Research

Working Papers

 "The Effects of Employer Concentration on Wage Inequality: Better Sorting or Uneven Rent Extraction?" - submitted 

We provide empirical evidence for mechanisms associated with labor market concentration. Using French matched employer-employee data, we first show that concentration increases local wage inequality within occupations. We study two possible mechanisms: employer concentration could i) generate a better worker selection that both increases inequality and generates efficiency gains (better sorting) or ii) reduce the bargaining power of the lowest earners relatively more (uneven rent extraction). We find that employer concentration increases within-firm inequality, decreases between-firm inequality and does not increase positive assortative matching. Based on the theoretical predictions from a simple formalization, we interpret these results as supporting the second mechanism.

"Energy, Inflation and Market Power:\\ Excess Pass-Through in France"

We explore how, in the French manufacturing sector, producer prices vary with market power during a severe episode of energy price hikes (between January 2020 and February 2023). Our work provides some empirical evidence in favor of a role for firms' market power in explaining inflation, and in favor of the "sellers' inflation'' hypothesis Weber and Wasner (2023): in less competitive sectors, firms could use the energy price hike to increase their prices more than warranted by actual changes in costs. Using a rich dataset on French manufacturing firms' balance sheets, we first estimate markups at the firm-level, and aggregate them at the sectoral level. We then study the response of the producer price index (PPI) to a change in spot energy prices, depending on average market power within sectors. We show that, in sectors with higher markups, prices increase relatively more: in the least competitive sector, firms pass through up to 110% of the energy shock, implying an excess pass-through of 10 percentage points. In addition, we find that the association between markup and pass-through is even higher when markup dispersion is low, consistent with the argument that firms engage in price hikes when they expect their competitors to do the same. 

  "Fire Sales and Bank Runs in the Presence of a Saving Allocation by Depositors"

In this paper, we introduce a new mechanism into a banking model featuring distressed sale of assets (fire sales). As in reality, depositors choose between the liquid deposits of banks and the illiquid assets of funds from which early withdrawals are not possible. Our model reflects that dynamics, showing that two inefficiencies arise due to a pecuniary externality. The first inefficiency is well-known: banks do not keep enough liquidity buffers. The second inefficiency is that depositors do not invest the optimal amount into institutions that can be subject to runs (banks) relative to institutions that are preserved from runs (such as pension funds). To investigate whether there is too much deposits in banks or in pension funds, the direction of the inefficiency is studied numerically. Simulations show that the banking sector can be too big relative to pension funds, and that liquidity ratios -aimed at making banks less risky- can decrease welfare by increasing incentives to deposit into banks. 

    "Bank run, liquidity ratios and shadow banks"

In a banking model in which coordination failure bank runs arise due to a game between investors taking the withdrawal decision of deposits, I introduce a choice by the bank manager of an unobservable effort that affects the mean of the distribution of returns. First, when the equilibrium of investors game is unique, a more precise private information of investors allows to better incentivize managers: expected return is higher. Second, a trade-off of liquidity ratios is identified: they can eliminate the coordination failure but also decrease the expected return. In the two-sector version of the model, a non-regulated sector, the shadow banking sector (SBS) coexists with the regulated traditional banking sector (TBS) and a micro funded choice by households between TBS and SBS is introduced. In the presence of ratios eliminating banks runs in the TBS, the TBS can be as risky as the SBS due to the effect of ratios on effort.

Publications

Revue d’Economie Financière ("Financial Economics Review") n°109, March 2013 « Unregulated Finance »:

- "Measuring the shadow banking system in the Euro Area : what does the ECB know? " (Joint with P. Artus)

   Link to English version

- "The shadow banking system: the result of an excessive banking regulation or a real economic role?"

    Link to French version