In this paper we revisit the relationship between democracy, redistribution and inequality. We first explain the theoretical reasons why democracy is expected to increase redistribution and reduce inequality, and why this expectation may fail to be realized when democracy is captured by the...

An emerging literature argues that changes in the allocation of workplace “tasks” between capital and labor, and between domestic and foreign workers, has altered the structure of labor demand in industrialized countries and fostered employment polarization - that is, rising employment in...

In the past two decades, China's manufacturing exports have grown spectacularly, U.S. imports from China have surged, but U.S. exports to China have increased only modestly. Using representative, longitudinal data on individual earnings by employer, we analyze the effect of exposure to import...

What circumstances or policies leave sovereign borrowers at the mercy of self-fulfilling increases in interest rates? To answer this question, we study the dynamics of debt and interest rates in a model where default is driven by insolvency. Fiscal deficits and surpluses are subject to shocks...

In many regulated markets, private, third-party auditors are chosen and paid by the firms that they audit, potentially creating a conflict of interest. This paper reports on a two-year field experiment in the Indian state of Gujarat that sought to curb such a conflict by altering the market...

This paper shows that large economic downturns may result from the propagation of micro-economic shocks over the input-output linkages across different firms or sectors within the economy. Building on the framework of Acemoglu et al. (2012), we argue that the economy's input-output structure can...

This paper's findings suggest that an arbitrary Chinese policy that greatly increases total suspended particulates (TSP) air pollution is causing the 500 million residents of Northern China to lose more than 2.5 billion life years of life expectancy. The quasi-experimental empirical approach is...

We develop a theoretical model of security investments in a network of interconnected agents. Network connections introduce the possibility of cascading failures, due to an exogenous or endogenous attack, depending on the profile of security investments by the agents. The general presumption in...

This paper was originally prepared for the New School celebration of Duncan Foley's career. It attempts to place his work in the context of the evolution of economics as a discipline and of the MIT Economics Department in the last forty years, and in particular the place of Marx and Keynes as...

Between 1984 and 2000, the share of non-elderly adults receiving benefits from the Social Security Disability Insurance (DI) and Supplemental Security Income (SSI) programs rose from 3.1 to 5.3 percent. We trace this growth to reduced screening stringency and, due to the interaction between...