PUBLICATIONS
Evaluating State and Local Business Tax Incentives (with Owen Zidar) Journal of Economic Perspectives 34(2) Spring 2020. Slides. Featured in: Wall Street Journal, Forbes, Governing.
Corporate Political Spending and State Tax Policy: Evidence from Citizens United (with Alisa Tazhitdinova and Sarah Robinson) Journal of Public Economics 221 May 2023. Publisher’s Link. Featured in: Wall Street Journal, Harvard Law School Forum.
WORKING PAPERS
Bidding for Firms: Subsidy Competition in the U.S. Revise and Resubmit, Journal of Political Economy Abstract: State and local governments in the U.S. compete to attract firms by offering discretionary subsidies. I use a private value English auction to model the subsidy bidding process and quantify the welfare effects of competition. The allocation of rents between states and firms depends on the heterogeneity in states' valuations for firms and the substitutability of locations. I find that competition increases welfare by only 3% over a subsidy ban, and states compete away the surplus, transferring the majority of rents to firms. These findings dampen any interpretation of subsidy competition as an effective place-based policy. Awards: National Tax Association Outstanding Doctoral Dissertation in Government Finance and Taxation, International Industrial Organization Conference Best Rising Star Paper, University of Virginia Outstanding Dissertation.
The Political Economy of Subsidy-Giving Abstract: Subsidy-giving is popular with politicians and voters, despite uncertainty over the economic benefit any given subsidy generates. In this paper I quantify the political benefit of subsidy-giving by combining hand-collected subsidy data, county level election returns, and an original survey of voters. While subsidy-giving generates votes for incumbent governors, the effect is not due to job creation. Instead, it is the salience of subsidy deals that drives electoral rewards. Subsidy-giving receives 20% more local news coverage than other job creation policies. Electoral accountability creates a distortion, leading incumbents to favor the more salient policy to other, more cost-effective, strategies.
Legislation, Regulation and Litigation: Demand for U.S. Legal Services in Historical Perspective (with Ariell Reshef) Abstract: In the twenty years between 1970 and 1990 the employment share of legal services more than doubled, reaching 1.15% of the private sector---in stark contrast to stability during 1850--1970 and in 1990--2015. During the same period the relative wage of legal services almost doubled, driven by commensurate increases in lawyers' wages and of law firm partners' income. We argue that that this demand shift was driven by important legislation and deregulation events, starting in the mid-1960s and lasting throughout the 1980s. Using historical data, we observe a tight correlation between the employment and compensation of lawyers and the scope of, and uncertainty created by, federal regulations and legislation. This is supported by cross-state and micro-level analysis. Other factors, e.g., shifts in lawyers' quality, patenting, firm density and ICT are not important determinants of the demand shift. A back of the envelope calculation implies that 42% of income to lawyers and partners are in excess of what these payments would be if relative income remained at 1970 levels. This represents an excess cost of $104 billion dollars in 2015 alone.
Works in Progress
Procurement and Infrastructure Costs (with Zachary Liscow and William Nober) [NEW DRAFT COMING SOON] Abstract: Why is it so expensive to build and maintain U.S. infrastructure? In this paper we conduct a survey of infrastructure procurement practices across the 50 states. We survey both employees at each state department of transportation (DOT) and the road builders that win contracts to build and maintain roads. With this survey we can create a new dataset of procurement rules and practices across the U.S. and start to understand what actors on the ground think drives costs. We correlate the survey practices with a new, detailed data set of project-level infrastructure costs. We find that two important inputs in the procurement process appear to particularly drive costs: (1) the capacity of the DOT procuring the project and (2) the lack of competition in the market for government construction contracts. In preliminary work using administrative data on the engineers who manage projects in California, we find that variation between individual engineers explains a substantial part of cost overruns.
Consolidation and Political Influence in the Auto Retail Industry (with Sarah Moshary) Abstract: This paper studies the relationship between consolidation and lobbying in the automobile retail industry. We focus on lobbying as a collective action problem because many policies germane to auto retailers, such as franchise laws and right to repair statutes, benefit not only the firm that lobbies, but also rival firms in the industry. Thus, consolidation should lead the merging firms to internalize a larger share of lobbying benefits. To test this hypothesis, we leverage novel state-level lobbying data to investigate how lobbying changes after large mergers. We find that lobbying increases after auto dealer groups merge, but only when these two auto groups share a political market. Mergers in product markets that cross state borders have no effect on lobbying. We then look at the enactment rate of legislation that auto dealers favor, and find that it increases after auto dealer mergers, implying an elasticity of bill enactment with respect to lobbying of 0.13.
The Distributional Effects of Million Dollar Plants (with Ben Hyman, Moises Yi, and Owen Zidar)
Tax Discrimination: Competition in the Market for Firms (with Mathilde Muñoz)