roy model, 556
of treatment effects, 583–588
Identity, 741–744
ethnicity and, 744, 744n48
gender and, 742–744
religious, 744
sexual orientation and, 744, 744n48
IF. See Influence function
Ignorability
aggregate decomposition and, 22
conditional distribution and, 35
conditional independence and, 21, 24, 25
conditional rank preservation and, 31
endogeneity and, 87–91
groups and, 24
invariance and, 22, 23
IPW and, 7
linear conditional quantiles and, 32
mean independence assumption and, 6
observables and, 24
self-selection and, 87–91
strong, 34, 35, 120
unobservables and, 24
Illumination experiments, 108–111
Imperfect compliance, random assignment and, 489–500
assessment of, 493–495
Imputation function, 57, 527. See also Residual imputation procedure
Incentives, 181, 181f
CEO compensation and, 709
contracts for, 253
in HMOs, 714
double duty of, 722
intrinsic motivation and, 747–764
effort norms and, 734–738
field experiments on, 182
inequality aversion and, 728–734
in laboratory experiments, 237, 242
in medical partnerships, 730
monetary
disadvantages of, 180n44
field experiments on, 183, 184
in firm experiments, 178–186
heterogeneity and, 184
in laboratory experiments, 233
ratchet effects and, 184n49
multi-tasking and, 726, 727
non-monetary, in firm experiments, 186–202
theoretical framework for, 189–191
in principal-agent/effort experiments, 248, 249
professional norms and, 738–741
social, 188, 189
for teachers, 145, 196n62
for teams, 199–202, 268
tournaments and, 199–202
Included variable bias, 522–526
Incomplete contracts (ICF), 303–305
Independence, 59
conditional
field experiments and, 119
groups and, 24
ignorability and, 21, 24, 25
mean independence
ignorability and, 6
zero conditional mean and, 29
in Roy model, 546
observables and, 557, 558
unobservables and, 557, 558
Independent contractors, 727, 727n26
Independent type-1 extreme value errors, 348–350
Industrial Psychology, 108
Inequality aversion, 253
asymmetry with, 729
double duty and, 730
incentives and, 728–734
in labor markets, 730
with lawyers, 714
principal-agent/effort and, 730, 731
reciprocity and, 279
rent sharing and, 731
Ultimatum game and, 731, 732
Infinite horizon model, 343n22, 645
for DCDP job search, 411–413
hazard function and, 422
reservation wage in, 412, 412n112
Influence function (IF), 76
Information, asymmetry of, 705
Informed consent, for field experiments, 127, 128
Initial conditions
for DCDP occupational choices, 435
for observables, with schooling, 437
unobserved state variables and, 352
Institutional Review Boards (IRBs), 128
Instrumental variables
for endogeneity, 91
LATE and, 574
Monotone Instrumental Variable, 587, 588
MTE and, 577
selection on, 519–521
assessment of, 521
treatment effects and, 120
Instrumental Variables (IV), 464
Intensified Employment Services, in Sweden, 113n15
Internal control, 746
unemployment and, 746n51
Internal validity
causality and, 481, 482
ex post program evaluation and, 475–477
Interpolation, 363
cautions with, 365n63
DCDP and, 355
male labor supply and, 403
self-interpolation, 356
Intrinsic motivation, 701–766, 763n71
agency and, 750
behavior and, 727–747
double duty incentives and, 747–764
pay structures and, 749
Introjection, 763n71
Intuitive Criterion, 722
separating equilibrium and, 755
Invariance
of conditional distribution, 12t
counterfactuals and, 22, 23
ignorability and, 22, 23
omitted groups and, 43, 44
policy, 486
Inverse conditional distribution, 63
Inverse Probability Weighting (IPW), 6
aggregate decomposition and, 7
ignorability and, 7
Inverse propensity reweighting, assumptions/properties of, 12t
Investment
game, positive reciprocity in, 287
hold-up problem and, 274–276
search models and, 658
IPW. See Inverse Probability Weighting
IRBs. See Institutional Review Boards
Iterated expectations, law of, 8, 19
Iterations, MCMC and, 369
IV. See Instrumental Variables
J
Jews, 308, 309
JMP See Juhn, Murphy, and Pierce
Job Openings and Labor Turnover Survey (JOLTS), 637, 638
measurement problems with, 637n17
Job search
DCDP and, 407–429
backwards recursion with, 429
counterfactuals and, 429
finite horizon model for, 413, 414, 421
identification in, 418
infinite horizon model for, 411–413
job search, 427
layoffs and, 422–425
likelihood function with, 419–422
measurement error with, 421
models for, 422–429
nonparametric estimation (NP) for, 414–417
partial equilibrium and, 408, 409
partial equilibrium for, 421
schooling and, 428, 429
search intensity with, 425, 426
structural model estimations for, 418, 419
UI and, 427–429
matching and, 636
search models and, 636
Job training
DCDP and, 450, 451
human capital and, 431
identification problem in, 147
search frictions and, 656
treatment effects for, 568
Job Training Partnership Act (JTPA), 114, 468
LATE and, 575, 576
John Henry effects, 116
Joint distributions, 19, 25, 28, 336n8, 351
of additive shocks, 371
identification of, 545–547, 557
in generalized Roy model, 564
JOLTS. See Job Openings and Labor Turnover Survey
Journal of Economic Literature, 132
The Journal of Political Economy, 132
JTPA. See Job Training Partnership Act
Juhn, Murphy, and Pierce (JMP). See also Residual imputation procedure
conditional rank preservation and, 31
linear conditional quantiles and, 32
K
Kernel function, 65, 65n52
Kindness, 758n64
Kuhn-Tucker conditions, 372n71
L
Labor demand, 131
Labor markets
agency and, 701–766
behavior and, 701–766
comparative advantage and, 438
DCDP and, 446–448
discrimination in, 149–177
data patterns with, 150–156, 151t
empirical methods with, 161–177
observational data on, 161–169
regression-based decomposition methods for, 161–169
dual, 719
ex ante and, 150
ex post and, 150, 243
females and, 743
inequality aversion in, 730
laboratory experiments on, 301–305
contractual incompleteness and, 303–305
market design for, 301–303
macroeconomic models of, 620–693
matching model in, 182n48
models for, 537–618
Bellman equation and, 604–606
continuity in, 543–545
covariate identification in, 541, 542
duration models, 591–596
generalized Roy model, 560–567
identification in, 539–542
LATE with, 571–576
MTE in, 576–582
observables and, 582, 583
Roy model, 545–559
search models and, 596–599, 620–693
selection and, 539
support in, 542, 543
treatment effects in, 567–591
policy effects on, 703
principal-agent/effort and, 705
search frictions and, 645
search models in, 182n48
segmentation of
agency and, 719–721
efficiency wages and, 720
trends in, 663–693
Labor supply, 131. See also Female labor supply; Male labor supply
DCDP and, 372–407
Mincer’s life cycle model for, 373
non-full solution method for, 374–385
elasticity in, 394, 641
fertility and, 358
fixed costs and, 379, 380
households and, 645, 646
model for, 548n5
reference points and, 728n28
10% tax on earnings and, 406t
Labor wedge
consumption-output ratio and, 642
heterogeneity and, 643n21
recessions and, 639–644
search models and, 657, 658
trends in, 679, 680
Laboratory experiments, 229–314
advantages of, 231–233
affirmative action and, 310–312
bargaining in, 294–298
beauty and, 309, 310
between-subjects design for, 241
calibration in, 241, 242
causality in, 232, 237
context in, 240
design of, 238–245
discrimination and, 233
external validity of, 237
fatal errors in, 242
field experiments and, 236–238
framing in, 240
gender and, 306–308
incentives in, 237, 242
on labor markets, 301–305
contractual incompleteness and, 303–305
market design for, 301–303
minorities and, 308, 309
monetary incentives in, 233
multiple periods in, 240, 241
objections to, 233–236
partial equilibrium and, 300, 301
partners designs in, 241
pretesting and, 233
principal-agent/effort experiments, 242–244
reading papers involving, 244, 245
real-effort experiments and, 120n22
reference points in, 240
re-matching in, 240n21
representativeness in, 234, 235
roles in, 241
sabotage and, 233
scrutiny in, 237
search models in, 298–301
self-selection in, 234, 235
spite and, 233
strategies and, 233, 242
teams in, 232
treatment effects and, 237, 238
within-subjects design for, 241
Labor-market-clearing model, 639, 641
Laffer curve, 247
Laissez-faire, 683
employment and, 684
human capital and, 684
turbulence and, 684
unemployment and, 685
Lampman, Robert, 111
Landers, Renee, 723
Language theory, 744–747
Large-scale social experiments, 111–114
LATE. See Local Average Treatment Effect
Latent index framework, 575
Latent variables, 70, 346n31
DCDP and, 335, 336, 344
married woman’s labor force participation and, 344
Law of iterated expectations, 8, 19
quantiles and, 57
Law school, 446, 447
Lawyers
adverse-selection equilibrium with, 724
inequality aversion with, 714
paying full freight at, 722n22
pro bono work by, 748
rat race model and, 723, 724
Layoffs
DCDP job search and, 422–425
finite horizon model and, 422–425
human capital and, 682
likelihood function for, 426
unemployment and, 423, 424
welfare state and, 684
Leading term
ATE and, 488
ex ante program evaluation and, 510
Learning-by-doing, LS and, 683
Leisure
consumption and, 639
frictionless model and, 683
wage rigidity and, 661
Lewis, H. Gregg, 3
Life-cycle consistent approach, 383, 384
male labor supply and, 406, 407
Lifetime earnings
human capital and, 431, 451
schooling and, 431
Likelihood function, 351, 352
with DCDP job search, 419–422
for finite horizon model, 421
for layoffs, 426
for male labor supply, 404
for unobserved heterogeneity, 426
Limited dependent variables, OB and, 51, 52
Limited liability
of CEOs, 709
unemployment and, 715
Lincoln Electric, 733, 734
Linear conditional quantiles, complete collection of, 32
Linear probability model (LPM), 52
aggregate decomposition and, 75
counterfactuals and, 71
MTE and, 578
RIF and, 76, 77
Linearity, 54. See also Non-linearity
additive, 29
detailed decomposition and, 40
counterfactuals and, 59
going beyond the mean, 11t
married woman’s labor force participation and, 345n26
mean decomposition and, 11t
OB and, 48
piece rates and, 254
of quantiles, 11t
reallocation shock and, 654
residual imputation procedure and, 11t, 60
of variance decomposition, 11t
Link functions, 71
Ljungqvist and Sargent (LS), 682, 683
frictionless model and, 683–685
human capital and, 683, 684
learning-by-doing and, 683
search frictions and, 685, 686
UI and, 685, 686
Local Average Treatment Effect (LATE), 466, 467
vs. ATE, 497–500
ATE and, 480, 499t
counterfactuals and, 25
ex ante program evaluation and, 495–500
ex post and, 467
instrumental variables and, 574
JTPA and, 575, 576
with labor market models, 571–576
monotonicity and, 489, 490, 576
Local inversion
monotonicity and, 81
for RIF, 77, 77f
RIF and, 81
Local linear regression, MTE and, 579
Local random assignment, 504
RD and, 467
Local Research Ethics Committees, 128
Locus of control, 746
Logit models, 9
counterfactuals and, 71
non-linearity and, 72, 73
NP, 65
polynomials and, 65n51
reweighting and, 86
Long-hour workers, 724
Longitudinal data, in research designs, 517–519
assessment of, 519
Long-run discount factor, 425
estimations of, 427
Loss aversion
early stopping and, 300
in principal-agent/effort tournaments, 260n44
LPM. See Linear probability model
LS. See Ljungqvist and Sargent
Luck
CEO compensation and, 711
RD and, 507
M
Machado and Mata (MM), 60–63
composition effect and, 82
detailed decomposition and, 63n48
RIF and, 78
unconditional reweighting and, 87
Macroeconomic models, of labor market, 620–693
Male labor supply
approximation and, 403, 404
DCDP and, 372n71, 400–407
human capital and, 400, 401
interpolation and, 403
life-cycle consistent approach and, 406, 407
likelihood function for, 404
NLSY and, 404
opportunity costs and, 405, 406
Marginal rate of substitution, 650
wage rigidity and, 661
Marginal Treatment Effects (MTE), 479, 570, 580f
applications of, 578–582
DI and, 579–581
of foster care, 581, 582
instrumental variables and, 577
in labor market models, 576–582
local linear regression and, 579
LPM and, 578
policy effects and, 577
polynomials and, 579
for schooling, 582
Market tightness, 636
Markov Chain Monte Carlo (MCMC), 367–369
iterations and, 369
Marriage
additive errors and, 390
DCDP and, 445, 446
female labor supply and, 385, 386, 391
norms and, 211
race and, 154, 398, 399
state space and, 351
Married woman’s labor force participation
additive separability and, 345n26
DCDP for, 342–357
dimensionality and, 354–357
fertility and, 360t
latent variables and, 344
linearity and, 345n26
observables with, 338n12
static models of, 336–342
structural models with, 338
unobservables with, 337, 338n12
Marshallian elasticity, 379, 397
Marxism, 109n7
Matching. See also Re-matching
efficiency and, 652
elasticity and, 655
estimations from, 467, 527, 528
job search and, 636
model
DCDP and, 433
in labor markets, 182n48
for occupational choice, 433, 434
on observables, 502
with recruiting, 646
selection on, 521–529
unemployment and, 636–639
Match-specific rents
business cycle and, 659n36
search models and, 621, 662
wage rigidity and, 662
Maximum categorical effect, 46
Mayo, Elton, 110
MCMC. See Markov Chain Monte Carlo
McMillan, John, 714
Mean
conditional, 8
non-linearity and, 48
structural models and, 93
detailed decomposition for, 78
error terms and, 29
experiments and, 124
OB and, 54
observables and, 58n43
quantiles and, 8, 9
unconditional, 8
zero conditional, 6, 54
aggregate decompositions and, 91
endogeneity and, 87–91
homoscedasticity and, 30
mean independence and, 29
self-selection and, 87–91
Mean decomposition
assumptions/properties of, 11t
functional form restrictions and, 29
OB and, 10
Mean independence
ignorability and, 6
zero conditional mean and, 29
Measurement error
with DCDP job search, 421
with hours, 358n53
monotonicity and, 28
primary data collection and, 60
rank preservation and, 60
Mechanism design, theory of, 232, 233
Medians
counterfactuals, 72
discrimination and, 167
Medical partnerships, incentives in, 730
Merged Outgoing Rotation Group (MORG), 167
Metropolis-Hastings algorithm, 368
Mills ratio, 385
Mincer, Jacob, 131, 141
Mincer’s life cycle model, for DCDP labor supply, 373
Minimum wage, 96, 232, 719
effort and, 289
gift exchange and, 287, 288
monotonicity and, 28
quantiles and, 63
rank pairings for, 28n14
reservation wage and, 734
UI and, 410
Minorities. See also Discrimination; Race
laboratory experiments and, 308, 309
Misbehavior, negative reciprocity and, 279, 280
Miscommunication
race and, 744–747, 746n50
unemployment and, 746
MM. See Machado and Mata
Monetary incentives
disadvantages of, 180n44
field experiments on, 183, 184
in firm experiments, 178–186
evidence from the field, 184–186
heterogeneity and, 184
in laboratory experiments, 233
ratchet effects and, 184n49
Monotone Instrumental Variable, 587, 588
Monotone Treatment Response (MTR), 586
Monotone Treatment Selection (MTS), 586, 587
Monotonicity
conditional rank preservation and, 31
detailed decomposition and, 28
LATE and, 489, 490, 576
local inversion and, 81
measurement error and, 28
minimum wage and, 28
non-monotonicity, 75
probabilistic, 467
RIF and, 81
with two period discrete choice dynamic models, 601, 602
Monte Carlo integration, 363
Moonlighting game, 287
Morale, in recessions, 205, 732
MORG. See merged Outgoing Rotation Group
Motivation
extrinsic, 763n71
intrinsic, 701–766, 763n71
agency and, 750
behavior and, 727–747
double duty incentives and, 747–764
pay structures and, 749
public service, 750
Motivational crowding out, 254n39
in principal-agent/effort experiments, 252–254
MTE. See Marginal Treatment Effects
MTR. See Monotone Treatment Response
MTS. See Monotone Treatment Selection
Multicollinearity, 542
Multinomials, DCDP, 357–371
Multi-periods. See also Two period discrete choice dynamic models
hold-up problem and, 274–276
principal-agent/effort experiments and, 271, 272
problems with, 276
re-matching and, 240
Multi-tasking
CEO compensation and, 725
double duty and, 725–727
incentives and, 726, 727
observables and, 726
participation constraint and, 726
principal-agent/effort and, 725–727
with principal-agent/effort experiments, 269–271
problems with, 276
signaling effect and, 725
for teachers, 725
theory, 179
Mutually exclusive groups, 14
N
NAEP-LTT. See National Assessment of Educational Progress-Long Term Trend
Nagin, Daniel, 720
Nash bargaining, 257, 649, 658
HKV and, 688
skills and, 688
substitutability and, 267n54
tournaments and, 258
wage rigidity and, 660
National Assessment of Educational Progress-Long Term Trend (NAEP-LTT), 168
National Education Longitudinal Study (NELS), 168, 169
National Health Service (NHS), 748
National Income and Product Accounts, 651
National Longitudinal Survey of Mature Women, 379, 387, 393
National Longitudinal Survey of Youth (NLSY), 163, 396
DCDP schooling and, 438
male labor supply and, 404
RIF and, 78
Natural field experiments, 118n20, 119, 123
direct inputs and, 141, 142
on discrimination, 170–173
on firms, 178n40
randomization in, 142
replication in, 127
Nature vs. nurture, 146
NCLB. See No Child Left Behind
Near rational wage, 738
Negative income tax, 111–114, 483
Negative Protection, Principle of, 269
Negative reciprocity, 238n16
fairness and, 205
misbehavior and, 279, 280
in principal-agent/effort experiments, 251, 285–287
ultimatum-game and, 286n73
NELS. See National Education Longitudinal Study
Nepotism, discrimination and, 308
Never-takers, 576
New Jersey police, 732
Newton, Isaac, 106
Neyman, Jerzy, 107
Neyman-Rubin-Holland model, 469, 482n14
NHS. See National Health Service
90th percentile
counterfactuals and, 66
discrimination and, 167
NLSY. See National Longitudinal Survey of Youth
No Child Left Behind (NCLB), 148
No punishment, 736, 737
Non-full solution method
for binary choice problem, 370, 371
for DCDP labor supply, 374–385
Non-linearity
conditional mean and, 48
with consumption, 340n16
counterfactuals and, 52
identification and, 599n24
logit models and, 72, 73
mean decomposition and, 11t
in principal-agent/effort experiments, 254, 255
probit models and, 72, 73
with schooling, 440n149
with stock options, 711n8
Non-monetary incentives, in firm experiments, 186–202
theoretical framework for, 189–191
Non-monotonicity, 75
Nonparametric estimation (NP), 338
for DCDP job search, 414–417
logit models, 65
omitted variable bias and, 417
for RD research designs, 511, 512
for Roy model, 552–557
Non-parametric identification
detailed decomposition and, 27, 28
structural models and, 94
Non-parametric logit model, 65
Non-random selection, randomized experiments and, 502–506
Non-standard subjects, 120
Nonstructural estimation (NS), 338
Norms, 753n57
conformism and, 753
for effort
dual labor markets and, 738
equilibrium unemployment and, 738
gift exchange and, 738
incentives and, 734–738
marriage and, 211
professional
HMOs and, 739, 740
incentives and, 738–741
Normalization, 44, 46
in Roy model, 557n8
Normally distributed additive shocks, 343–348
North Carolina/Iowa study, 113n14
NP. See Nonparametric estimation
NS. See Nonstructural estimation
Null hypothesis
experiments and, 124
treatment effects and, 484
Nuremberg Code of 1947, 127, 128
O
Oaxaca-Blinder decomposition (OB), 2, 36–52
adding-up property and, 26
assumptions/properties of, 11–12t
categorical variables and, 43
composition effect and, 37
counterfactuals and, 37, 47, 48
covariates and, 37
detailed decomposition and, 43–47
estimations in, 36
formulas for, 4, 5
identification problem and, 13
interpretations in, 36
limited dependent variables and, 51, 52
linearity and, 48
mean and, 54
mean decomposition and, 10
omitted group and, 43–47
path dependence and, 40
reweighting and, 48–51
RIF and, 87
statistical interference with, 52
OB. See Oaxaca-Blinder decomposition
Observables
Bellman equation and, 605
covariates, 582
for DCDP occupational choices, 437
field experiments and, 120
heterogeneous returns to, 32
homoscedasticity and, 30
ignorability and, 24
independence and, in Roy model, 557, 558
initial conditions for, with schooling, 437
labor market models and, 582, 583
with married woman’s labor force participation, 338n12
matching on, 502
mean and, 58n43
multi-tasking and, 726
selection on, 6, 482n14, 521–529
for unobservable selection, 588–591
self-selection and, 88–90
sub-types of, 504
treatment effects and, 582, 583
Occupational choice
DCDP and, 429–452
Bellman equation for, 436
general equilibrium of, 441–445
initial conditions for, 435
models of, 432–445
observables for, 437
partial equilibrium and, 433–441
shocks with, 435, 437
state variables for, 436
unobservable heterogeneity and, 434, 437
matching model for, 433, 434
Roy model and, 545
two period discrete choice dynamic model and, 599–604
Oil shocks, 681
OLS, 13, 38t, 49n37, 59, 385, 565, 566
regression coefficient, 523
RIF and, 76
selection bias and, 381, 387
Omitted groups, 4
ATT and, 9
covariates and, 7
detailed decomposition and, 10
invariance and, 43, 44
no general solution for, 8, 9
OB and, 43–47
RIF and, 78
Omitted variable bias, 13, 141–144, 525
NP and, 417
primary data collection and, 60
proxy variable bias and, 417
regression coefficient and, 85
schooling and, 432n140
Opportunists, 736, 737, 736n35
punishment for, 737n36
Opportunity costs, male labor supply and, 405, 406
Optimal employer behavior, discrimination and, 160, 161
Orchestra auditions, gender and, 163, 164
Other regarding preferences, 728
bargaining and, 294
emotions and, 279
Outcomes
experiments and, 124
factors and, 3
Outcome variables
into bins, 70
in experiments, 125
RD and, 510, 511
Overlapping support
with aggregate decomposition, 17, 18
aggregate decomposition and, 22
P
Panel data
endogeneity and, 91, 92
self-selection and, 91, 92
Pan-theoretic causal inference, 481, 482
Parameter of interest, ex ante program evaluation and, 477–479, 488
Pareto distribution, 418, 419, 429n135
Parsimony, with ex ante program evaluations, 470
Partial correlations, regression coefficients and, 40
Partial equilibrium
DCDP and
job search, 408, 409, 421
occupational choice, 433–441
schooling, 433–441
decomposition methods and, 3
by HLT, 443
laboratory experiments and, 300, 301
Participation constraint, 705, 707, 713
multi-tasking and, 726
rent sharing and, 731
two-period, 713n11
Participation models, 548n5
Participation rate (PR), 669, 672f, 673f
Partners designs, in laboratory experiments, 241
Pasteur, Louis, 107
Path dependence, 7, 8
adding-up property and, 27
conditional distribution and, 12t, 75
conditional quantiles and, 63
detailed decomposition and, 27, 85
inverse propensity reweighting and, 12t
mean decomposition and, 11t
OB and, 40
reweighting and, 85
RIF and, 12t, 81
Patience, 758n64
Pay
for performance, 702
increased effort from, 714
regulation of, with principal-agent/effort experiments, 287–290
structures, 703, 704
hierarchical, 713, 730
intrinsic motivation and, 749
Paying full freight, with lawyers, 722n22
PBE, 273
Peer effects
emotions and, 737
piece rates and, 255, 256
in principal-agent/effort experiments, 255, 256
Penn World Tables, consumption-output ratio from, 642
Perfect Bayesian equilibrium, 232, 276, 716
Perfect compliance, random assignment and, 467, 480–489
Perfect multicollinearity, 542
Performance-bond, 721, 722
Period utility function, 639
Permanent-transitory structure, 350, 351
Permutation test, 485
Perry Preschool program, 143, 144
Personnel policies, 704
agency and, 711–715
principal-agent/effort and, 711–715
Physicians, utility function of, 739
Piece rates
bonuses and, 254, 255, 254n40
effort and, 247–249
fines and, 254, 255
gift exchange in, 255n42
linearity and, 254
peer effects and, 255, 256
Safelite Glass Corporation and, 249
selection and, 721
self-selection and, 249, 250, 249n32
targets and, 254, 255
Planners, employment and, 646–649
Plato, 149
Plugging-in methods, 53
Poisson arrival rate, of shocks, 632
Poisson process, 411n111
Policy effects
on labor markets, 703
MTE and, 577
Policy invariance, 486
Policy relevant treatment effect (PRTE), 478, 486
Polynomials
approximation by, 539
logit models and, 65n51
MTE and, 579
specifications for RD research designs, 513
Pooling equilibrium, 722
Positive reciprocity
in investment game, 287
in principal-agent/effort experiments, 251, 285–287
Positive selectivity, 525
Potential outcomes framework, 473
PR. See Participation rate
Preference effect, 188
Pre-market discrimination, 162
Pre-school, 143, 144, 144n33
Present-bias, 425, 426
Pretesting, laboratory experiments and, 233
Price markup, 662n40
Primary data collection
in field experiments, 130, 131
in firm experiments, 179
measurement error and, 60
omitted variables and, 60
Primary jobs, 719
Principal-agent/effort
Bayesian equilibrium with, 712
CEO compensation and, 708–711
communication and, 293, 294
efficiency and, 705
ex post with, 715
extrinsic rewards and, 721–727, 753–757, 760f
inequality aversion and, 730, 731
labor market and, 705
multi-tasking and, 725–727
personnel policies and, 711–715
profit maximization and, 707
social preferences and, 755
tournaments and
collusion in, 261, 262
feedback in, 262, 263
loss-aversion in, 260n44
sabotage in, 260–262, 260n44
trust and, 756f
Principal-agent/effort experiments
career concerns with, 272–274
causality in, 243
communication and, 293, 294
design questions in, 242–244
feedback in, 262n48, 49
gift exchange in, 250, 252, 253, 255n42, 281–285
hold-up problem with, 274–276
incentives in, 248, 249
motivational crowding out in, 252–254
multi-periods and, 271, 272
problems with, 276
multi-tasking with, 269–271
problems with, 276
negative reciprocity in, 251, 285–287
non-linearity in, 254, 255
pay regulation and, 287–290
peer effects in, 255, 256
positive reciprocity in, 251, 285–287
ratchet effects in, 243, 271, 272
real-effort experiments with, 248, 249
reciprocal behavior in, 250, 251
reference points in, 244, 251, 252
self-selection in, 244
signaling effect in, 273
social preferences and, 276–294
teams in, 264–269
complementarities in production with, 266, 267
selection of, 267–269
testing traditional theory of, 245–276
tournaments in, 244, 256–263
early experiments, 257, 258
risk-taking in, 259, 260
selection in, 258, 259
theory for, 256, 257
Principle of Negative Protection, 269
The Principles of Scientific Management (Taylor), 108n5
Pro bono work, by lawyers, 748
Probabilistic monotonicity, 467
Probability density function, 65, 66
Probability models, reweighting and, 65
Probit models, 9, 51, 70
counterfactuals and, 71
for discrimination, 172
generalized Roy model and, 564–567
hazard model and, 70
non-linearity and, 72, 73
reweighting and, 86
structural probits, in Roy model, 550, 551
Production
by firms, 646
recruiting and, 649
Productivity
consumption-output ratio and, 653n29
employment and, 653n29
shocks in, 184n49
wage rigidity and, 660
Productivity shocks, 652, 653
reallocation shock and, 655n30
recruiter-unemployment ratio and, 654, 655
search models and, 653, 660
Professional norms
HMOs and, 739, 740
incentives and, 738–741
Profit
expected, 707
for firms, 709
maximization of
agency and, 717
best response effort and, 717
CEO compensation and, 711
principal-agent/effort and, 707
random variables and, 717
statistical discrimination and, 157, 175
Program evaluation, 463–532. See also Ex ante; Ex post
broad brush comparison of, 469–471
lessons and challenges of, 529–532
scope and background of, 468–479
PROGRESA, 210
Propagation, search models and, 656, 657
Propensity score matching (PSM), 119
for descriptive, non-causal inference, 526–529
ex post program evaluation and, 473
reweighting for, 526–529
Proportional hazard model, 69n
Proportions
estimations for, 72
quantiles and, 8, 72f
RIF and, 77
“A Proposal for Demonstration of New Techniques in Income Maintenance” (Ross), 111
Prospect theory, 728n28
Proxy variable bias, omitted variable bias and, 417
PRTE. See Policy relevant treatment effect
PSID, 381, 382, 390
PSM. See Propensity score matching
Public ability, 273
Public service motivation, 750
Punishment, 736, 737
for opportunists, 737n36
Q
Quantiles, 7
assumptions/properties of, 11, 12t
conditional, 8, 53, 60–63
advantages of, 63
conditional rank preservation and, 31
detailed decomposition and, 87
limitations of, 62, 63
counterfactuals, 71
feedback and, 199–202
law of iterated expectations and, 57
minimum wage and, 63
proportions and, 8, 72f
residual imputation procedure and, 60
RIF and, 77
standard regressions and, 8, 9
unconditional, 8
RIF and, 78
The Quarterly Journal of Economics, 132
Quasi-experiments
estimations from, 516
on nature vs. nurture, 146
treatment effects and, 568
R
Race. See also Affirmative action; Discrimination
AFQT and, 166
asymmetry and, 705
communication and, 172
DCDP schooling and, 438, 439
efficiency wage and, 745
female labor supply and, 398
fertility and, 154
marriage and, 154, 398, 399
miscommunication and, 744–747, 746n50
personal characteristics by, 155t
statistical discrimination and, 164, 165
taste-based discrimination and, 167
unemployment and, 746
wage inequality with, 2–92
Random utility model (RUM), 454
ex ante and, 470
Random variables
notation for, 539
profit maximization and, 717
support for, 542, 543
Randomization, 107
alternative hypothesis and, 142
assignment by
imperfect compliance and, 489–500
perfect compliance and, 467, 480–489
treatment effects and, 568
unobservables and, 482
bias, 114
framed field experiments and, 123
DCDP and, 355, 356
dimensionality and, 357
ex post and, 466
in experiments, 502
non-random selection and, 502–506
research design and, 483–485
field experiments and, 117, 118
natural field experiments and, 123, 142
RD and, 502
in re-matching, 240
stratified/block, 482, 483
test, 485
Randomized controlled trials (RCTs), 468
Randomized response, 237n14
Rank pairings, 28
for minimum wage, 28n14
Rank preservation
conditional, 12t
detailed decomposition and, 30–32
counterfactuals and, 59
measurement error and, 60
residual imputation procedure and, 60
Rat race model, 703, 722–725
adverse-selection equilibrium in, 723
career concerns and, 724
double duty in, 723
female labor supply and, 723
fertility and, 723
lawyers and, 723, 724
Ratchet effects
monetary incentives and, 184n49
in principal-agent/effort experiments, 243
with principal-agent/effort experiments, 270, 271
RCTs. See Randomized controlled trials
RD. See Regression Discontinuity
RDD. See Regression discontinuity design
Real-effort experiments, 235
laboratory experiments and, 120n22
with principal-agent/effort experiments, 247n28, 248, 249
on sabotage, 261
Reallocation shock, 653
linearity and, 654
productivity shock and, 655n30
Recentered influence function (RIF), 8
adding-up property and, 26
assumptions/properties of, 12t
cumulative distribution function and, 8
detailed decompositions and, 76–82
advantages of, 81
limitations of, 81, 82
local inversion for, 77, 77f
LPM and, 76, 77
OB and, 87
OLS and, 76
reweighting and, 69, 81n61
Recessions
EE and, 636
labor wedge and, 639–644
morale in, 205, 732
from shocks, 622
unemployment and, 636
Reciprocal behavior, in principal-agent/effort experiments, 250, 251
Reciprocators, 736, 737
Reciprocity
asymmetry with, 705
distributional preferences and, 279
effort and, 734
inequality aversion and, 279
negative, 238n16
fairness and, 205
misbehavior and, 279, 280
in principal-agent/effort experiments, 251, 285–287
ultimatum-game and, 286n73
positive
in investment game, 287
in principal-agent/effort experiments, 251, 285–287
Recruiter-unemployment ratio, 645, 646, 649
productivity shock and, 654, 655
Recruiting
costs of, 653n28
equilibrium with, 650
by firms, 645, 646
matching with, 646
production and, 649
unemployment and, 646
Reduced form model, 390, 549
Reference points
behavior and, 728n28
labor supply and, 728n28
in laboratory experiments, 240
in principal-agent/effort experiments, 244, 251, 252
Regression coefficient, 55, 540
OLS, 523
omitted variables and, 85
partial correlations and, 40
state variables and, 364
Regression Discontinuity (RD), 464
assessment of, 506–508
assignment process and, 480
assignment variables and, 501, 502, 507, 508, 510, 512, 513
ATE for, 505, 506
causality and, 508
estimations with, 500
ex ante program evaluation and, 508–510
experiments and, 502
local random assignment and, 467
luck and, 507
outcome variables and, 510, 511
randomization and, 502
research designs
bandwidths and, 513
baseline covariates and, 513, 514
binned local averages for, 513
estimations for, 510–514
fuzzy, 514–516
goodness-of-fit for, 512
graphical presentation of, 510, 511
implementation checklist for, 512–514
NP for, 511, 512
polynomial specifications for, 513
sharp, 500–514
self-selection and, 508, 531
validation for, 506–508
weighted average treatment effect and, 502
Regression discontinuity design (RDD), 468
Regression-based decomposition methods, 3
with labor market discrimination, 149, 150, 161–169
Regression-compatible approach, 48
Religious identity, 744
Re-matching
in laboratory experiments, 240n21
multi-periods and, 240
randomization in, 240
Rent sharing, 714
gender and, 744
inequality aversion and, 731
participation constraint and, 731
Replication, 107
field experiments and, 126, 127
Representativeness, in laboratory experiments, 234, 235
Reputation, extrinsic rewards and, 757–762
Research, 131–140
designs for, 463–532
publication by decade, 133t
publication, from 2000–2009, 135–137t
on social preferences, 138
Research designs
assignment process and, 479–516
experiment randomization in, 483–485
longitudinal data in, 517–519
assessment of, 519
RD and
fuzzy, 514–516
sharp, 500–514
self-selection in, 516–532
Reservation wage
in finite horizon model, 414
heterogeneity in, 734
with hyperbolic discounting, 426
in infinite horizon model, 412, 412n112
minimum wage and, 734
search models and, 596–598
Residual claimant, 708, 709
Residual imputation procedure, 53, 58–60
advantages of, 60
assumptions/properties of, 11–12t
limitations of, 59, 60
linearity and, 11t, 60
quantiles and, 60
rank preservation and, 60
unobservables and, 59
Retribution, in contract disputes, 732, 733
Reverse causality, 141
Review of Economic Studies, 132
Rewards. See Extrinsic rewards
Reweighting, 63–69
adding-up property and, 85
advantages of, 68
aggregate decompositions and, 68, 73, 86
binary covariates and, 83, 84
conditional distributions and, 58
counterfactuals and, 58, 63, 66, 85
covariates and, 49n36, 86
detailed decomposition and, 68, 82–87
advantages of, 86
limitations of, 87
estimations with, 65n51, 68
general covariates and, 84–86
inverse propensity, 12t
limitations of, 68, 69
OB and, 48–51
path dependence and, 85
probability models and, 65
for PSM, 526–529
RIF and, 69, 81, 81n61
Rhys-Williams, Juliet, 111n11
RIF. See Recentered influence function
Rigid wages
search models and, 658–663
theory of, 659–661
Risk neutral, 487
with agency, 254
agency and, 711n7
tournament and, 257
Risk-taking
in principal-agent/effort tournament experiments, 259, 260
in tournaments, 263
Ritter-Taylor, 719, 745, 746, 752
Roles, in laboratory experiments, 241
Ross, Heather, 111
Rothamsted Manor, 107
Roy model, 539, 545–559. See also Dynamic generalized Roy model; Generalized Roy model
binary choice in, 545, 603
choice model and, 553, 554
estimations in, 548–552
exclusion restrictions of, 545, 546, 556, 558–560
homoscedasticity in, 546
identification of, 545, 546, 552–557
slope and, 556
independence in, 546, 557, 558
normalization in, 557n8
NP for, 552–557
observables and, 557, 558
occupational choice and, 545
search models and, 598
of self-selection, 477
structural probits in, 550, 551
unobservables and, 557, 558
RUM. See Random utility model
Rust’s model, 605
S
SA. See Social assistance
Sabotage, 179
in laboratory experiments, 233
in principal-agent/effort tournaments, 260–262, 260n44
real-effort experiments on, 261
in tournaments, 263
Safelite Glass Corporation, 180–184, 181f
piece rates and, 249
selection at, 721
Sample size, in experiments, 125, 126
San Francisco Bay Area Rapid Transit (BART), 454, 470
Sanders, Seth, 720
Schooling, 18. See also Teachers
affirmative action with, 448, 449
Catholic schools and, 566t
credit markets and, 439, 440
DCDP and, 429–452
general equilibrium of, 441–445
human capital and, 441
job search and, 428, 429
models of, 432–445
NLSY and, 438
partial equilibrium and, 433–441
race and, 438, 439
unobservable heterogeneity and, 438
error terms and, 88
human capital and, 140–144, 431–432
identification with, 608, 609
interruptions in, 440n148
lifetime earnings and, 431
measuring policy effects, 147–149
MTE for, 582
non-linearity with, 440n149
observable initial conditions with, 437
omitted variable bias and, 432n140
teacher quality and, 144–147
vouchers for, 148
Science, experiments and, 106–108
S-conditions, 516, 517, 530
Scrutiny, in laboratory experiments, 237
Search frictions, 94n68, 620–693
employment and, 621
firms and, 410
HKV and, 688, 689
households and, 645
job training and, 656
labor markets and, 645
LS and, 685, 686
turbulence and, 690
unemployment and, 620, 719n20
Search models
amplification and, 653–656
behavior in, 621
business cycle and, 621–663
facts about, 623–644
consumption and, 658
employment and, 624–628
ex ante and, 596
exclusion restrictions in, 597
hazard function and, 596, 597
hours and, 624–628
standard deviation for, 626f
identification of, 599
investment and, 658
job search and, 636
labor market models and, 596–599, 620–693
in labor markets, 182n48
labor wedge and, 657, 658
in laboratory experiments, 298–301
match-specific rents and, 621, 662
productivity shocks and, 653, 660
propagation and, 656, 657
reservation wage and, 596, 597, 598
results for, 652–658
rigid wages and, 658–663
Roy models and, 598
shocks and, 621
UI and, 298
unemployment and, 621, 622, 624–628
wage rigidity and, 662, 663
Search-and-matching model, 629
Seattle-Denver study, 113n14
Secondary jobs, 719
Sectoral shift, 652, 653
Selection. See also Adverse selection; Self-selection
bias, OLS and, 381, 387
correction term, 497
effect, 182
with managerial incentives, 195
on instrumental variables, 519–521
assessment of, 521
labor market models and, 539
on matching, 521–529
MTS, 586, 587
non-random, randomized experiments and, 502–506
on observables, 6, 21, 482n14, 521–529
for unobservable selection, 588–591
piece rates and, 721
in principal-agent/effort experiments
teams, 267–269
tournaments, 258, 259
at Safelite Glass Corporation, 721
on unobservables, 519–521
assessment of, 521
observable selection for, 588–591
Selective reporting, 484
Self Sufficiency Project (SSP), 95
Self-approximation, 356
Self-interest model, 734
Self-interpolation, 356
Self-selection, 24
field experiments and, 126n25, 129
ignorability and, 87–91
in laboratory experiments, 234, 235
for law school, 446, 447
observables and, 88–90
panel data and, 91, 92
piece rates and, 249, 250, 249n32
in principal-agent/effort experiments, 244
RD and, 508, 531
in research designs, 516–532
Roy model of, 477
social experiments and, 114, 115
structural models and, 95
in tournaments, 257, 258, 259, 263
unobservables and, 88–90
zero conditional mean and, 87–91
Separable regression model, 543
Separating equilibrium, 722
conformism and, 752
Intuitive Criterion and, 755
Sexual orientation, identity and, 744, 744n48
Shame, 737
Shapley decomposition, 27
Shaprio-Stiglitz model, 719
Shirking, 205–207
wage rigidity and, 661
Shocks
additive, 343–348
joint distributions of, 371
normally distributed, 343–348
aggregate, 653
aggregate productivity, 651, 653
amplification of, 656, 657
business cycles and, 622, 652, 653
with DCDP occupational choices, 435, 437
employment and, 651, 715n16
oil, 681
Poisson arrival rate of, 632
productivity, 184n49, 652, 653
reallocation shock and, 655n30
recruiter-unemployment ratio and, 654, 655
search models and, 653, 660
reallocation, 653
linearity and, 654
productivity shock and, 655n30
reallocational, 653
recessions from, 622
search models and, 621
with skills, 681
taste, 404
time-varying, 119
tournaments and, 257
unemployment and, 652, 653
Shocks-and-institutions hypothesis, 681
LS and, 682, 683
Short-hour workers, 724
Short-run discount factor, 425
estimations of, 427
Short-run elasticity, 397
Sieve estimators, 539
Signaling effect, 188, 188n55
multi-tasking and, 725
in principal-agent/effort experiments, 273, 274n60
Simple guilt, 280
Simple random assignment, 480–482
Single Equation Model, 565
SIPP. See Survey of Income and Program Participation
Skills
index, 70
Nash bargaining and, 688
shock with, 681
Slope, identification of, in Roy model, 556
Social assistance (SA), 95
Social comparison, 729n30
Social connections, 198, 199, 198n64
Social context, field experiments and, 237n12
Social custom, of discrimination, 150
Social esteem, 753–757
Social experiments, 111–114
shortcomings of, 114–117
Social incentives, 188, 189
among bottom tier workers, 191–195
contamination effects with, 191n60
among managers, 195–199
Social insurance, 683
Social preferences
agency and, 751–753
altruism and, 195
behavior and, 728
mapping of, 290–293
models of, 278–281
principal-agent/effort and, 755
experiments, 276–294
research on, 138
Ultimatum game and, 276, 277
Solved problem, aggregate decomposition and, 7
Specification error, 50
Speed dating, 212
Spite, laboratory experiments and, 233
SSP. See Self Sufficiency Project
Standard regressions, quantiles and, 8, 9
State dependence, female labor supply and, 385, 386
State space, 333, 343–345
evolution of, 369n65
of households, 337
marriage and, 351
state variables and, 355, 363
State variables, 350–353
Bellman equation and, 605
DCDP and, 359
occupational choices, 436
regression coefficient and, 364
state space and, 355, 363
time-varying, 362
unobservables, 371n69
Static models, of married woman’s labor force participation, 336–342
Static optimization problem, 403
Statistical conditions, 466
Statistical discrimination, 157–160
for profit maximization, 175
race and, 164, 165
Statistical interference, with OB, 52
Status incentives, 187
Steady state equilibrium, 687, 689
Stochastic fertility, 345n27
Stock options, 711
at the money, 734
non-linearity with, 711n8
Strategies, laboratory experiments and, 233, 242
Stratified/block randomization, 482, 483
Strong ignorability, 34, 35
field experiments and, 120
Structural form, aggregate decomposition and, 15, 16
Structural functions, detailed decomposition and, 27, 28
Structural models, 92–96, 470n5
for ATT, 92
estimations with, for DCDP job search, 418, 419
with married woman’s labor force participation, 338
treatment effects and, 120
Structural probits, in Roy model, 550, 551
Substitutability, Nash bargaining and, 267n54
Substitution bias, 116, 117
framed field experiments and, 123
Summary measures, 56, 57
Supply of effort experiments, 239
Support
in labor market models, 542, 543
overlapping, aggregate decomposition and, 17, 18, 22
for random variables, 542, 543
for two period discrete choice dynamic models, 601, 602
for uniform variables, 543
Survey of Income and Program Participation (SIPP), 636
Survivor function, 69
Sweden, Intensified Employment Services in, 113n15
Swimming upstream query, 43
T
Taber’s parameterization, 604
Targeting effect, 195
Targets, piece rates and, 254, 255
Taste shocks, 404
Taste-based discrimination, 156
race and, 167
Taylor approximation, 509
Taylor, Frederick, 108n5
Teachers
DCDP and, 447, 448
human capital and, 725
incentives for, 145, 196n62
multi-tasking for, 725
quality of, human capital and, 144–147
Teams
communication in, 266n53, 268
feedback and, 199–202
incentives for, 199–202, 268
in laboratory experiments, 232
in principal-agent/effort experiments, 264–269
complementarities in production with, 266, 267
selection of, 267–269
VCM and, 265, 265n52
Temperance, 758n64
Tennessee STAR experiment, 142
10th percentile
counterfactuals and, 66
discrimination and, 167
Testing theory, 231
Theil coefficient
counterfactuals and, 66
limitations of, 56
Theory of mechanism design, 232, 233
Third-degree price discrimination, 157
Three-fold decomposition, 5
Three-state model, unemployment and, 631–635, 634f
Time-aggregation, 655n31
unemployment and, 632n13
Time-varying shocks, 119
Time-varying state variables, 362
TOT. See Treatment on the treated
Tournaments, 200n68, 231, 232
affirmative action in, 263, 310, 311
collusion in, 261n45, 263
contamination effects in, 258
empirical regularities of, 263
gender and, 743
incentives and, 199–202
Nash bargaining and, 258
principal-agent/effort and
collusion in, 261, 262
experiments on, 244, 256–263
feedback in, 262, 263
loss-aversion in, 260n44
sabotage in, 260–262, 260n44
prizes for, 713
risk neutral and, 257
risk-taking in, 263
sabotage in, 263
self-selection in, 257–259, 263
shocks and, 257
Treatment effects. See also Average Treatment Effect; Average Treatment effect on the Treated; Local Average Treatment Effect; Marginal Treatment Effects
with charter schools, 148
counterfactuals and, 47
decomposition methods and, 33–36
for drug treatment, 568
experiments and, 125, 126
field experiments and, 120
generalized Roy model and, 568–571
heterogeneity in, 95, 96, 465
identification of, 583–588
instrumental variables and, 120
for job training, 568
in labor market models, 567–591
observable selection for unobservable selection, 588–591
laboratory experiments and, 237, 238
null hypothesis and, 484
observables and, 582, 583
PRTE, 478, 486
quasi-experiments and, 568
random assignment and, 568
social experiments and, 114, 115
structural models and, 95, 96, 120
wage structure effect as, 6, 7
weighted average treatment effect, 491, 492
RD and, 502
Treatment on the treated (TOT), ex ante program evaluation and, 508–510
Trends
in hours, 668–672, 669f, 671f
in labor market, 663–693
in labor wedge, 679, 680
theory of, 680–693
in unemployment, 663–668, 664f, 666–667f
inflows and outflows, 672–679, 676f
Triple differences decomposition, detailed decomposition and, 48
Trust, 752, 753
from communication, 250n33
contracts, 253, 253n37
principal-agent/effort and, 756f
Turbulence, 682–686
laissez-faire and, 684
search frictions and, 690
welfare state and, 684, 686
Two period discrete choice dynamic models, 599–604
error terms and, 603, 604
exclusion restrictions and, 603
identification at infinity and, 602
monotonicity with, 601, 602
support for, 601, 602
Two-period participation constraint, 713n11
Type I error, 124
Type II error, 124
Type probability function, Bayes’ rule for, 353
U
UI. See Unemployment insurance
UK Family Expenditure Survey, 384
Ultimatum game
inequality aversion and, 731, 732
negative reciprocity and, 286n73
social preferences and, 276, 277
Unconditional mean, 8
Unconditional quantiles, 8
RIF and, 78
Unconditional reweighting, MM and, 87
Unconditional variance, 54
Unconfoundedness, 21
Undersmoothing, 513
Unemployment
agency and, 715–719
Bayesian equilibrium and, 716
BLS and, 630n9, 632n12
CPS and, 630n9
EE and, 635, 636
equilibrium with, 717–719
effort norms and, 738
heterogeneity in, 664
hours and, 668–672, 674f
inflows and outflows, 628–631, 651
asymmetry with, 678
trends in, 672–679, 676f
internal control and, 746n51
laissez-faire and, 685
layoffs and, 423, 424
limited liability and, 715
matching and, 636–639
miscommunication and, 746
race and, 746
recessions and, 636
recruiting and, 646
search frictions and, 620, 719n20
search models and, 621, 622, 624–628
shocks and, 652, 653
three-state model and, 631–635, 634f
time-aggregation and, 632n13
trends in, 663–668, 664f, 666–667f
wage rigidity and, 660
welfare state and, 685
Unemployment insurance (UI), 409, 683
DCDP job search and, 427–429
intensity of, 427
employment and, 685
hazard function and, 413
LS and, 685, 686
minimum wage and, 410
search models and, 298
Uniform variables, 542
support for, 543
Unit price, to unobservables, 32, 33
Unitary model, for households, 209
Unobservables
assumptions of, 467
Bellman equation and, 605
composition effect and, 26
constant returns to, 29
counterfactuals and, 17
covariates and, 28
groups and, 24
heterogeneity with
DCDP occupational choice and, 434, 437
DCDP schooling and, 438
female labor supply and, 392, 393
likelihood function for, 426
homoscedasticity and, 29, 30
ignorability and, 24
independence and, in Roy model, 557, 558
linear conditional quantiles and, 32
with married woman’s labor force participation, 337, 338n12
random assignment and, 482
residual-imputation procedure and, 59
selection on, 519–521
assessment of, 521
observable selection for, 588–591
self-selection and, 88–90
state variables, 350–353, 371n69
unit price to, 32, 33
Utility function, 396n93
Bellman equation and, 605
frictionless model and, 683
of physicians, 739
V
Vacancy-unemployment ratio, 636
Validation
for DCDP, 454
external validity, 475
ex post program evaluation and, 478
of field experiments, 130
of laboratory experiments, 237
internal validity
causality and, 481, 482
ex post program evaluation and, 475–477
for RD, 506–508
Value functions, 343n23
alternative-specific, 344, 345, 346
Bellman equation and, 605
DCDP and, 333
Variance decomposition, 53, 54–56
assumptions/properties of, 11–12t
estimations with, 56
homoscedasticity and, 55
structural models and, 93
VCM. See Voluntary contributions mechanism
Voluntary contributions mechanism (VCM), teams and, 265, 265n52
Vouchers, for schooling, 148
V-overall difference, 19
V-overall wage gap, 15
Vow of poverty, 748
V-wage structure effect, 19
W
Wages
efficiency, 715, 721
agency and, 720
gift exchange and, 734
labor market segmentation and, 720
race and, 745
equilibrium, employment and, 718f
inequality in, 2–97
markup, 662n40
minimum, 96, 232, 719
effort and, 289
gift exchange and, 287, 288
monotonicity and, 28
quantiles and, 63
rank pairings for, 28n14
reservation wage and, 734
UI and, 410
near rational, 738
reservation
in finite horizon model, 414
heterogeneity in, 734
with hyperbolic discounting, 426
in infinite horizon model, 412, 412n112
minimum wage and, 734
search models and, 596–598
rigid
bargaining and, 660, 661
Cobb-Douglas matching function and, 661, 662
consumption and, 661
evidence of, 661, 662
leisure and, 661
marginal rate of substitution and, 661
match-specific rents and, 662
Nash bargaining and, 660
productivity and, 660
search models and, 658–663
shirking and, 661
theory of, 659–661
unemployment and, 660
volatility in, 662n40
V-overall wage gap, 15
V-wage structure effect, 19
wage setting institutions, 681
The Wall St. Game, 240
Walmart, 733, 734
Weakest link game, 266
Weighted average of causal impacts, 505
Weighted average treatment effect, 491, 492
RD and, 502
Welfare
female labor supply and, 395
elimination of, 399
hyperbolic discounting for, 427
state, 683
layoffs and, 684
turbulence and, 684, 686
unemployment and, 685
trap, 246n27
Western Electric Company, 108–111
Wilcoxon rank-sum test, 245
Within decomposition. See Between vs. within decomposition
Within-subjects design
binomial test for, 245
for laboratory experiments, 241
World Values Survey, 212
Written application approach, 128, 169
X
X12 algorithm, 630n9
Z
Zero conditional mean, 6, 54
aggregate decompositions and, 91
endogeneity and, 87–91
homoscedasticity and, 30
mean independence and, 29
self-selection and, 87–91
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