Working Papers

Superstar Teams
[Latest version (v1.4) | Jan 2024], [Official WP (v1.3) | Nov 2023]

This paper argues that an important aspect of what firms do is assemble teams of  ‘complementary workers’  and this perspective can help explain salient features and trends in the macro economy, such as the growing importance of between-firm wage inequality.

Peer-reviewed Publications

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.

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.

We propose 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. 


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