Research
Job Market Paper
Intangible assets have unique characteristics compared to physical capital; they are scalable and exhibit spillover effects. This paper develops a structural model to empirically test these features of intangible assets. I introduce intangible capital into the production function as an additional factor input and external knowledge as a productivity shifter. I estimate production functions at the firm level including labor-augmenting, and Hicks-neutral productivity without imposing any parametric functional form. My empirical results indicate a positive and significant impact of intangible capital on a firm's production. This return to intangibles increases with firm size in all sectors, suggesting that intangible capital exhibits scalability. Moreover, knowledge spillovers increase firm productivity, and the extent of this increase varies depending on firm size, and sector. Large firms and firms in the health sector tend to benefit more from their rival's knowledge stock. Additionally, I reveal that markups tend to rise with a firm's intangible intensity, suggesting a potential explanation for the recent rise in market concentration.
Work in Progress
The U.S. economy has been experiencing a decline in aggregate productivity growth and an increase in productivity dispersion, which also co-moves with the rise of intangible capital. How would intangible capital lead to heterogeneous impacts on productivity patterns? To explore this question, we introduce a new channel in which intangible capital meets skilled labor to internalize its economic benefits, which requires economies of scale. Using firm-level measures of intangible capital and skill intensity, we document four related stylized facts: i) increasing productivity dispersion driven by large firms, especially in intangible intensive sectors, ii) rising intangible capital concentration by large firms, iii) increasing number of skilled workers in large intangible firms, and iv) higher intangible-skill complementarity in large firms. Based on these motivating facts, we build an empirical framework to quantify the effects of the intangible capital - skilled labor complementarity on firm-level productivity dynamics. We find that complementarity brings higher productivity in large firms, whereas it has no effect on small firms. Hence, large firms' surge in intangible capital combined with skilled labor accounts for an increasing trend in productivity dispersion. To rationalize the reduced-form empirical evidence, we build a general equilibrium model of heterogeneous firms subject to adjustment costs investing in tangible and intangible capital, and hiring skilled and unskilled labor. Consistent with the empirical evidence, our model delivers that an increase in asset intangibility increases the skilled premium and productivity dispersion by replacing unskilled labor with skilled labor. The model also generates testable predictions on the role of intangibility in the relation between investment dynamics and labor reallocation.
Market Concentration, Income Inequality, and Business Cycles, Slides
In recent literature, two significant trends have been well-established: the increasing concentration of markets and rising income inequality, particularly in the US economy. This has resulted in a greater concentration of sales and investment, leading to the economies depending more on large firms' sensitivities to aggregate shocks. Simultaneously, income inequality has escalated, with poor households getting stagnant and the rich getting richer. Do these two simultaneous changes have any impact on the impulse response of economies to aggregate shocks? This study establishes a connection between these trends and reveals an amplified response of aggregate consumption and output to both monetary and productivity shocks. The degree of this amplification increases with inequality, market concentration, and productivity gap among firms.
Working Paper
Two-sided Heterogenous Agent Models
The heterogeneous agent literature is based on the differences among firms or consumers. In this study, I analyze how the heterogeneity in both agents affects the general equilibrium results. The agents are different with respect to their productivity and asset holdings and they decide whether to be an entrepreneur or a worker at each period. Their productivity follows a continuous-time Poisson process. The financial markets are incomplete through collateral constraints. This setting, compared to only one side heterogeneity, captures much better the income and wealth inequality with a highly left-skewed distribution. It shows how the top 1% of society owns almost all of the wealth in the economy. The consumption and saving level differences between the rich and poor are also much closer to the data.