Research

Publications:

"Goods and Factor Market Integration:A Quantitative Assessment of the EU   Enlargement" (joint with L. Caliendo, L. D. Opromolla and F. Parro)

      Journal of Political Economy, 2021, 129(12), pages 3491-3545

Working papers: NBER, CEPR DP12213, CEP DP 1494.

Media coverage: VOXEU

Abstract: The economic effects from labor market integration are crucially affected by the extent to which countries are open to trade. In this paper we build a multi-country dynamic general equilibrium model to study and quantify the economic effects of trade and labor market integration of the 2004 European Union enlargement. In our model, trade is costly and households of different skills and nationalities face costly forward-looking relocation decisions. We use the EU Labour Force Survey to construct annual migration flows by employment status, skill, and nationality across EU countries for the period 2002-2014. We exploit the timing of the changes in policies due to the EU enlargement to identify the changes in migration costs. We apply our model and use these estimates, as well as the observed changes in tariffs, to quantify the effects from the enlargement. We find that new member state countries are the largest winners, with heterogenous effects across skill groups. We find smaller welfare gains for EU-15 countries. However, in the absence of changes to trade policy, the EU-15 would have been worse off after the enlargement. We study even further the interaction effects between trade and migration policies, the importance of the timing of migration policy, and the role of different mechanisms in shaping our results. Our results highlight the importance of trade for the quantification of the welfare and migration effects from labor market integration. We also use our framework to quantify the general equilibrium effects of imposing migration and trade restrictions due to Brexit.

"The Value of Managers' Export Experience: Lessons from the Angolan Civil War (joint with G. Mion and L. D. Opromolla)

Forthcoming at the Review of Economics and Statistics

       Working papers: CEPR DP 11706, CEP DP 1458, CESifo WP, Banco de Portugal WP 1/2017

       Media coverage: The world Economic Forum, VOXEU and LSE Business Review, Lavoce (Italian)

 Abstract: The distribution of performance across exporting firms is far from even. Some exporters achieve a superior performance, while others barely survive. In this paper we study the role of managerial knowledge in determining the chances a firm has to export in a new market. We focus on the Angolan civil war, and the exporting behavior of Portuguese firms in the Angolan market. The sudden end of the Angolan civil war allows us to conduct an event study to asses firms’ entry decisions distinguishing between firms that, in the aftermath of an exogenous conflict-related shock, have a manager with export knowledge in the Angolan market versus firms without such in-house knowledge. We leverage on the natural experiment and an instrumental variable approach to have a setting with quasi random assignment of managers’ knowledge to firms. We find that the market knowledge brought to the firm by the manager doubles the probability of entering the Angolan market.

"The Short and Long Run Effects of the Refugee Crisis in Europe" (joint with L. Caliendo, L. D. Opromolla and F. Parro) 

American Economic Association, Papers & Proceedings, vol 113, May 2023, pages 577-84

Working paper: CEPR 30879

European countries experienced a large increase in labor supply due to the influx of Ukrainian refugees after the 2022 Russia invasion. We study its dynamic effects in a spatial model with forward-looking households of different skills, trade, and endogenous capital accumulation. We find that real GDP increases in Europe in the long term, with large distributional effects across countries and skill groups. In the short run, an increase in the supply of labor strains the use of capital structures that takes time to build. Over time, countries that build capital structures increase output, resulting in potential long run benefits.

"Globalization in the time of COVID-19"  (joint with Marina Steininger)

Covid Economics: Vetted and Real-Time Papers, Issue 19, 159-210, May 2020

Working paper: CESifo wp n°8184

Abstract: The economic effects of a pandemic crucially depend on the extent to which countries are connected in global production networks. In this paper we incorporate production barriers induced by the COVID-19 shock into a Ricardian model with sectoral linkages, trade in intermediate goods and sectoral heterogeneity in production. We use the model to quantify the welfare effect of the disruption in production that started in China and quickly spread across the world. We find that the COVID-19 shock has a considerable impact on most economies in the world, implying an average 12.9% drop in GDP across countries. Moreover, we show that global production linkages have a clear role in explaining the observed magnitudes. Finally, we show that the economic effects of the COVID-19 shock would have been marginally worse in a closer economy, with an average drop of GDP of 13% across countries. Our results contribute to the recent debate on the renationalization of global production. We show that renationalization would not help countries mitigate the impact of global pandemic shocks, and would itself imply enormous GDP losses.

Working papers:

"The Financial Channels of Labor Rigidities: Evidence from Portugal" (joint with E.M. Acabbi and E. Panetti) NEW version October 2022

Abstract: We study how labor rigidities affect firms’ responses to credit shocks. Using novel data on the universe of workers, firms, banks and credit in Portugal, we establish three main facts. First, a short-term credit supply shock leads to a decrease in firms’ employment and size and to a greater probability of exit, but the effects are con- centrated on firms deriving greater value added from labor within their industries. Second, this exposure to liquidity risk stems from exposure to high-skill workers’ compensation: the shock disproportionately affects productive firms with a high- skilled specialized labor force that requires greater investment in on-the-job training. Third, given labor costs exposure, productivity does not attenuate the effects of credit shocks. Our findings suggest that labor rigidities are an important driver of the lack of productivity-enhancing reallocation throughout financial crises.

"Credit and firms' organization?"  (joint with E.M. Acabbi) NEW version coming soon

Winner of: Best Presentation Award (Unicredit & Universities)

Working paper: CESifo wp n°8084

Abstract: What happens to firms’ organisational structure when they are hit by a negative shock? By matching employer-employee data with firm loans and bank balance sheets, I study firm reactions to a credit shock–the global financial crisis–and compare it to a trade shock–the entry of China in the WTO. When hit by a credit supply shock, firms reduce employment of higher skilled workers more than lower skilled production workers, while no adjustment is found on the wages. In contrast, a trade shock affects the hierarchy of the firm from the bottom to the top: firms rescale the organisation and reduce employment at all levels. Results support the existence of heterogenous complementarities between capital and skills along the hierarchy of the firm: a shock to credit hits workers in the middle of the hierarchy, while a trade induced demand shock affects the scale of the firm, hence all skills proportionally. 

Resting papers:

"The Weather Effect: estimating the effect of voter turnout on electoral outcomes in Italy" 

Abstract: This paper examines the effect of variation in voter turnout to electoral outcomes in Italy. I use data on spatial distribution of turnout for 2008 and 2013 to examine how it can affect differences in electoral outcomes. Exploiting the exogenous variation in weather conditions across municipalities I use rainfalls to instrument for turnout levels: if non-voters systematically differ from habitual voters in terms of their characteristics or preferences, the effect of turnout on the electoral outcome can generate "extreme" outcomes. I find that bad weather decreases turnout and that a higher turnout favours the Movimento 5 Stelle, while both the Democrats and the Centre are negatively affected.

Policy Papers:

The Performance of TNCs’ Affiliates across European Regions, C. Altomonte, L.  Saggiorato and A. Sforza, UNCTAD, TNC Journal (2012) here

FDI in Lombardy: A comparative analysis of Foreign Direct Investments across European Regions, C. Altomonte, L. Saggiorato and A. Sforza, Camera di Commercio di Milano (2012) here