Publications

Compensation of most US public school teachers is rigid and solely based on seniority. This paper studies the effects of a reform that gave school districts in Wisconsin full autonomy to redesign teacher pay schemes. Following the reform some districts switched to flex- ible compensation. Using the expiration of preexisting collective bargaining agreements as a source of exogenous variation in the timing of changes in pay, I show that the introduction of flexible pay raised salaries of high-quality teachers, increased teacher quality (due to the arrival of high-quality teachers from other dis- tricts and increased effort), and improved student achievement.

The moon landing just over 50 years ago is remembered as the culmination of a fierce competition between the United States and the USSR. But in fact, space exploration almost started with cooperation. President Kennedy proposed a joint mission to the moon when he met with Khrushchev in 1961 and again when he addressed the United Nations in 1963. It never came to pass, but in 1975 the Cold War rivals began working together on Apollo-Soyuz, and by 1998 the jointly managed International Space Station had ushered in an era of collaboration. Today a number of countries are trying to achieve a presence on the moon, and again there are calls for them to team up. Even the hypercompetitive Jeff Bezos and Elon Musk once met to discuss combining their Blue Origin and SpaceX ventures.

TIAA, originally founded in 1918 to provide first-rate financial services to employees of nonprofit organizations, has undergone a major transformation. Historically focused on higher education, TIAA faced intense competition from companies like Fidelity and Vanguard starting in the early 2000s, compelling it to expand its product offerings and increase its visibility through marketing. By 2021, under CEO Thasunda Brown Duckett, TIAA aimed to attract more diverse customers from the nonprofit sector, particularly underserved minorities, women, and early-career professionals, who had historically been less engaged with the firm's services.

These three groups present unique challenges. Underserved minorities often face a significant wealth and income gap, exacerbated by less favorable labor market experiences, higher levels of debt, and historical barriers to wealth accumulation, such as housing discrimination. Women, on average, tend to have lower earnings and more career interruptions, making it crucial for TIAA to tailor its products and messaging to meet their specific financial planning needs. Early-career professionals often prioritize immediate financial concerns over long-term retirement planning. This demographic is less familiar with TIAA, and many lack the financial knowledge to recognize the benefits of early retirement savings. How can TIAA overcome these challenges to attract members of these three groups?

Stock momentum, long-term reversal, and other past return characteristics that predict future returns also predict future realized betas, suggesting these characteristics capture time-varying risk compensation. We formalize this argument with a conditional factor pricing model. Using instrumented principal components analysis, we estimate latent fac- tors with time-varying factor loadings that depend on observable firm characteristics. We show that factor loadings vary significantly over time, even at short horizons over which the momentum phenomenon operates (one year), and this variation captures reliable con- ditional risk premia missed by other factor models commonly used in the literature. Our estimates of conditional risk exposure can explain a sizable fraction of momentum and long-term reversal returns and can be used to generate even stronger return predictions.

Value stocks sharply underperformed growth stocks from 2017 to 2020, exacerbating a lon- ger period of lackluster performance that dates back to the Global Financial Crisis for some value factors. Some have blamed the interest rate environment—the low level of interest rates, falling bond yields, or the flattening yield curve. The authors examine these claims. Theory suggests the link between value and interest rates is ambiguous and complicated. Empirically, the authors find fairly modest links that change for different specifications. Evidence of a mild relationship between interest rate variables and value’s performance is found for some specifications but not others. Despite eye-catching patterns during a few episodes in recent years, related to changes in bond yields or the yield curve slope, the economic significance of any relationship is small and not robust in other samples. The authors conclude that the performance of value is not easily assessed based on the interest rate environment and that factor timing strategies based on interest rate–related signals are likely to perform poorly.

Based on a survey of AFA members, we analyze how demographics, time allocation, production mechanisms, and institutional factors affect research production during the pandemic. Consistent with the literature, research productivity falls more for women and faculty with young children. Independently, and novel, extra time spent teaching (much more likely for women) negatively affects research productivity. Also novel, concerns about feedback, isolation, and health have large negative research effects, which disproportionately affect junior faculty and PhD students. Finally, faculty who express greater concerns about employers’ finances report larger negative research effects and more concerns about feedback, isolation, and health.

We study when pure bundling, i.e., offering only the grand bundle of all products, is optimal for a multi-product monopolist. Pure bundling is optimal if consumers with higher values for the grand bundle have higher relative values for smaller bundles compared to the grand bundle. Conversely, pure bundling is not optimal if consumers with higher values for the grand bundle have lower relative values. We prove the results by decomposing the problem into simpler ones in which types can be ranked according to their values for the grand bundle.

Young workers' early years in the labor market are a key and formative time. Using data from 31 countries, this article documents the selection of labor market entrants into large firms, which existing literature associates with propitious environments for young workers. The young and inexperienced are underrepresented at large firms compared to experienced and older workers. Entrants who do get their first job at large firms are positively selected in terms of education and cognitive skills. The patterns of large-firm selection (i.e., importance of education vs. skills) somewhat differ between Europe, East and Southeast Asia, and North America.

Many studies report that audit fees are discounted in the year of an auditor change and regulators have long been concerned that such fee discounting could impair audit quality. We find significant bias in the way studies have tested for fee discounting. The bias exists because interim procedures are usually performed by both the predecessor and successor auditors but only the successor's fee needs to be disclosed. Accordingly, the disclosed fee during the auditor change year usually relates to a partial year of auditing services. We find that the evidence for fee discounting disappears after correcting for this measurement bias.