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ABSTRACT: This paper examines how housing market distress affects job search. Using data from a leading online job search platform during the Great Recession, we find that job seekers in areas with depressed housing markets apply for fewer jobs that require relocation. With their search constrained geographically, job seekers broaden their search to lower-level positions nearby. These effects are stronger for job seekers with recourse mortgages, which we confirm using a spatial regression discontinuity analysis. Our findings suggest that housing market distress distorts labor market outcomes by impeding households’ ability to move.

ABSTRACT: We examine the impact of consumer protection laws on loan terms and outcomes in auto financing. We find that dealers strategically adjust contracts such that similar borrowers face the same monthly payments in states with and without usury laws. Default rates do not vary with usury law when lenders can seek deficiency payments through wage garnishment; however, default rates are higher where wage garnishment is prohibited. Consumers who can discharge their debt through bankruptcy default more frequently, and local unemployment also adversely affects default rates. We find evidence that all borrowers—including those who pay their debt in full—face higher total observable loan costs where wage garnishment is prohibited.

  • Anne Boring and Jen Brown. October 2016. “Gender, Competition, and Choices in Higher Education” [email to request most recent version]

ABSTRACT: We examine misconduct in financial services. We propose a theory in which experts extract surplus based on the value of their firm’s brand and their own skills. Using sales complaint data for insurance agents, we find that agents working exclusively for large branded firms are more likely to be the subject of justified sales complaints, relative to smaller independent experts, despite doing substantially less business. In addition, more experienced experts attract more complaints per year.

ABSTRACT: Incentive schemes that reward participants based on their relative performance are often thought to be particularly risk-inducing. Using a novel, real-effort task experiment in the laboratory, we find that the relationship between incentives and risk-taking is more nuanced and depends critically on the availability of informa- tion about peers’ strategies and outcomes. Indeed, we find that when no peer information is available, relative rewards schemes are associated with significantly less risk-taking than non-competitive rewards. In contrast, when decision-makers receive information about their peers’ actions and/or outcomes, relative incentive schemes are associated with more risk-taking than non-competitive schemes. The nature of the feedback—whether subjects receive information about peers’ strategies, outcomes, or both—also affects risk-taking. We find no evidence that competitors imitate their peers when they face only feedback about other subjects’ risk-taking strategies. However, decision-makers take more risk when they see the gaps between their performance score and their peers’ scores grow. Combined feedback about peers’ strategies and performance—from which subjects may assess the overall relationship between risk-taking and success—is associated with more risk-taking when rewards are based on relative performance; we find no similar effect for non-competitive rewards.

  • Jen Brown and Jin Li. July 2010. “Going for it: The Adoption of Risky Strategies in Tournaments.”