Matthew Freedman

Targeted Business Incentives and Local Labor Markets

This paper uses a regression discontinuity design to examine the effects of geographically targeted business incentives on local labor markets. Unlike elsewhere in the United States, enterprise zone (EZ) designations in Texas are determined in part by a cutoff rule based on census block group poverty rates. Exploiting this discontinuity as a source of quasi-experimental variation in investment and hiring incentives across areas, I find that EZ designation has a positive effect on resident employment, increasing opportunities mainly in lower-paying industries. While business sitings spurred by the program are more geographically diffuse, EZ designation is associated with increases in home values.

Who Benefits from Environmental Regulation? Evidence from the Clean Air Act Amendments

Using geographically disaggregated data and exploiting an instrumental variable strategy, we show that contrary to conventional wisdom, the benefits of the 1990 Clean Air Act Amendments (CAAA) were progressive. The CAAA created incentives for local regulators to target the initially dirtiest areas for cleanup, creating heterogeneity in the incidence of air quality improvements that favored lower-income households. Based on house price appreciation, households in the lowest quintile of the income distribution received annual benefits from the program equal to 0.3% of their income on average during the 1990s, over twice as much as those in the highest quintile.

Agency and Compensation: Evidence from the Hotel Industry

We examine how agency problems in the workplace interact with compensation policies by taking advantage of the structure of the hotel industry, in which many chains have both company-managed and franchised properties. As residual claimants on their properties’ profits, franchisees have stronger incentives to monitor employees than managers in company-managed hotels. Exploiting this variation and using rich, longitudinal data on the hotel industry, we estimate differences in wages and human resource practices across company-managed and franchised hotels within chains as well as within individual hotels as they change organizational form. Our results suggest that the timing of pay and the propensity to use performance-based incentives relate to the extent of agency problems within establishments. (JEL J31, J41, L23, L83)

Your Friends and Neighbors: Localized Economic Development and Criminal Activity

We exploit a sudden shock to demand for a subset of low-wage workers generated by the 2005 Base Realignment and Closure (BRAC) program in San Antonio, Texas, to identify the effects of localized economic development on crime. We use a difference-in-differences methodology that takes advantage of variation in BRAC’s impact over time and across neighborhoods. We find that appropriative criminal behavior increases in neighborhoods where a fraction of residents experienced increases in earnings. This effect is driven by residents who were unlikely to be BRAC beneficiaries, implying that criminal opportunities are important in explaining patterns of crime.

Product Market Competition and Human Resource Practices: An Analysis of the Retail Food Sector

The rise of super-centers and the entry of Wal-Mart into food retailing have dramatically altered the competitive environment in the industry. This paper explores the impact of such changes on the labor market practices of traditional food retailers. We use longitudinal data on workers and firms to construct new measures of compensation and employment, and examine how these measures evolve within and across firms in response to changes in product market structure. An additional feature of the analysis is to combine rich case study knowledge about the retail food industry with the new matched employer-employee data from the Census Bureau.

Decomposing the Sources of Earnings Inequality: Assessing the Role of Reallocation

This paper exploits longitudinal employer-employee matched data from the U.S. Census Bureau to investigate the contribution of worker and firm reallocation to changes in earnings inequality within and across industries between 1992 and 2003. We find that factors that cannot be measured using standard cross-sectional data, including the entry and exit of firms and the sorting of workers across firms, are important sources of changes in earnings distributions over time. Our results also suggest that the dynamics driving changes in earnings inequality are heterogeneous across industries.

New Approaches to Creating Data for Economic Geographers

Policymakers, faced with increasing demands to make decisions at a local level, are turning to statistical agencies to provide local data. Advances in matching technology, combined with the reduced cost of archiving, indexing, storing, and curating large-scale datasets, now mean that it is technically feasible to provide information at fine levels of geographic detail by means of combining administrative and survey datasets at lower cost and potentially greater coverage. This paper describes an approach that uses administrative data from U.S. unemployment insurance records to enhance the coverage and accuracy of work location information in the American Community Survey.

Redistribution, Delegation, and Regulators’ Incentives: Evidence from the Clean Air Act

Taking advantage of the structure of the 1990 Clean Air Act Amendments (CAAA), we study the tradeoff between efficiency and equity associated with different levels of discretionary power when delegating regulatory authority to lower levels of government. Exploiting an instrumental variables approach, we provide evidence that the benefits of the 1990 CAAA were highly localized and accrued disproportionately to poorer households. Further, under the current structure of the 1990 CAAA, it costs at most about

Product Market Competition and Human Resource Practices in the Retail Food Sector

1.30 for every

Lost Jobs and Health Insurance: An Analysis of the Impact of Employment Volatility on Firm-Provided Health Insurance

1 worth of air quality improvements transferred from richer to poorer areas, suggesting that the program does not entail a large tradeoff between efficiency and equity.