Working Papers

Superstar Teams
[Latest version (v2.0) | Dec 2024] -- NEW VERSION!

A theory where firm performance is rooted in the quality of its workforce; and heterogeneity across firms naturally arises from talent sorting motivated by complementarities in team production that endogenously arise due to skill specialization. This theory can help explain salient features and trends in the macro economy, such as the growing importance of between-firm wage inequality. It also demonstrates that for productivity gains from specialization to materialize, workers need to be matched with colleagues possessing complementary expertise.

Peer-reviewed Publications

A capitalist-worker two-agent New Keynesian model to study the interaction of fiscal policy and household heterogeneity in a tractable environment.  The model is consistent with micro data on empirical intertemporal marginal propensities to consume and it avoids implausible profit income effects on labor supply. Relative to the traditional two-agent model, these features imply, respectively, a lower sensitivity of consumption to the composition of public financing; and smaller fiscal multipliers alongside pronounced redistributive effects. 

Volatile Hiring: Uncertainty in Search and Matching Models, with W. Den Haan and P. Rendahl
Journal of Monetary Economics, Vol. 123, pp. 1-18, 2021 [Published version - open access],  [Online appendix ], [Replication files], [Short slides | April 2021], [VoxEU column | Sep 2021] 

We study the hypothesis that heightened uncertainty leads to higher unemployment because firms prefer to adopt a "wait-and-see" approach to posting vacancies. Contrary to common belief, option-value considerations  play no role in the standard search-and matching model with free entry. Constructively, we show that when the mass of entrepreneurs is finite and there is heterogeneity in firm-specific productivity, a rise in perceived uncertainty robustly increases the option value of waiting and reduces job creation.

This paper argues that a risk-premium mechanism plays an important tole in the transmission of macroeconomic uncertainty shocks to the labor market. In a quantitative model, this channel accounts for a significant fraction of the uncertainty-induced rise in unemployment, and it implies that uncertainty shocks are less deflationary than regular demand shocks, nor can they be fully neutralized by monetary policy.

Work in Progress

For Whom the Bot Tolls: A Method to Estimate the Earnings Effects of AI (provisional title; with L. Mann)
Advances in technology, particularly recent progress in AI, raise concerns about job displacement. While many studies estimate task and occupation exposure to technical innovations, the impact on individual earnings is mediated by workers' task-specific skills, which determine their ability to adapt to task displacement by switching tasks within their current role or by transitioning to new occupations. Yet, these skills are typically unobserved. We develop a novel approach to address this challenge. Guided by an analytical framework, we use Bayesian techniques to estimate the distribution of task-specific skills from micro data on wages, occupational choices, and the task composition of occupations. We then demonstrate how to quantify the dynamic earnings effects of new technologies, such as LLMs or self-driving vehicles, for workers with different bundles of task-specific skills. The project thus aims to contribute a flexible tool to characterize the labor market trajectory of workers with heterogeneous skill portfolios under different technological scenarios. 

Firms as Foragers (with V. Carvalho)
Supported by a ~£38,000 grant from the Keynes Fund.

Project on Teams & Firm-Level Growth (with T. Ifergane)

Discussions

"Household Portfolio Choices and Nonlinear Income Risk," by J. Galvez