Organizations & Markets

Bank balance sheet lending is commonly viewed as the predominant form of lending. We document and study two margins of adjustment that are usually absent from this view using microdata in the $10 trillion U.S. residential mortgage market. We first document the limits of the shadow bank substitution margin: shadow banks substitute for traditional “deposit-taking” banks in loans which are easily sold, but are limited from activities requiring on-balance-sheet financing.

To get back in balance, allocators have a number of options — everything from using secondary markets and making valuations more realistic to doing nothing. 

This should be the golden age of demand research. Many of the constraints of the past have relaxed when it comes to data collection. Yet the methodologies of demand analysis created by thought leaders such as Lester Taylor (1972, 1974; Houthakker and Taylor 2010) have not grown at the same pace and are holding back our understanding and power of prediction. Demand research is, of course, highly important. On the macro-level, governments and businesses need to know what to expect by way of aggregate or sectorial demand, such as for housing or energy.

One common explanation for the gender wage gap is that women and men have different negotiation behaviors in labor markets. Yet, scholars also suggest that the gender wage gap reflects differences in initial salary offers provided to women and men that vary apart from negotiations. A challenge in parsing these explanations has been that salaries, not salary offers, have been studied previously by researchers. In this study we use proprietary data on nearly 300,000 initial salary offers from thousands of employers to job candidates in the U.S. from 2017 to 2020.

Firms increasingly delegate job screening to third-party recruiters, who must not only satisfy employers' demand for different types of candidates, but also manage yield by anticipating candidates' likelihood of accepting offers. We study how recruiters balance these objectives in a novel, two-sided field experiment. Our results suggest that candidates' behavior towards employers is very correlated, but that employers' hiring behavior is more idiosyncratic.

New laws aim to reduce inequality by limiting the information employers can seek. Although employers are forbidden from seeking certain information, workers are free to disclose voluntarily. A large survey of the US workforce shows that men are more likely to disclose their salaries unprompted, particularly when they believe that other candidates are volunteering. Women report higher disclosure costs (particularly non-pecuniary psychological or cultural costs), and are more likely to resist disclosing (even if others disclose).

A growing body of research has revealed that firms leverage nationalism in their strategies. However, it is unclear why some firms are more likely to do so than others. This paper uses institutional theory to address this question and examines the influences of domestic and foreign customers. We study firms’ responses to nationalist movements, a type of sociopolitical mobilization arising in response to international controversies.

We study optimal workforce and contract design for a firm that employs a team of two agents. The agents have possibly diverse demographic characteristics captured by their discount factors. We also study optimal team design for four agents with given discount factors—two with low discount factors and two with high discount factors—who are to be assigned to two teams and identify conditions under which diverse assignment is optimal.