I am a postdoctoral fellow at the University of Chicago Becker Friedman Institute.
In the summer of 2021, I will join the department of economics at Harvard University, first as a postdoctoral fellow, then as an Assistant Professor.
My research focuses on Macroeconomics, Spatial Economics and Labor Economics. I also have interests in the use of Continuous-Time Methods.
CV You can find my CV here.
Unemployment rates differ widely across local labor markets. I offer new empirical evidence that high local unemployment emerges primarily because of elevated local job losing rates, even for observationally identical workers. I then propose a theory in which spatial differences in job loss arise endogenously. Highly productive employers prefer to fill their vacancies rapidly, as waiting implies foregoing high profits. Therefore, they sort into high wage locations with few vacancies per job seeker while less productive employers sort into tight labor markets with low wages. Jobs at more productive employers are endogenously more stable, and spatial gaps in job losing rates arise. In contrast, the equilibrium response of reservation wages results in a flatter profile of job finding rates across locations. Due to labor market frictions, productive employers over-value locating close to each other. Thus, the optimal policy incentivizes productive employers to relocate to areas with high job losing rates, providing a rationale for commonly used place-based policies. After structurally estimating the model on French administrative data, I show that it accounts for over 90% of the cross-sectional dispersion in unemployment rates, as well as for the respective contributions of job losing and job finding rates. Employers’ inefficient location choices amplify spatial unemployment differentials five-fold. Finally, I show that both real-world and optimal place-based policies yield sizable welfare gains at the local and aggregate level.
Firm and Worker Dynamics in a Frictional Labor Market, with N. Engbom, S. Mongey and G. Violante
This paper develops a continuous-time random-matching model of a frictional labor market with firm and worker dynamics. Multi-worker firms choose whether to shrink or expand their employment in response to productivity shocks to their decreasing returns to scale technology. Growing entails posting costly vacancies, which are filled either by the unemployed or by employees poached from other firms. Firms also choose optimally when to enter and exit the market. Tractability is obtained by proving that, under a parsimonious set of assumptions, all worker and firm decisions can be characterized by comparisons between marginal surpluses which only depend on firm’s productivity and size. As frictions vanish, the model converges to a standard competitive model of firm dynamics. A parameterized version of the model yields longitudinal and cross-sectional patterns of net poaching in response to productivity shocks that are in line with the data. The model also generates a drop in job-to-job transitions as firm entry declines, offering an interpretation to U.S. labor market dynamics around the Great Recession. All these outcomes are a reflection of the job ladder in marginal surplus that emerges in equilibrium.
Location as an Asset, with E. Rossi-Hansberg
Conditionally accepted, Econometrica
The location of individuals determines their job opportunities, living amenities, and housing costs. We argue that it is useful to conceptualize the location choice of individuals as a decision to invest in a "location asset". This asset has a cost equal to the location's rent, and a payoff through better job opportunities and, potentially, more human capital for the individual and her children. As with any asset, savers in the location asset transfer resources into the future by going to expensive locations with good future opportunities. In contrast, borrowers transfer resources to the present by going to cheap locations that offer few other advantages. As in a standard portfolio problem, holdings of this asset depend on the comparison of its rate of return with that of other assets. Differently from other assets, the location asset is not subject to borrowing constraints, so it is used by individuals with little or no wealth that want to borrow. We provide an analytical model to make this idea precise and to derive a number of related implications, including an agent's mobility choices after experiencing negative income shocks. The model can rationalize why low wealth individuals locate in low income regions with low opportunities even in the absence of mobility costs. We document the investment dimension of location, and confirm the core predictions of our theory with French individual panel data from tax returns.
WORK IN PROGRESS
Solving Heterogeneous Agent Models with the Master Equation
This paper proposes a general method to analyze and compute equilibria in heterogeneous agent economies with aggregate shocks in continuous time. Treating the underlying distribution as an explicit state variable, a single value function defined on an infinite-dimensional state space provides a fully recursive representation of the economy: the 'master equation' recently introduced in the mathematics mean field games literature. I show that analytic local perturbations around the steady-state drastically reduce dimensionality. The First-order Approximation to the Master Equation (FAME) reduces to an explicit value function with only twice the number of idiosyncratic states. The FAME has five main advantages: (1) block-recursive structure bypassing price or distributional fixed points; (2) explicit stability and convergence speed results; (3) applicability when many distributional moments or prices enter individuals' decision such as trade, spatial or wage ladder settings; (4) fast numerical implementation using standard finite difference methods bypassing dimension reduction; (5) amenability to higher-order perturbations necessary in settings such as asset pricing. I apply the method to two business cycle economies: a precautionary savings model with a wage ladder, and a multi-industry-location model with migration and trade in intermediate inputs.