🌐ENGLISH

In any multiperiod panel, a two-way fixed effects (TWFE) regression is numerically equivalent to a first-difference (FD) regression that pools all possible between-period gaps. Building on this observation, this paper develops numerical and causal interpretations of the TWFE coefficient. At the sample level, the TWFE coefficient is a weighted average of FD coefficients with different between-period gaps. This decomposition is useful for assessing the source of identifying variation for the TWFE coefficient. At the population level, a causal interpretation of the TWFE coefficient requires a common trends assumption for any between-period gap, and the assumption has to be conditional on changes in time-varying covariates. I propose a natural generalization of the TWFE estimator that can relax these requirements. I illustrate the practical importance of these insights by examining the TWFE estimates of the minimum wage effect on employment outcomes in the U.S. state–year panel.

Uncertainty faced by individual firms appears to be heterogeneous. In this paper, I construct a new set of empirical measures of firm-level uncertainty using data such as the IBES and Compustat. The panel data that I construct reveals persistent differences in the degree of uncertainty facing individual firms not reflected by existing measures. Consistent with existing measures, I find that the average level of uncertainty across firms is countercyclical, and that it rose sharply at the start of the Great Recession. I next develop a heterogeneous firm model in a setting wherein each firm gradually learns about its own productivity, and each occasionally experiences a shock forcing it to start learning afresh. Uncertainty is gradually resolved as firms operate longer and get better informed. When calibrated to reproduce the level and cyclicality of the cross-sectional dispersion of sales growth, I show that an uncertainty shock can explain 18 percent of the observed output volatility and 29 percent of the investment volatility in the data. ​

Identifying parents’ willingness to pay for school quality is a significant issue. To estimate the magnitude, we focus on the setting of Japanese public elementary schools, which are highly uniform in terms of school inputs and operate under a distinctive disclosure policy. Although the disclosure of test scores at the school level had been strictly prohibited in Japan, the central government implemented a reform in 2014 that allows for the publication of results by school. Employing a boundary discontinuity design close to school district boundaries combined with a difference-in-differences model before and after publication, we find heterogeneous results by market that an increase of one standard deviation in total test score leads to increased sale prices of apartments by 2.0%–2.7% but to increases in rents of only 0.4%–0.6% after publication. Our extended analysis suggests that the effects are slightly larger for math and applied content test scores than for Japanese and basic content scores.

This study reveals that the interaction between tax competition and the political overrepresentation of the rich can collectively impede redistribution in response to rising inequality. We develop a capital tax competition model between countries, each comprising two distinct classes: rich and poor. An income bias in political attention creates an overrepresentation of the rich in each country. First, we show that tax competition diminishes the political attention of the poor, amplifying the rich’s political influence. Hence, tax competition reduces capital taxation not only through conventional economic channels but also by altering political power in favor of the rich. Remarkably, from a global perspective, the attention of the poor is underprovided for their benefit. Second, rising inequality encourages the poor to pay attention to politics, thereby increasing capital taxation. However, we show that tax competition weakens this mechanism; thus, increasing inequality in tax competition is more likely to lead to reduced capital taxation than in a closed economy.