“Rationalizing Entrepreneurs’ Forecasts” (joint with N. Bloom and R. Fletcher)
Summary: Twitter Thread, Slide Deck
Presented at the NBER Summer Institute, Entrepreneurship (July 18, Cambridge, MA), EEA-ESEM Annual Congress (August 25, Milano, Italy)
Abstract: We analyze, benchmark, and run randomized controlled trials on a panel of 7,463 U.S. entrepreneurs making incentivized sales forecasts. We assess accuracy using a novel administrative dataset obtained in collaboration with a leading US payment processing firm. At baseline, only 13% of entrepreneurs can forecast their firm's sales in the next three months within 10% of the realized value, with 7.3% of the mean squared error attributable to bias and the remaining 92.7% attributable to noise. Our first intervention rewards entrepreneurs up to $400 for accurate forecasts, our second requires respondents to review historical sales data, and our third provides forecasting training. Increased reward payments significantly reduce bias but have no effect on noise, despite inducing entrepreneurs to spend more time answering. The historical sales data intervention has no effect on bias but significantly reduces noise. Since bias is only a minor part of forecasting errors, reward payments have small effects on mean squared error, while the historical data intervention reduces it by 12.4%. The training intervention has negligible effects on bias, noise, and ultimately mean squared error. Our results suggest that while offering financial incentives make forecasts more realistic, firms may not fully realize the benefits of having easy access to past performance data.
“Directed Technological Change: The Case of Work from Home Patents during Covid-19 and Beyond” (joint with N. Bloom, S. Davis and Y. Zhestkova) [NEW DRAFT COMING SOON!]
In the media: New Things Under the Sun, Time
Abstract: We examine the text content of U.S. patent applications, identifying those that advance technologies in support of video conferencing, telecommuting, remote interactivity, and working from home (collectively, WFH). We find that the share of new patent applications that advance WFH technologies steadily increases after the onset of COVID-19. The share of WFH applications is up around 50% in the first year after January 2020 compared to the last pre-pandemic year, 75% in the second year, and more than double in the last 3 months of 2022. The absolute number of WFH applications similarly reached multiple new time highs greatly surpassing any pre-pandemic peaks. This evidence suggests that (re-)directed technical change in reaction to COVID-19 will raise the quality and efficiency of remote work, thereby reinforcing a shift to working from home.
“Do Work Search Requirements Work? Evidence from a UK Reform Targeting Single Parents” (joint with T. Waters)
In the media (selected): The Guardian, Bloomberg, Yahoo! Finance, ITV, Evening Standard, Morning Star, Newschain, The Independent, Daily Mail
Feeding into: IFS Deaton Review of Inequality; (mini) Twitter Thread
Abstract: Proponents of work search requirements for out-of-work welfare claimants argue they are effective in inducing individuals to work and delivering fiscal savings. In this paper, we provide a much more comprehensive assessment than has been available to date, exploiting a UK reform introducing full-time work search requirements for single out-of-work parents. Using the policy’s staggered roll-out, we show that the reform reduced the number of single parents claiming welfare by a quarter, partly by discouraging eligible individuals from beginning a claim in the first place. However, only about half of the reduction in the number of claimants is explained by higher employment, and almost all of that is in part-time, low paid jobs – the median marginal job pays around the 13th percentile of the UK earnings distribution, so even those that get into work pay little in tax and receive significant (in-work) transfers. Most of the rest of the effect is accounted for by individuals substituting to – more generous – incapacity and disability benefits. As a result, the policy produces fiscal savings indistinguishable from zero. Furthermore, we find negative effects on the mental health of individuals who remained out-of-work, though positive effects for those pushed into work.
Work in Progress
“The Effects of Business Loans and Technology Support on the Growth of U.S. Online Start-ups”
“From Schoolmates to Business Partners: The Labor Market Effects of Going to a more Selective School Revisited” (joint with E. Krkoska)
“What can previous recessions tell us about the Covid-19 downturn?” (joint with B. Bell and S. Machin)
LSE Centre for Economic Performance Briefing Note, August 2020
In the media (selected): The Independent, The Guardian, Institute for Employment Rights, LSE Blog, Written evidence to UK Parliament Committee
Summary: The labour market effects of the Covid-19 crisis measured as of June 2020 are compared with the three most recent UK recessions: the early 1980s, the early 1990s, and the downturn induced by the global financial crisis in the 2000s. We design a ‘realistic’ employment rate measure (based on individuals working a positive number of hours) that shows a decrease in employment between February and June of more than 15 percentage points, in sharp contrast with stable official unemployment. With hours worked only at 80 percent of the level from February 2020, the picture is bleak - the UK economy is on track to suffer its biggest unemployment shock since at least the 1980s recession. Despite their different impacts across industries, the Covid-19 crisis and the three most recent UK recessions share the common feature of a disproportionate impact on the most vulnerable (the poorest, the youngest, the least educated, and ethnic minorities).
“The changing generosity of the UK state pension system to the self-employed” (joint with R. Crawford, J. Cribb, and C. Emmerson)
IFS Report R182, October 2020
In the media (selected): The Times (paywall), International Investment (paywall) , IFS Retirement Consortium Public Presentation
Summary: This report analyses state pension provision for the self-employed in the context of these two underlying trends: the rising number of the self-employed and new legislation increasing universality of the UK state pension system. We first document that those working for their own business are a small but rapidly growing proportion of the UK workforce: in 2016, they accounted for approximately 15% of the workforce, the highest share since at least 1854. We show that, historically, the self-employed are in a single year less likely than other workers to accrue entitlement towards the state pension. As a result, increases in the prevalence of self-employment explain around a third of the increase in the proportion of workers not accruing state pension entitlement in a given year between 2007-2016. We show that the new (single-tier) state pension is typically more generous to the self-employed than the state pension system was previously. However, this masks significant heterogeneities with some self-employed groups (such as those receiving in-work and child benefits) set to lose from the reform.