Work in progress
Job Stability and Earnings Inequality
Working papers
Should I Stay or Should I Grow? How Cities Affect Human Capital
Whilst the spatial concentration of skills begets regional disparities, it may increase aggregate human capital. To study this possible equity-efficiency tradeoff, I propose a theory in which cities affect learning by shaping whom individuals meet. Learning complementarities dictate whether the agglomeration of skills increases aggregate human capital. I estimate learning complementarities from a local projection of future skills on the skills of nearby individuals using French administrative data. I find that workers in skill-dense cities experience faster skill growth, especially skilled workers. In the aggregate, local human capital spillovers boost TFP by 5% but generate substantial learning gaps across birthplaces.
The Local Root of Wage Inequality
Revise & Resubmit, Journal of Political Economy.
Wages are on average higher in larger cities, yet the real earnings of low-wage workers are lower. Using French administrative data, I document two novel facts. Large cities concentrate high-paying jobs, while low-paying jobs are everywhere. The reallocation of workers across jobs spurs faster wage growth in larger cities. I propose a framework that rationalizes these facts. Productive employers agglomerate in large cities to maximize their size. Fiercer competition steepens the local ladder, and workers accept lower real earnings anticipating future wage growth. After estimating the model, I find that housing-adjusted unemployment benefits amplify spatial disparities but raise aggregate welfare.
Publications
Outsourcing, Inequality and Aggregate Output
with A. Bilal.
Conditionally Accepted, Journal of Political Economy.
Outsourced workers experience large wage declines, yet domestic outsourcing may raise aggregate productivity. To study this equity-efficiency trade-off, we contribute a framework in which multi-worker firms either hire imperfectly substitutable worker types in-house along a wage ladder, or rent labor services from contractors who hire in the same frictional labor markets. More productive firms select into outsourcing to save on labor costs and higher wage premia. Outsourcing leads firms to raise output and labor demand. Contractor firms pay lower wages. We find reduced-form support for all three implications in French administrative data, instrumenting revenue productivity with export demand shocks and outsourcing costs using variation in occupational exposure. After proving identification and structurally estimating the model, we find that the emergence of outsourcing in France lowers low skill service worker earnings and welfare by 3.1% but raises aggregate output by 1.8%.
Supply Chain Resilience: Should Policy Promote International Diversification or Reshoring?
with G. Grossman and E. Helpman. Journal of Political Economy, 131:12 (2023), 3462-3496 .
Little is known about optimal policy in the face of potential supply chain disruptions. Should governments promote resilience by subsidizing backup sources of input supply or encourage firms to source from safer, domestic suppliers? We address these questions in a model of production with a single critical input and exogenous risks of relationship-specific and country-wide supply disturbances. In the CES case, a subsidy for diversification achieves the constrained social optimum. When the demand elasticity rises with price, private investments in resilience may be socially excessive and the social planner may wish to favor sourcing at home or abroad.