The Paycheck Protection Program (PPP) extended over 650 billion dollars of forgivable loans in an unprecedented effort to support small businesses affected by the COVID-19 crisis. This paper provides evidence that information frictions and the “first-come, first-served” design of the PPP program skewed its resources towards larger firms and may have permanently reduced it’s effectiveness. Using new daily survey data on small businesses in the U.S., we show that the smallest businesses were less aware of the PPP and less likely to apply. If they did apply, the smallest businesses applied later, faced longer processing times, and were less likely to have their application approved. These frictions likely mattered, as businesses that received aid re-port fewer layoffs, higher employment, and improved expectations about the future.

This paper studies how welfare outcomes in centralized school choice depend on the assignment mechanism when participants are not fully informed. Using a survey of school choice
participants in a strategic setting, we show that beliefs about admissions chances differ from
rational expectations values and predict choice behavior. To quantify the welfare costs of belief
errors, we estimate a model of school choice that incorporates subjective beliefs. We evaluate
the equilibrium effects of switching to a strategy-proof deferred acceptance algorithm, and of
improving households' belief accuracy. Allowing for belief errors reverses the welfare comparison
to favor the deferred acceptance algorithm.

This paper studies the potential small and large scale effects of a policy designed to produce more in-formed consumers in the market for primary education. We develop and test a personalized information provision intervention that targets families of public Pre-K students entering elementary schools in Chile. Using a randomized control trial, we find that the intervention shifts parents’ choices toward schools with higher average test scores, higher value added, higher prices, and schools that tend to be further from their homes. Tracking students with administrative data, we find that student academic achievement on test scores was approximately 0.2 standard deviations higher among treated families five years after the intervention. To quantitatively gauge how average treatment effects might vary in a scaled up version of this policy, we embed the randomized control trial within a structural model of school choice and competition where price and quality are chosen endogenously and schools face capacity constraints. We use the estimated model of demand and supply to simulate policy effects under different assumptions about equilibrium constraints. In counterfactual simulations, we find that capacity constraints play an important role mitigating the policy effect but in several scenarios, the supply-side response increases quality, which contributes to an overall positive average treatment effect. Finally, we show how the estimated model can inform the design of a large scale experiment such that reduced form estimates can capture equilibrium effects and spillovers.

While it is a widely held belief that family and social networks can influence important life decisions, identifying causal effects is notoriously difficult. This paper presents causal evidence from three countries at different stages of economic development that the educational trajectories of older siblings can significantly influence the college and major choice of younger siblings. We exploit institutional features of centralized college assignment systems in Chile, Croatia, and Sweden to generate quasi-random variation in the educational paths taken by older siblings. Using a regression discontinuity design, we show that younger siblings in each country are significantly more likely to apply and enroll in the same college and major that their older sibling was assigned to. These results persist for siblings far apart in age who are unlikely to attend higher education at the same time. We propose three broad classes of mechanisms that can explain why the trajectory of an older sibling can causally affect the college and major choice of a younger sibling. We find that spillovers are stronger when older siblings enroll and are successful in majors that on average have higher scoring peers, lower dropout rates and higher earnings from graduates. The evidence presented shows that the decisions, and even random luck, of your close family members and peer network, can have significant effects on important life decisions such as the choice of specialization in higher education. The results also suggest that college access programs such as affirmative action, may have important spillover effects through family and social networks.

We study the efficiency of a centralized college admissions platform that operates jointly with a decentralized “off-platform” aftermarket. We exploit a policy change in 2012 in which a significant number of off-platform higher education options joined a centralized assignment system for higher-education programs in Chile. We show evidence that this policy change had impacts on real outcomes finding that the share of students declining their placed spot de-creased by 8% and dropout rates at the end of the first year of college dropped by 2 percentage points (a 16% drop) following this event. To quantify the welfare impacts of the aftermarket on the efficiency of the match, we develop and estimate an empirical model of college applications, aftermarket waitlists and matriculation choices, using individual-level administrative data from Chile on almost half a million applications, including test scores and enrollment decisions at all on- and off-platform higher education options. According to model estimates, welfare increases substantially, students begin their studies sooner, and fewer students drop out by the end of the first year of study when top off-platform programs join the platform. These benefits are greater for less advantaged students and for women. Counterfactual analysis suggests that more desirable options generate larger negative externalities when not on the platform. These externalities are mostly driven by students admitted on on-platform options that decline their spots to pursue off-platform programs; and are amplified by frictions in waitlists that yield socially inefficient allocations. Our results indicate that platform design can have real impact on outcomes of interest. Specifically, our findings suggest policymakers need to consider the implications of off platform options and their characteristics when designing regulation surrounding centralized assignment systems.