Regulation as Opportunity: Proactive GDPR Compliance in the U.S. Credit Intermediation Industry (with T. Kretschmer)
Abstract: We study the impact of the European Union’s General Data Protection Regulation (GDPR) on US Fortune 500 corporations in the credit intermediation industry. We find that firms with more than 1% EU market presence experienced 24% higher growth in operating incomes than primarily US-based firms. This effect was identified soon after GDPR was announced, consistent with proactive compliance by firms in an already heavily regulated sector. Post-hoc analyses of survey data suggest that exposure to GDPR correlated with reduced data platform usage, increased data standardization, and more ML/AI innovation five years after the regulation was introduced. These results suggest that GDPR may have spurred firms to improve internal data handling practices, which led to non-transitory operational efficiency gains. Overall, regulatory requirements can help large traditional firms overcome organizational inertia by aligning stakeholder interests around committing to short-run costs and making necessary adjustments to achieve long-run benefits.
Local Labor Market Frictions and Platform-Dependent Entrepreneurship (with Y. Lyu)
Abstract: This paper examines the relationship between local labor market conditions and platform-based entrepreneurs' performance. Drawing on the labor market frictions perspective, we hypothesize that local job scarcity induces high-ability individuals to sort into self-employment, increasing the share of high-quality entrepreneurs entering digital platform-based entrepreneurship. Combining data from a large online marketplace with official labor market statistics across U.S. states, we show that entrepreneurial businesses entering the platform in low vacancy rate locations achieve superior revenue performance. We also show that the vacancy rate positively moderates the relationship between local wages and entrepreneurial revenues. Finally, those entering platform-based entrepreneurship in low vacancy labor markets are more likely to multi-home and have a business partner, consistent with choosing founding strategies associated with being higher quality.
Sampling Bias in Entrepreneurial Experiments (with R. Koning and R. Nanda)
Management Science (forthcoming), 2023.
The Economic Effects of Social Networks: Evidence from the Housing Market (with M. Bailey, T. Kuchler, and J. Stroebel)
Journal of Political Economy, 126(6): 2224-2276, December 2018.
Measuring Social Connectedness (with M. Bailey, T. Kuchler, J. Stroebel, and A. Wong)
Journal of Economic Perspectives, 32(3): 259-80, Summer 2018.
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