Abstract: This paper examines realtor-loan officer referral networks as a key source of mortgage market power. Despite the high level of competition in mortgage lending, significant price dispersion persists. We argue that realtors steer homebuyers toward a limited set of loan officers, restricting borrower choice even in competitive markets. Using a unique dataset that maps the entire realtor-loan officer network across 17 states and Washington, D.C., we document substantial concentration within these networks, with 85% of realtors likely referring their clients to a limited number of loan officers. Borrowers who work with high-concentration realtors pay 12 basis points higher mortgage rates, even after controlling for borrower and mortgage characteristics. Instrumental variable (IV) estimates confirm that referral-driven constraints impose a premium of 19.7 basis points (equivalent to $2,722 in upfront costs) on homebuyers who choose referred loan officers. This premium primarily results from suboptimal lender selection and is particularly severe for Black, Hispanic, and financially constrained borrowers. While referred loan officers might improve the likelihood of mortgage approval and expedite mortgage processing (by 0.45 days), these benefits do not fully justify the higher borrowing costs. Our findings suggest that realtor referral networks reinforce mortgage market power, imposing significant financial burdens and raising equity concerns for borrowers.
Abstract: We estimate the preferences of individuals from different wealth backgrounds to explain intergenerational wealth mobility. We use rich micro-level data on the balance sheets, consumption, and risky investments of Swedish residents, together with family wealth background measured during the offspring’s early adulthood. We find that patience and risk-tolerance are strongly correlated with wealth background. Counterfactual analyses reveal that background-dependent preferences can explain at least 75 percent of the wealth gap between adults of non-rich backgrounds (90 percent of the population) and very-rich backgrounds (2.5 percent of the population). In contrast, early-adulthood heterogeneity in wealth, gifts and inheritances, and intergenerational transmission of human capital are not dominant determinants of wealth mobility.
Discussant: Sylvain Catherine, University of Pennsylvania
Abstract: Recent progress in artificial intelligence raises the prospect that, asymptotically, all tasks will be automated. We characterize the consequences for capital and labor markets of such automation, in combination with standard economic forces determining capital returns and wages. In particular, we derive a simple condition determining whether or not capital dominance arises, i.e., national income flowing entirely to the owners of capital. Our model provides a natural setting for policy analysis, and implies that the negative consequences of capital dominance are better ameliorated via taxation-funded ``basic income'' than by the deliberate retardation of automation. The capital-dominance condition maps to observables, and a first-pass calibration suggests that the current rate of automation is too slow to generate capital dominance.
Discussant: Stavros Panageas, University of California-Los Angeles
