Adrien Bilal


I am a postdoctoral fellow at the Harvard University Department of Economics, and a Faculty Research Fellow at the National Bureau of Economic Research.

In the summer of 2022, I will join the Department of Economics at Harvard University 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.

Contact adrienbilal (at) fas (dot) harvard (dot) edu @AdrienBilal Google Scholar

CV You can find my CV here.


The Geography of Unemployment

NBER Working paper 29269

Unemployment rates differ widely across local labor markets. I offer new empirical evidence that high local unemployment emerges because of elevated local job losing rates. Local employers, rather than local workers, account for most of spatial gaps in job stability. I then propose a theory in which spatial differences in job loss arise endogenously, due to the spatial sorting of heterogeneous employers across local labor markets. Labor market frictions induce productive employers to over-value locating close to each other. The optimal policy incentivizes them to relocate to areas with high job losing rates, providing a rationale for commonly used place-based policies. I estimate the model using French administrative data. The estimated model accounts for over three fourths 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. Both real-world and optimal place-based policies can yield sizable local and aggregate welfare gains.

Outsourcing, Inequality and Aggregate Output, with H. Lhuillier

NBER Working Paper 29348. 20 minutes podcast by InequaliTalks

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 more productive firms either hire many imperfectly substitutable worker types in-house by posting wages along a job ladder, or rent labor services from contractors who hire in the same frictional labor markets. Three implications arise. First, more productive firms are more likely to outsource to save on higher wage premia. Second, outsourcing raises output at the firm level. Third, labor service providers endogenously locate at the bottom of the job ladder, implying that outsourced workers receive lower wages. Using firm-level instruments for outsourcing and revenue productivity, we find empirical support for all three predictions in French administrative data. After structurally estimating the model, we show that the rise in outsourcing in France between 1996 and 2007 raised aggregate output by 3% and reduced the labor share by 0.7 percentage points. A 9% minimum wage increase stabilizes the labor share and maintains two thirds of the output gains.

Labor Market Dynamics When Ideas are Harder to Find, with N. Engbom, S. Mongey and G. Violante

NBER Working paper 29479

This paper evaluates the impact of slowing economic growth on labor market dynamism and misallocation. It provides a model of endogenous growth via imitation in a frictional labor market. The framework accounts for rich data on worker job-to-job transitions as well as stochastic and lifecycle properties of firm growth and job reallocation. High productivity entrants gradually replace obsolescing incumbents by poaching their workers, a process that is intermediated via a frictional labor market. When the likelihood of entrants imitating technologies in the tail of the distribution falls (ideas are harder to find), so does growth. Consistent with US data over the past 30 years, firm entry, incumbents’ employment response to productivity shocks, and job-to-job transitions decline, while the share of old firms increases. With lower imitation, however, there is less misallocation, because the slower rate of obsolescence induces productive growing firms to invest more in costly hiring.


Firm and Worker Dynamics in a Frictional Labor Market, with N. Engbom, S. Mongey and G. Violante (link to Online Supplement)

Forthcoming, Econometrica. NBER Working paper 26547

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

Econometrica, Vol. 89, No. 5 (September, 2021), 2459–2495 (link to Online Supplement)

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.


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.