Research

Abstract
Using variation in the timing and location of branches of failed banks we analyze its effect on income inequality. Employing a difference-in-differences specification we find that bank failures increased the GINI by 0.3 units (or 0.7%). We show that the rise in inequality is due to a decrease in the incomes of the poor that outpaces declines of the rest. We further show that individuals with lower levels of education exhibit a relatively greater decline in real wages and weekly hours worked. Exploring channels of transmission, we find income inequality is explained by a general decline in small business loans. This in turn reduces net new small business formation and their job creation capacity, a sector that hires a substantial share of low-income earners.

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@article{contreras23,
author = {Salvador Contreras and Amit Ghosh and Iftekhar Hasan},
title = {The effect of bank failures on small business loans and income inequality},
journal = {Journal of Banking & Finance},
volume = {146},
number = {},
pages = {},
year = {2023}
}

Abstract
Employing a difference-in-differences framework we examine the effect of COVID-19 on various performance metrics of minority-owned banks relative to peer banks. We find little evidence of worsening performance of minority-owned banks, except for Asian-owned banks. In some instances, minority banks show improved performance. We find a decline in non-performing single-family residential loans for Hispanic-owned banks. Moreover, minority banks have disbursed more PPP loans than their matched non-minority counterparts. Their resilient performance indicates that minority banks are well positioned to aid in the ongoing economic recovery.

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@article{contreras22,
author = {Salvador Contreras and Amit Ghosh},
title = {COVID-19 and its impact on minority-owned banks},
journal = {AEA Papers and Proceedings},
volume = {112},
number = {},
pages = {213-18},
year = {2022}
}

Abstract
Using firm-level data, we study the impact of bank failures on corporate innovation. We find that exposure to a bank failure reduces the number of patents by 0.34 and citations by 0.35, implying a loss of 21% and 22%, respectively. Such effects are most pronounced for explorative innovation and for firms more dependent on external financing. These effects point to the interdependence between bank failures and corporate decisions, highlighting an important role for government intervention. We show that the TARP helped banks to reduce such pernicious effects on innovation, which is primarily driven by TARP recipient banks headquartered in the county of the bank failure and by large TARP receiving banks.

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@article{contreras21,
author = {Salvador Contreras and Amit Ghosh and Joon Ho Kong},
title = {Financial crisis, Bank failures and corporate innovation},
journal = {Journal of Banking & Finance},
volume = {129},
number = {},
pages = {106161},
year = {2021}
}

Abstract
Using a difference-in-differences framework we evaluate the effect that exposure to a bank failure in the Great Recession period had on income inequality. We find that it led to a 1% higher Gini, relative rise of 38 cents for high earners, and 7% decline for lowest earners in treated MSAs. Moreover, we show that blacks saw a decline of 10.2%, Hispanics 9.8%, and whites 5.1% in income. Low income blacks and Hispanics drove much of the effect on inequality.

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@article{contreras21,
author = {Salvador Contreras and Amit Ghosh and Iftekhar Hasan},
title = {Income inequality and minority labor market dynamics: Medium term effects from the Great Recession},
journal = {Economics Letters},
volume = {199},
number = {},
pages = {109717},
year = {2021}
}

Abstract
Purpose The authors present a quantitative analysis of the effect that organizational change has on work stress, work attitudes and perceptions, and cognitive utilization in a task. Design/methodology/approach First, the authors study the role organizational change has on work stress, attitudes and perceptions, including the role of attitudes toward change. The authors do so by examining differences across employees who are and are not undergoing change, as well as across two change phases. Second, the authors take advantage of the ongoing organizational change to study how people's anxiety about such change affects their cognitive utilization. They use an innovative approach to measure attention disengagement in a cognitive utilization task – a proxy for task-related performance – through a letter detection exercise. Third, the authors examine the role of work stress and change-related anxiety on attention disengagement among employees undergoing change. For this test, they use two organizational change-related texts to function as an anxiety-inducing and a calming-inducing prime. Findings Organization change is associated with higher work stress, lower job satisfaction and perceptions of institutional effectiveness and support. Further, organizational change-related anxiety adversely affects cognitive utilization, showing that employees undergoing change have higher attention disengagement relative to those not experiencing change. Among employees undergoing change, those receiving an anxiety-inducing prime show better cognitive utilization (lower attention disengagement) than those receiving the calming-inducing prime. Originality/value The rare merger of two public universities provides a natural experiment and a source of exogenous variation to examine the effects of radical organizational change on employees' attitudes, perceptions and task performance.

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@article{contreras20,
author = {Contreras, Salvador and Jorge A. Gonzalez },
title = {Organizational change and work stress, attitudes, and cognitive load utilization: a natural experiment in a university restructuring},
journal = {Personnel Review},
volume = {50},
number = {1},
pages = {264-284},
year = {2020}
}

Abstract
We present a theoretical and empirical analysis of household positional and non-positional time investment choices in the education of her child. We show that a parent who is mindful of her relative position in the income distribution will use her time investment choices to influence her perceived status. Our theoretical model predicts that visible time investment increases as members of her reference group move up in rank. We show that moving down in rank lowers utility. We employ NELS (1988) dataset to test our model prediction and show that visible time invested in child's education is explained by place on the income distribution.

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@article{contreras16,
author = {Contreras, Salvador},
title = {Looking for status appeal? Act interested in your child’s education},
journal = {International Journal of Social Economics},
volume = {44},
number = {3},
pages = {377-399},
year = {2017}
}

Abstract
We evaluate the endogenous peer influence of students in one U.S. public University College of Business. In particular, we measure the peer effect on student grades. This study utilises an exclusion restriction approach similar to De Giorgi et al. (2010) to estimate the endogenous peer effect. Our results support the finding that a student’s classroom performance has a significant effect on their peers. Overall, our results suggest a negative peer effect. However, we find that the direction and magnitude of the peer effect is sensitive to the student’s own average ability and that of their peers.

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@article{contreras12,
Author = {Salvador Contreras and Francisco Badua and Mitchell Adrian},
Journal = {International Review of Economics Education},
Issue = {1},
Pages = {57-66},
Title = {Peer Effects on Undergraduate Business Student Performance},
Volume = {11},
Year = {2012},
}

Abstract
This paper presents a model with a domestic household and a heterogeneous migrant household in arrival timing. The domestic and documented migrant households divide their one unit of time between lobbying for/against immigration enforcement expenditures and employment. The analysis shows that an increase in public dislike for undocumented workers lowers domestic and existing migrant households private investment in own child education. It also causes average public expenditures on education to fall and leads to a negative impact on the educational outcomes of all households.

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@article{contreras11,
Author = {Contreras, Salvador},
Journal = {Journal of Regional Science},
Number = {4},
Pages = {821 - 835},
Title = {A Theoretical Exposition of Migration Enforcement on Existing Migrant and Domestic Households.},
Volume = {51},
Year = {2011},
}

Abstract
The authors investigated the results of the Educational Testing Service Major Field Test (ETS-MFT) administered to business majors at a U.S. state university. Longitudinal trends and cross-sectional differences are documented, including significant performance differences among students of different majors. Findings suggest that a cohort affect may influence testing outcomes. The authors discuss with possible explanations for performance differences and explore means of remediation.

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Abstract
This paper presents a household theoretical model that explains child labor as a function of household resources, wages, and child work time allocation. The analysis is based on the interplay between household educational investment choices and adult-child wage differentials. The theory dynamics reveal that child labor participation is increasing in wage equality and as the wage gap decreases it reduces the distance by where the households is able to escape the cycle of poverty by investing beyond the dynamically attracting poverty level of inefficient human capital investment. The model dynamics also present the conditions by where poor households use child labor as a development strategy, as a means of accumulating physical assets at the expense of child human capital investment, in the early stages of development. The policy implications of this work are that child labor bans increase the wage differentials between child and adult earners while simultaneously decreasing the household incentive to invest in child education. The impact, of such policies, has a double negative effect on poor households. Furthermore, policies that reduce wage distortions, between adult and child labor, increase adult human capital, and provide universal access to educational will have long-run developmental growth effects. These policies, in the long-run, are shown to produce household substitution away from child labor and toward the acquisition of schooling based education.

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@article{contreras08,
Author = {Contreras, Salvador},
Journal = {Journal of Macroeconomics},
Number = {1},
Pages = {499 - 512},
Title = {Child Labor Participation, Human Capital Accumulation, and Economic Development.},
Volume = {30},
Year = {2008},
}