Tipping is large and growing, yet little is known about why firms adopt it or what happens to workers and firms when they do. We link point-of-sale and payroll records at 20,000 U.S. firms, so we see tips when customers pay them and when workers earn them. The share of firm revenue paid in tips barely moves from month to month. Tips therefore make hourly pay move with demand, while base wages and prices do not. Firms that begin collecting tips claw back 23 to 30 cents for each dollar of tips through lower base wages, and workers keep the rest as a raise. Tips may also reward effort: workers at tipping firms earn more by serving more customers, so they supply more effort when demand rises. We test this with demand shocks constructed from customer spending at other businesses. A demand shock raises revenue nearly twice as much and hours nearly four times as much at tipping firms as at non-tipping firms. Output per hour also rises more at tipping firms, despite the larger increase in hours. The firm gains from the added effort, even though it recovers less than a third of the tips through lower base wages. Yet not every firm adopts tipping: the cost of adopting remains high where customers do not expect to tip. A model calibrated to these estimates implies that tipping benefits both workers and firms. These gains may explain why tipping has grown.

Using point-of-sale and payroll data, we estimate the direct tax savings, behavioral tipping response, and incidence of the 2025 No Tax on Tips (NTOT) provision. The average tipped worker directly saves $531, but these savings are concentrated: 26% earn too little to benefit. Tip revenue rose 3.1% post-enactment as firms newly enabled tipping. Workers kept 72 cents of each new tip dollar, while firms lowered base pay by the remaining 28 cents. Overall, NTOT raised the average tipped worker's after-tax earnings by approximately 3.3%. The new tips are a raise for workers and, partly, a wage subsidy to firms.

A central question in immigration policy is how mobility restrictions affect the wages of temporary foreign workers (TFWs). We study the labor market return to TFWs gaining permanent residency (PR), which loosens mobility restrictions. Using administrative data linking matched employer-employee data in Canada to temporary and permanent visa records from 2004–2014 along with an event-study design, we find that gaining PR leads to a sharp, immediate, and persistent increase in the job switching rate of 21.7 percentage points and an increase in earnings of 3.2 percent three years after PR. These gains are driven primarily by reallocation across firms: workers move to higher-paying firms, and our estimates are consistent with no within-firm effects. To guide and interpret our reduced-form results, we develop a search-and-matching model featuring heterogeneous workers and firms. Permanent residents and native-born workers search for jobs in the same labor market and engage in on-the-job search, while TFWs search separately within a segmented labor market and do not receive outside wage offers. We calibrate the model to match our reduced-form results, and we use it to simulate the long-run effects of PR and consider two counterfactual policies: (1) increasing the cost to firms of posting a TFW vacancy and (2) allowing TFWs to switch employers freely under "open" visas. We evaluate how these policies affect output, wages, profits, and overall social welfare.

Heterogeneity robust difference-in-differences methods typically require control units that remain untreated throughout the entire post-treatment window. This prevents the identification of long-run effects when researchers observe fewer pre-treatment periods than post-treatment periods. We show that cohort-stacked estimators identify long-run effects by chaining together successive not-yet-treated controls. This approach uses overlapping cohorts to extend identification under standard common trends assumptions. We apply this to the earnings effects of parenthood. In a setting where direct methods identify effects only four years post-birth, chaining extends identification to eight years.

Are the effects of minimum wage hikes evidence for or against monopsony? The textbook monopsony model predicts that firms paying different wages could adjust in different directions. Using new firm-level microdata, we find that firms paying just below the new minimum wage increase employment and decrease prices relative to competitors. But, firms initially paying the old minimum wage decrease employment and raise prices. Different aggregate effects can therefore reflect different mixes of firms, rather than different underlying economic models. We then use a quantitative monopsony model to interpret these results and find that unconstrained markdowns and markups are large. Nevertheless aggregate employment falls, because minimum wages raise wages primarily through market-level spillovers rather than reductions in firm-level markdowns. Building up from firm-level responses allows aggregate effects to differ across contexts, even in sign, while imposing enough structure to extrapolate to new policies.