We argue that the Democratic Party’s evolution on economic policy helps explain partisan realignment by education. First, we document that educated Americans differentially oppose “predistribution” (e.g., job guarantees, higher minimum wages, protectionism, and stronger unions), while the educational gradient for redistribution (taxes and transfers) is close to zero. These relationships have been largely unchanged since the 1940s. Second, focusing on politicians and donors as key party actors, we show that the Democratic Party has moved away from predistribution since the 1970s. The number of predistribution bills introduced by Democratic House Speakers has declined by half since the 1970s. Unions—the traditional lobbying force for predistribution—see their share of Democratic Party PAC donations decline from ninety to forty percent from 1968 to 1980, following 1970s legislation that facilitated corporate PAC donations. From 1980 onward, the Democrats rely increasingly on individual contributions from educated donors relative to the Republicans. We show the increased reliance on corporate PACs and educated donors is driven by the rise of a self-described “New Democrat’ faction particularly conservative on pre-distribution and social issues. Finally, we trace out the reaction of voters to these changes in the Democratic Party. Less-educated Americans begin to leave the party in the 1970s, after decades of serving as its base. We also show that in the crucial transition period of the 1970s through 1990s, New Democrat candidates out-perform other Democrats among more-educated voters in both survey questions and actual Congressional elections. As the New Democrats are more socially conservative than other Democrats, their success with educated voters suggests that social issues alone cannot explain educational realignment.

Do men negatively respond when women first enter an occupation? We answer this question by studying the end of one of the final explicit occupational barriers to women in the U.S.: in 2016, the U.S. military opened all positions to women, including historically male-only combat occupations. We exploit the staggered integration of women into combat units to estimate the causal effects of the introduction of female colleagues on men’s job performance, behavior, and perceptions of workplace quality, using monthly administrative personnel records and rich survey responses. We find that integrating women into previously all-male units does not negatively affect men’s performance or behavioral outcomes, including retention, promotions, demotions, separations for misconduct, criminal investigations, and medical conditions. Most of our results are precise enough to rule out small detrimental effects. However, there is a wedge between men’s perceptions and performance. The integration of women causes a negative shift in male soldiers’ perceptions of workplace quality. The decline is driven by units integrated with female officers, likely arising from female officers increasing men’s awareness of workplace problems or from men’s dissatisfaction from working with women in positions of authority—even though men in such units show some performance gains. If male-dominated workplaces are reluctant to incorporate women due to expectations that men will become less productive, our paper provides evidence to weigh against that notion.

We explore how traders’ equity capitalization influences asset prices in a framework that accounts for market power. In our model, traders with capital constraints engage in transactions in an imperfectly competitive market. We demonstrate that looser capital constraints elevate both asset prices and price impact, the latter diminishing market liquidity. Using Canadian Treasury auction data, we illustrate how to apply our model to quantify these effects. We estimate the shadow costs of capital constraints by leveraging a temporary policy exemption during 2020–2021. We show that while these constraints are only infrequently binding, their relative impact when activated can be sizable. (JEL E63, G12, G14, G23, G41, L13)

We provide a model to explain how the interaction between the spot and lending markets for stocks can lead to abrupt changes in short selling activity. Furthermore, rational short sellers may choose to abandon the market even as mispricing widens. We document empirically that the dynamics of short selling are fat tailed and subject to abrupt changes, especially for the stocks that the model identifies as susceptible to such dynamics. (JEL G11, G12, G14, G41)

The validity of instrumental variable (IV) designs is typically tested using two types of falsification tests. We characterize these tests as conditional independence tests between negative control variables—proxies for unobserved variables posing a threat to the identification—and the IV or the outcome. We describe the conditions variables must satisfy in order to serve as negative controls. We show these falsification tests examine not only independence and the exclusion restriction but also functional form assumptions. Our analysis reveals conventional applications of these tests may flag problems even in valid IV designs. We offer implementation guidance to address these issues. (JEL C12, C18, C26, C52)

Digitization reforms have been hailed as an effective way of strengthening state capacity. However, digitization can also fundamentally reshape the organization of bureaucracies. Using a unique administrative dataset on agricultural taxation and surveys of local bureaucrats from Punjab, Pakistan, we show that digitization reforms can have unintended consequences for state capacity. We exploit the staggered rollout of the digitization of land records in Punjab to show that digitization had a negative effect on tax collection. The fall in taxes was not due to a decrease in the tax base. Instead, digitization affected the bureaucrats’ capacity to collect taxes. (JEL D73, H11, H71, O12, O17)

We study a canonical collective action game with incomplete information. Individuals attempt to coordinate to achieve a shared goal, while also facing a temptation to free-ride. More similar information can help them coordinate, but it can also exacerbate free-riding. Our main result shows that more similar information facilitates (impedes) achieving the common goal when it is sufficiently challenging (easy). We apply this insight to show why less powerful authoritarian governments may face larger protests if they restrict press freedom, when committee diversity is beneficial in costly voting, and when a more diverse community contributes more to public good provision. (JEL C71, D71, D72, D81, D82, D83, H41)

Why do health facilities in developing countries do so poorly? This paper examines the role of financial constraints. I describe an experiment in which we surprised health workers in randomly selected public health clinics in Nigeria with a ₦600,000 grant paid out in installments over one year. Its administration was left entirely to health workers. The award led to large productivity gains. Using expenditure data combined with novel textual data, I provide an explanation for these effects. I show the award increased investments in physical and human capital, led to lower prices for patients, and inspired health workers to do better. (JEL D24, G31, H75, I11, J24, J31, O15)

We study how international migrant income prospects affect long-run development in origin areas. We leverage the 1997 Asian Financial Crisis exchange rate shocks in a shift-share identification strategy across Philippine provinces. Initial migrant income shocks are magnified six-fold over time, increasing domestic income, education levels, migrant skills, and high-skilled migration. Remarkably, 74.9 percent of long-run income gains come from domestic rather than migrant income. Trade driven impacts of exchange rate shocks are orthogonal to effects via migrant income. A structural model reveals that 19.7 percent of long-run income gains stem from educational investments. International migration fosters broad economic development in origin communities. (JEL F22, F31, G01, J24, J82, O15, O16)

We develop a simple multilayer network model in which agents allocate effort across layers with heterogeneous structures, subject to an aggregate effort constraint. Incentives are shaped by agents’ network positions within each layer, and equilibrium behavior reflects both within- and cross-layer interactions. We analyze how shocks propagate through the network and characterize optimal targeting interventions. Our results show that effective policy design must account for effort allocation across layers. We also demonstrate that predictions from monolayer models can diverge sharply from those of multilayer models, underscoring the importance of accounting for network complexity in both empirical and policy analyses. (JEL C70, D78, D82, D85, H41, Z13)

This paper studies which misspecified models are likely to persist when decision-makers compare them with competing models. The main result characterizes such models based on two features that can be derived from primitives: The model’s asymptotic accuracy in predicting the equilibrium distribution of observed outcomes and the “tightness” of the prior around such equilibria. Misspecified models can be robust, persisting against any arbitrary competing model—including the true model—despite decision-makers observing an infinite amount of data. Moreover, simple misspecified models equipped with entrenched priors can be more robust than complex correctly specified models. (JEL C11, C52, D11, L82)

We embed diagnostic expectations in a workhorse neoclassical model with heterogeneous firms and risky debt. A realistic degree of overreaction estimated from US firms’ earnings forecasts generates realistic credit cycles. Good times produce economic and financial fragility, predicting future disappointment of expectations, low bond returns, and investment declines. To generate the size of spread increases observed during 2007–2009, the model requires only moderate negative shocks. Diagnostic expectations offer a realistic, parsimonious way to produce financial reversals in business cycle models. (JEL D84, E13, E22, E32, E44, G12, G32)

In sequential games, the set of paths consistent with rationality and forward‐induction reasoning may change nonmonotonically when adding transparent restrictions on players' beliefs. Yet, we prove that—in an incomplete‐information environment—predictions become sharper when the restrictions only concern initial beliefs about types. Thus, strong rationalizability for games with payoff uncertainty characterizes the path predictions of forward‐induction reasoning across all possible restrictions on players' hierarchies of exogenous beliefs. With this, we can solve an open problem: the implementation of social choice functions through sequential mechanisms under forward‐induction reasoning—which considerably expands the realm of implementable functions compared with simultaneous mechanisms (Müller (2016))—is indeed robust in the sense of Bergemann and Morris (2009).

Gaussian empirical Bayes methods usually maintain a precision independence assumption: The unknown parameters of interest are independent from the known standard errors of the estimates. This assumption is often theoretically questionable and empirically rejected. This paper proposes to model the conditional distribution of the parameter given the standard errors as a flexibly parameterized location‐scale family of distributions, leading to a family of methods that we call close . The close framework unifies and generalizes several proposals under precision dependence. We argue that the most flexible member of the close family is a minimalist and computationally efficient default for accounting for precision dependence. We analyze this method and show that it is competitive in terms of the regret of subsequent decision rules. Empirically, using close leads to sizable gains for selecting high‐mobility Census tracts.

Shrinkage methods are frequently used to improve the precision of least squares estimators of fixed effects. However, widely used shrinkage estimators guarantee improved precision only under strong distributional assumptions. I develop an estimator for the fixed effects that obtains the best possible mean squared error within a class of shrinkage estimators. This class includes conventional shrinkage estimators and the optimality does not require distributional assumptions. The estimator has an intuitive form and is easy to implement. Moreover, the fixed effects are allowed to vary with time and to be serially correlated, in which case the shrinkage optimally incorporates the underlying correlation structure. I also provide a method to forecast fixed effects one period ahead in this setting.

Studies on agricultural technology adoption often focus on one input, practice, or package, which is analytically useful, but may overlook the complexities involved with multidimensional learning needed for a lot of agricultural decisions. In Kenya, we study farmers' dynamic learning (from oneself and others) and adoption decisions over six seasons after randomly inviting them to participate in agronomic research trials, comparing different combinations of inputs during three consecutive seasons. As a response to the trials, adoption increases steadily despite the absence of positive profits multiple seasons after exposure to the trials. Know‐how increases rapidly and faster for high skill farmers who experiment the most, at the cost of making new mistakes. The findings are consistent with a theoretical model with multidimensionality of input and practice decisions and differential learning from one's own experience by skills, where complementarities imply that adoption of an input requires finding how to re‐optimize other dimensions, which adds to the cost of adoption.

This paper studies the labor market impacts of firm accommodation decisions after workplace disability and assesses implications for the design of firm subsidies. We leverage a workers' compensation (WC) program in Oregon that provides wage subsidies to firms for accommodating workers with workplace disabilities. Leveraging rich administrative data and a policy change to the wage subsidy, we show that accommodation rates respond to the subsidy rate and that receipt of accommodation leads to a significant increase in employment and earnings a year later. To explore welfare implications, we develop and estimate a frictional labor market model of accommodation as a form of human capital investment. Worker turnover and imperfect experience rating in WC lead to underaccommodation and inefficient labor market outcomes after workplace disability. Counterfactual simulations show that subsidizing accommodation not only improves long‐run labor market outcomes of workers experiencing work‐related disability but also yields welfare gains for most workers.

Consider a repeated interaction where it is unknown which of various stage games will be played each period. This framework separates the basic logic of intertemporal incentives from the requirement that any given strategy profile yields a well‐defined payoff vector. A natural solution concept is ex post perfect equilibrium: strategies must form a subgame‐perfect equilibrium for any realization of the sequence of stage games. When there is one long‐run player and others are short‐run, and public randomization is available, we can adapt the standard recursive approach to determine the maximum feasible gap between reward and punishment for the long‐run player. This allows us to identify which actions can be played in equilibrium and, assuming perfect monitoring, to fully characterize what outcome paths can arise. With multiple long‐run players or no public randomization, the approach fails; a diagnostic of this failure is that optimal penal codes may no longer exist.

We examine the effects of international trade in the presence of a set of domestic distortions giving rise to informality, a prevalent phenomenon in developing countries. In our quantitative model, the informal sector arises from burdensome taxes and regulations that are imperfectly enforced by the government. In equilibrium, smaller, less productive firms face fewer distortions than larger, more productive ones, potentially leading to substantial misallocation. We show that in settings with a large informal sector, the gains from trade are significantly amplified, as reductions in trade barriers imply a reallocation of resources from initially less distorted to more distorted firms. We confirm findings from earlier reduced‐form studies that the informal sector mitigates the impact of negative labor demand shocks on unemployment. Nonetheless, the informal sector can exacerbate the adverse real income effects of economic downturns, amplifying misallocation. Last, our research sheds light on the relationship between trade openness and cross‐firm wage inequality.

We examine the application of quantitative spatial models to the growing body of fine spatial data used to study local economic outcomes. In granular settings in which people choose from a large set of potential residence‐workplace pairs, observed outcomes in part reflect idiosyncratic choices. Using analytical examples, Monte Carlo simulations, and event studies of neighborhood employment booms, we demonstrate that calibration procedures that equate observed shares and modeled probabilities perform very poorly in these high‐dimensional settings. Parsimonious specifications of spatial linkages deliver better counterfactual predictions. To quantify the uncertainty about counterfactual outcomes induced by the idiosyncratic component of individuals' decisions, we introduce a quantitative spatial model with a finite number of individuals. Applying this model to Amazon's proposed second headquarters in New York City reveals that its predicted consequences for most neighborhoods vary substantially across realizations of the individual idiosyncrasies.

We propose a novel optimal transport‐based version of the Generalized Method of Moment (GMM). Instead of handling overidentification by reweighting the data to satisfy the moment conditions (as in Generalized Empirical Likelihood methods), this method proceeds by allowing for errors in the variables of the least mean‐square magnitude necessary to simultaneously satisfy all moment conditions. This approach, based on the notions of optimal transport and Wasserstein metric, aims to address the problem of assigning a logical interpretation to GMM results even when overidentification tests reject the null, a situation that cannot always be avoided in applications. We illustrate the method by revisiting Duranton, Morrow and Turner's (2014) study of the relationship between a city's exports and the extent of its transportation infrastructure. Our results corroborate theirs under weaker assumptions and provide insight into the error structure of the variables.

This paper studies how governments intervene in agricultural markets to reshape the economic consequences of climate extremes. We construct a global dataset of agricultural policies and extreme heat exposure by country and crop since 1980. Extreme heat shocks to domestic production lead to policies that assist consumers by lowering domestic food prices. This effect is persistent, primarily implemented via border policies, and stronger during election years. Shocks to foreign production induce the opposite response: policies that assist producers by raising prices. These findings can be rationalized by a model in which governments use agricultural policy to redistribute among domestic interest groups. Our estimates imply that policy responses shield domestic consumers, while exacerbating losses for domestic producers and foreign consumers. Policy responses have regressive consequences globally, disproportionately harming poor and heat‐exposed countries.

Internal labor markets are increasingly important for matching workers to jobs within organizations. We present evidence from a randomized trial that compares matching workers to jobs using the deferred acceptance (DA) algorithm to the traditional manager‐directed matching process. Our setting is the U.S. Army's internal labor market, which matches over 14,000 officers to units annually. We find that DA reduces administrative burden and increases match quality as measured by reduced justified envy, increased truthful preference reporting, and officers' and units' preferences over their matches. The overall impact of DA on officer retention and performance in the two years after officers started their new jobs is limited by strategic preference coordination between officers and units. However, DA leads to significant improvements in officer retention and promotions in markets with inexperienced managers. Our findings suggest that cross‐market communication between agents in internal labor markets can attenuate the benefits of strategyproof matching algorithms.

Empirical research has revolutionized how we understand the global economic impacts of climate change. Recent empirical analyses have tested theoretical ideas, challenged prior estimates, and revealed important and unexpected impacts. Further, the credibility and replicability of empirical results have played a critical role in guiding high-stakes climate policies. Here, I describe the landscape of empirical economic research on global impacts, I explain elements of modern analyses, I summarize recent findings on a range of topics, and I point toward promising new areas of investigation. In particular, I focus on empirical perspectives for six grand challenges in the field: understanding climate change's global impact on economic output, health, conflict, food security, disasters, and migration. Overall, I argue that interwoven empirical findings across outcomes are aligning to paint an increasingly coherent picture of a future global economy impacted by climate change. Taking the literature as a whole, the global consequences of unmitigated climate change are likely to be substantial, unequal, harmful in aggregate, and potentially destabilizing.

Despite well-developed economic institutions, premodern Japan, 1600–1868, had among the lowest real wages according to available estimates, around half those in preindustrial England. However, many Japanese peasants owned land, unlike their mostly landless English counterparts, due to institutional differences in land inheritance. Using a Malthusian model, I show that this greater landownership equality paradoxically led to Japan's lower wages and GDP per capita. Evidence from Japanese village censuses supports the mechanism. If, as many historians believe, high wages in Western Europe spurred industrialization, Japan's failure to industrialize first could have been shaped by its unusual preindustrial equality. (JEL D63, E23, J31, N15, N35, N45, N55)

This paper provides new evidence on the causal impacts of citywide racial segregation on intergenerational mobility. We use an instrumental variable approach that relies on plausibly exogenous variation in segregation due to the arrangement of railroad tracks in the nineteenth century. Our analysis finds that higher segregation reduces upward mobility for Black children from households across the income distribution and White children from low-income households. Moreover, segregation lowers academic achievement while increasing incarceration and teenage birth rates. An analysis of mechanisms shows that segregation reduces government spending, weakens support for antipoverty policies, and increases racially conservative attitudes among White residents. (JEL I38, J13, J15, J62, N32, N72, R30)

I study the long-run economic effects of land concentration on the American frontier. Using quasi-random variation in initial land allocations from a checkerboard formula, I analyze a large database of property assessments and find that historical concentration reduced modern land values by 4.5 percent and fixed capital by 23 percent. Modern effect sizes are 23–64 percent of their historical equivalents, indicating significant rates of both persistence and convergence over the last 150 years. Using archival data on tenant contracts, I argue that the low-powered incentives of share agreements discouraged investment by large-scale owners with long-term effects. (JEL D82, G31, N41, N51, Q12, Q15, Q24)

This paper studies the effect of pretrial electronic monitoring (EM) relative to both pretrial release and pretrial detention (jail). EM often involves a defendant wearing an electronic bracelet, which aims to reduce pretrial misconduct at a low cost. Using the quasi-random assignment of bond court judges, I estimate the effect of EM versus release and EM versus detention on pretrial misconduct, case outcomes, future recidivism, and aggregate total costs. Results indicate that EM reduces overall costs relative to detention. However, EM does not prevent enough high-cost crime to justify its use relative to release. (JEL K14, K41, K42)

Is ethnic diversity good or bad for economic development? Most studies find corrosive effects. This paper shows that historical exposure to economic exchange can mitigate these effects in the long run. I collect data from a natural experiment of Peru's colonial history: the forced resettlement of native populations in the sixteenth century. Where the resettlement concentrated ethnically diverse populations with a history of internal crop exchange, contemporary populations perform better systematically. Additional evidence suggests that prior experience with mutually beneficial crop exchange shaped more open attitudes toward out-group members. Economic complementarities helped sustain long-run, market-oriented cooperation and local trade. (JEL F54, J15, N16, N36, N56, O15, Q12)

Influenza causes substantial illness among children. RCTs demonstrate that the influenza vaccine reduces active-surveillance-detected influenza but have insufficient samples to examine outcomes such as health care provider visits. This study documents that children whose well-child visits occur when the seasonal influenza vaccine is broadly available are 23.4 pp more likely to be vaccinated than children whose visits do not. Using large administrative health care datasets, we leverage this vaccination-rate variation to show that the vaccine reduces outpatient and ED visits significantly. The results imply that making pediatric influenza vaccinations more convenient could substantially increase vaccination rates and reduce health care expenditures. (JEL I11, I12, I18, J13)

Online dating apps have transformed the dating market, yet their broader effects remain unclear. We study Tinder's impact on college students using its initial marketing focus on Greek organizations for identification. We show that the full-scale launch of Tinder led to a sharp, persistent increase in sexual activity, but with little corresponding impact on the formation of long-term relationships or relationship quality. Dating outcome inequality, especially among men, rose, alongside rates of sexual assault and STDs. However, despite these changes, Tinder's introduction did not worsen students' mental health on average and may have even led to improvements for female students. (JEL I12, I23, J13, J16, L86)

Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based start-ups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all start-ups' science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds, restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms' right-tail outcomes. Despite these benefits, workers make posttreatment bets indicating highly overoptimistic beliefs about start-up success, suggesting a problem of broader informational deficits. (JEL D22, D83, J22, J23, J24, M13, M51)

Evidence on school-entry age impacts in lower-income countries is limited. We assess how school starting age affects human capital development in Lesotho, exploiting an enrollment age threshold. Children who start primary school at older ages overcome initial skill deficits as they progress. They are more likely to remain in school, spend less time on economic and household activities, and obtain substantially higher total years of schooling. In adulthood they are more likely to have professional occupations and less likely to be married or have children as teenagers, become HIV infected (men), and experience the death of a child (women). (JEL I12, I21, I25, I26, J13, J24, O15)

Two mechanisms have been proposed to explain sex selection in India: son preference, in which parents desire a male heir, and daughter aversion, in which dowry payments make parents worse off with girls. Our model incorporates both mechanisms, providing microfoundations, based on the organization of the marriage institution, for daughter aversion. Marital matching, sex selection, and dowries are jointly determined in the model, whose implications are tested on a representative sample of rural households. Simulations of the model indicate that existing policies targeting daughter aversion might exacerbate the problem, while identifying other policies that could be effective. (JEL D31, G51, J12, J16, O12, O18, Z13)

We analyze nearly 70 million scientific articles to estimate the gender dynamics in the commercialization of science. We report a gender gap of 14 percent, which does not appear to be explained either by the quality of the science or by its commercial potential. The gap is widest among papers with female last authors (i.e., lab head or principal investigator), even when publishing high-quality science. However, the gap vanishes when authors self-commercialize discoveries via new ventures, and the gap is reduced when commercializing in cooperation with firms that are smaller or that have more female inventors. (JEL D22, I23, J16, O31, O34)

To what extent is economic success determined by with whom individuals interact socially? We tackle this question by exploiting a large-scale natural experiment in the Finnish conscription. Our research design is based on the alphabetization of dorms, which is shown to induce as good as random variation in peer composition. Dormmates from high-income families have a positive impact on earnings, with the largest effect among individuals from high-income families. For them, a one standard deviation increase in dormmates' parental income increases long-term earnings by 5.7 percent. The results support labor market networks among the rich as the key mechanism. (JEL D12, D31, G51, I32, J31, J45)

We exploit the regulatory environment in the Austrian pharmaceutical market to study the effects of price regulation on market outcomes and consumer welfare. We find that product acquisitions of drug producers have a differential impact in regulated and unregulated market segments. Regression results show that M&A increase prices where regulation is absent. While variety decreases in both segments, the effects are smaller under regulation. Counterfactual simulations confirm binding price constraints and show that mergers caused modest consumer surplus losses in unregulated segments, while welfare remained unchanged in regulated ones. Thus, regulation can successfully mitigate the effects of market power.

We consider a correlated random coefficient panel data model with two-way fixed effects and interactive fixed effects in a fixed T framework. The model allows slope coefficients to be arbitrarily correlated with the regressors, accommodating flexible forms of heterogeneity. We propose a two-way mean group (TW-MG) estimator for the expected value of the slope coefficient and propose a leave-one-out jackknife method for valid inference. We apply our new methods to examine the relationship between health-care expenditure and income.

We directly compare the influences of impact and responsibility considerations on giving behaviour. In moral philosophy, utilitarianism emphasizes the importance of the former, whereas theories of equity and desert argue for the importance of the latter. Our data are from a television show where an audience of one hundred people divides ten thousand euros among three candidates who face financial difficulties, and from independent raters who evaluated attributes of the candidates and their predicaments. We find that the well-being benefit of donations (‘impact’) outweighs the degree to which the candidate had control over the cause of their situation (‘responsibility’). Giving increases more with impact than it decreases with responsibility, and the contribution of impact to the explanatory power of our regression models is approximately twice that of responsibility. Additionally, our analysis shows no evidence of discrimination based on age, gender, or physical attractiveness.

Parental caregiving responsibilities can disrupt paid work, contributing to persistent gender inequalities in employment and earnings. Using Australian employer-employee linked data and a dynamic difference-in-differences approach, this study examines how workplace environments shape the impacts of caregiving shocks, focusing on parents of children receiving chemotherapy. Mothers experience large and persistent earnings losses, while fathers’ outcomes remain stable. Family-friendly firms and occupations, defined by high female representation in senior roles and lower work hour intensity, significantly reduce mothers’ earnings penalties. These findings highlight the important role of workplace conditions in reducing gendered economic costs of caregiving.

This paper constructs a new game—the ”rule-the-roost game”—where players compete repeatedly for power (“chickens”) and wealth (“eggs”) in the lab. In a “patronage” treatment, players can buy others’ support to win power; in a ”no-patronage” treatment, such payments are impossible. A vicious circle develops under patronage, where the powerful accumulate more power and wealth, leading to substantial inequality. This is attenuated, however, by a countervailing force: the powerless act to oppose the powerful. No vicious circle arises in the no-patronage treatment and inequality is markedly lower. Gender differences in outcomes are small without patronage but large with it.

Economists usually endorse the efficacy of price mechanisms, such as matching subsidies, to foster philanthropic contributions. Our experiments, however, show that the match only increases donations when avoiding the ask is not possible. Our data are consistent with a behavioural hypothesis of a “norm-signalling mechanism,” positing that a match increases the psychological cost of deviating from the norm of giving but only when the ask cannot be avoided. We show that indeed, giving zero, but not avoiding the ask, is perceived as less socially desirable under a match. Our findings highlight the possible limits and potential welfare losses of matching subsidies.