This paper develops a micro-founded city systems model with an endogenous number of cities to explore whether local governments establish the optimal city size when production processes involve environmental pollution. Our analysis delivers two key insights. First, if an optimal scheme to...

Between 1990 and 2008, emissions of the most common air pollutants from U.S. manufacturing fell by 60 percent, even as real U.S. manufacturing output grew substantially. This paper develops a quantitative model to explain how changes in trade, environmental regulation, productivity, and consumer...

There is substantial empirical evidence showing that peer effects matter in many activities. The workhorse model in empirical work on peer effects is the linear-in-means (LIM) model, whereby it is assumed that agents are linearly affected by the mean action of their peers. We develop a new...

Following early economist Francis Y. Edgeworth's proposal to measure people's hedonic experiences as they go about their daily lives, we use a smartphone app that over eight years randomly asked a panel of 30, 936 UK residents (N = 2, 235, 733) about their momentary feelings and activities to...

Little is known about how gamblers estimate probabilities from multiple information sources. This paper reports on a preregistered study that administered an incentivized Bayesian choice task to n=465 participants (self-reported gamblers and non-gamblers). Our data failed to support our main...

In May 1981, President François Mitterrand regularized the status of undocumented immigrant workers in France. The newly legalized immigrants represented 12 percent of the non-French workforce and about 1 percent of all workers. Employers have monopsony power over undocumented workers because...

Using field and laboratory experiments, we demonstrate that the complexity of incentive schemes and worker bounded rationality can affect effort provision, by shrouding attributes of the incentives. In our setting, complexity leads workers to over-provide effort relative to a fully rational...

This paper deals with the complex relationship between innovation and the labor market, analyzing the impact of new technological advancements on overall employment, skills and wages. After a critical review of the extant literature and the available empirical studies, novel evidence is...

We study the relationship between outside options and workers' motivation to exert effort. We evaluate changes in outside options arising from age and experience cutoffs in the Austrian unemployment insurance (UI) system, and use absenteeism as a proxy for worker effort. Results indicate that a...

International migration is a selective process that induces ambiguous effects on human capital and economic development in countries of origin. We establish the theoretical micro-foundations of the relationship between selective emigration and human capital accumulation in a multi-country...