Research
Research Statement
Published papers
The welfare effects of unemployment insurance in Argentina: New estimates using changes in the schedule of transfers (with Martín González-Rozada) Journal of Human Resources, accepted for publication.
Unemployment insurance transfers should balance the provision of consumption to the unemployed with the disincentive effects on the search behavior. To provide evidence about the effects of this policy we exploit kinks in the schedule of transfers in Argentina. Our results suggest that higher benefits increase re-employment wages and, at the same time, induce little behavioral responses in job-finding rates. We use a sufficient statistics formula from a model with random wage offers and we calibrate it with our estimates. We show that welfare could rise substantially if benefits were increased in Argentina. Importantly, our conclusion is relevant for the median eligible worker.
Do Trade Agreements contribute to the decline in Labor Share? Evidence from Latin American Countries (with Martin González-Rozada) World Development, 177.
In this paper, we explore the role of trade in the evolution of labor share in Latin American countries (LAC). We use trade agreements with large economies (US, EU, and China) to capture the effect of sharp changes in trade. During the last two decades, the countries that signed these trade agreements experienced a negative trend in labor share, while in the remaining countries there is an average increase in this share, generating a gap of 7 percentage points. We apply synthetic control methods, combined with regression analysis, to estimate the average causal impact of trade agreements on labor share. While effects are heterogeneous in our eight case studies, the average impact is negative between 2 to 4 percentage points of GDP four years after the entry into force of the trade agreements. This result is robust to the specification used and to the set of countries in the donor pool. We find that trade agreements with more labor-abundant counterparts affect labor share more, in line with traditional Heckscher–Ohlin forces. We also find that, after trade agreements, exports of manufactured goods and the share of industry to GDP increase on average, most notably in the case studies where negative effects on labor share are significant, a fact compatible with enhanced participation in Global Value Chains. Finally, a decomposition shows that all the reduction in labor share is explained by a negative impact on real wages.
Wage dynamics and worker mobility during deep recessions (With Anete Pajuste) Baltic Journal of Economics, 19(1), 52-83. 2019.
We provide empirical evidence of the relationship between downward wage rigidity and unemployment volatility by comparing wage dynamics and worker mobility during the Great Recession in two countries where wages adjusted very differently: Latvia and Spain. Using a panel of social security administrative data, we find that wages in Spain were rigid even during periods of rising unemployment. In contrast, Latvian wages were reduced and wage cuts affected 60 percent of jobs. At the same time, the elasticity of workers’ transition rates into and out of unemployment to productivity shocks was four times higher in Spain than in Latvia, and these responses were more persistent in Spain. This evidence is consistent with theoretical models that show that unemployment volatility is higher when wages are rigid.
Entrepreneurial Overconfidence: evidence from a public program (With Guadalupe González) Journal of Economic and Business Studies, 2(5). 2019.
In this study, we use data taken from a survey of entrepreneurs that participated in a government program of Buenos Aires to provide evidence of entrepreneurial overconfidence. All the applicants are scored and ranked by the program. Although this ranking is common knowledge, we find prevalent overconfidence among applicants: more than 80% of respondents ranked themselves above the median when asked to compare themselves with other participants. Additionally, we show that 60% of entrepreneurs declared that they will perform much better than average in the future, while the re- sults were centered on the average when asked about past performance. Furthermore, the provision of information about other entrepreneurs made respondents tend toward moderate optimism. We discuss the implications of these findings for policies aimed at fostering entrepreneurship.
Motivated Attribution and Entrepreneurial Confidence (with Guadalupe González) International Academic Journal of Entrepreneurship, 1(1), 1-17. 2019.
In this paper, we argue that entrepreneurial overconfidence can be the result of pursuing self-motivation rather than a cognitive bias to be corrected, and we propose a particular mechanism for this process. Through a model of motivated attribution, we analyze the problem of agents who can use causal attribution to explain away bad signals about their ability to preserve self-confidence and commit to effort. This behavior can result in individuals reporting the receipt of past signals in an unbiased way while maintaining biased beliefs about their self-abilities. We provide testable implications of our model.
Optimal Unemployment Benefits in the Presence of Informal Labor Markets (With Martín González Rozada) Labour Economics, 41(C), 2016, 204-227.
We assess optimal unemployment benefit level and duration in a labor market with many informal jobs. Using administrative data from Argentina, a country with high informality, we exploit discontinuities in duration, and a reform that increases benefits. We find that increasing benefits hardly extends unemployment spells but raises re-employment wages. In contrast, extending unemployment benefits prolongs unemployment spells with no effect on re-employment wages. In a search model, we derive sufficient statistics to analyze the welfare effects of a reform that increases benefits by shortening duration. Calibrating our formula using our empirical results, we find that welfare would increase with higher benefits and shorter duration.
Public funding for startups in Argentina: an impact evaluation (With Inés Butler and Gabriela Galassi) Small Business Economics, 46(2), 2016, 295-309. DOI 10.1007/s11187-015-9684-7
A broad literature has found that the misallocation of entrepreneurial talent has strong effects on productivity. To investigate whether the government can improve entrepreneurial activity, we analyze a policy aimed at promoting innovative startups through the provision of funding and technical assistance to potential entrepreneurs in Buenos Aires, Argentina. We conduct a survey and use regression discontinuity methods to identify the effects of the policy. We find significant effects on enterprise creation and survival as well as on employment. Overall, we show that small-scale public policy can help entrepreneurs overcome a wide variety of barriers to firm entry and improve the allocation of their entrepreneurial talent.
Optimal Life Cycle Unemployment Insurance. (With Claudio Michelacci.) American Economic Review, 105(2), 2015, 816-59.
We argue that US welfare would rise if unemployment insurance were to be increased for young workers and decreased for old. This is because young workers have little means to smooth consumption during unemployment, and want jobs to accumulate high-return human capital. So unemployment insurance is highly valuable to them while the induced moral hazard problem is mild. We consider a life cycle model with unemployment risk and endogenous search effort, that we calibrate to match US labor market institutions. We find that allowing unemployment replacement rates and other government transfers to decline with age yields sizeable welfare gains which amount to more than two thirds of the gains attained under the constrained optimal scheme for unemployment insurance over the life cycle.
Working papers
Unemployment Insurance when the Wealth Distribution Matters (With Facundo Piguillem and Nicholas Trachter)
This paper analyzes the welfare effects of unemployment insurance in a life-cycle model, focusing on partial vs. general equilibrium effects. We study an OLG economy with learning-by-doing human capital accumulation. Agents can be employed or unemployed. While unemployed agents costly search for new jobs. We calibrate the model to the U.S. economy, and find that replacement ratio and potential duration are close to the current one. But, in contrast with the previous literature, we find that the optimal policies under general and partial equilibrium are almost the same. Through a series of exercises we conclude that the life-cycle model provides two key components, crucial for welfare evaluation: it emphasizes workers' insurance needs by accurately reproducing the left tail of the wealth distribution, and generates a realistic response of precautionary savings to transfers.
Taxing for Health in Latin America (with Leandro Arozamena, Pablo Sanguinetti and Federico Weinschelbaum) Department of Economics Working Papers 2024_03, Universidad Torcuato Di Tella.
Short version: Excise Taxes: Is Health a Priority in Latin America? May 2024.
Inequality in Unemployment Risk over the life-cycle (with Claudio Michelacci)
Destruction of Cognitive and Noncognitive Skills in Adulthood (With Nelson Oviedo and Pablo Lavado)
The formation of cognitive and noncognitive skills in adulthood has been scarcely studied in the economic and psychological literature. The lack of studies addressing this production process is explained in part by past results pointing to the stabilization of skills at the last years of adolescence. However, recent evidence supports the malleability of skills during adulthood. Following the latter strand of the literature, we identify events associated with the destruction of skills during this age. Furthermore, we evaluate the effects of the skills dynamics on labor market outcomes such as wages and employability. We extend the model of formation of skills (Cunha and others , 2010) and estimate it in its reduced form using the 1970 British Cohort Study. Results show that three or more months of unemployment are related to a decrease of 0.15 SD of skills level.
Education, signaling and the allocation of entrepreneurial skills (With Leandro Arozamena) Research Department working papers 1102, CAF Development Bank of Latin America.
Non-Contributory Pensions and Savings: evidence from Argentina (With Martín González-Rozada) IDB Working Paper Series IDB-WP-629, IADB.
Education, signaling and mismatch (With Leandro Arozamena) Research Department working papers 916, CAF Development Bank of Latin America.
The Effects of Unemployment Insurance Under High Informality: Evidence from Argentina (With Martín González Rozada) Department of Economics Working Papers wp201403, Universidad Torcuato Di Tella.
Impacto de las políticas de Fomento al Emprendedorismo: el caso de ‘Buenos Aires Emprende’. (With Inés Butler, Gabriela Galassi and Guadalupe González) CAF Working Paper, Nro 2012/11. Nov. 2012.
Protecting Workers against Unemployment in Latin America and the Caribbean: Evidence from Argentina (With González-Rozada, M. and L. Ronconi) IDB Working Paper No. IDB-WP-268. dec. 2011.
Inequality in Unemployment Risk and in Wages. (With Claudio Michelacci and Josep Pijoan-Mas.)
Other unpublished papers and miscellany
The Emergence of Blueberry Exports in Argentina. (With Gabriel Sánchez, Inés Butler and Ricardo Rozenberg) In Export Pioneers in Latin America, Charles Sabel, Eduardo Fernández-Arias, Ricardo Hausmann, Andrés Rodríguez-Clare and Ernesto Stein, Ed., IADB, Rockefeller Center for Latin American Studies-Harvard University, 2012.
Effects of Argentina’s Social Security Reform on Labor Markets and Poverty. (with María Laura Alzúa) PEP MPIA Working Paper N. 2011-11. June 2011.
“Unemployment volatility puzzle and the specifications of the matching model”. Master's thesis. June 2008. [.pdf]
“El trabajo independiente en los registros de la Seguridad Social”. In Trabajadores Independientes, Mercado Laboral e Informalidad en Argentina, Fabio Bertranou and Roxana Maurizio Eds. International Labor Organization, Buenos Aires, 2011. [link]
“The Emergence of New Successful Export Activities in Argentina: Self-Discovery, Knowledge Niches, or Barriers to Riches” with Gabriel Sánchez, Ricardo Rozenberg and Inés Butler. IADB Working Paper. March 2008. [link]
“Uso y adopción de tecnología informática en el mercado laboral de Argentina” with Pablo Brassiolo and Paula Nahirñak. AAEP annual meeting. Nov. 2006. [.pdf]
“Políticas de Empleo e Inclusión Digital” with Pablo Brassiolo, Paula Nahirñak and Eliana Miranda. Sept. 2005. [.pdf]
“La dinámica del empleo y las empresas en el sector formal en Argentina” with Daniela Felcman, Susana Kidyba and Gabriel Sánchez. AAEP annual meeting. Nov. 2004. [.pdf]
“La verdadera presión tributaria en la Argentina” with Nadin Argañaraz, Pablo Brassiolo and others. IERAL and AEA. 2004.
"Medición del Ingreso laboral: Ajustes a los datos de la EPH para el análisis de la distribución del ingreso (1993-2002)" with Daniela Felcman and Susana Kidyba. AAEP annual meeting, Nov. 2003. [.pdf]
"Reformas de la Seguridad Social y estructura del mercado laboral: el caso de Argentina." with Pablo Brassiolo and Guillermo Mondino, Conferencia Interamericana de Seguridad Social. Nov. 2003.
"Growth, Structural Change and the MDGs for Sub-Saharan Africa- Some Lessons from Recent Fast Growers" with Gabriel Sánchez, Inés Butler, Rosario Flores-Vidal. Contribution to the Industrial Development Report, 2004, ONUDI. Nov. 2003.
“Manufacturing Job Dynamics and Productivity in Argentina 1990-2001” with I. Butler and G. Sánchez, mimeo, 2002.
“Proyección del Empleo y el Desempleo”, with Jimena Macció. Mimeo, Universidad Católica Argentina. 2002.
Políticas de Desarrollo Regional y Local. Grupo Sophia. Dec. 1999.