Research

PUBLICATIONS

"Vacancies, Employment Outcomes and Firm Growth: Evidence from Denmark" (with Jesper Bagger, Francois Fontaine and Manolis Galenianos), Labour Economics, Volume 75, 2022 [final version]

Abstract: We use comprehensive data from Denmark that merge online job advertisements with a matched employer-employee dataset and a firm-level dataset with information on revenues and value added to study the relationship between vacancy-posting and various firm outcomes. Vacancy-posting is associated with a 4.4 percentage point increase in a firm’s hiring rate and 85% of the additional hiring occurs within two months. The response of hiring from employment is twice as large as the response of hiring from non-employment. Firms that are smaller, low-wage and fast-growing are associated with larger hiring responses and that response materializes faster at larger firms, low-wage firms and fast-growing firms. We also find that separations are associated with subsequent vacancy-posting and this effect is stronger for separations to employment, consistent with replacement hiring and the presence of vacancy chains. Growth in revenue and value added strongly predict vacancy-posting, with negative shocks having a stronger effect than positive shocks and larger shocks having less-than-proportional responses.

"Job Creation and Wages in Least-Developed Countries: Evidence from Sub-Saharan Africa" (with Juan Pablo Rud), The Economic Journal, Volume 131, Issue 635, April 2021 [final version] [Online Appendix]

(circulated previously as "Wage Dispersion, Job Creation and Development: Evidence from Sub-Saharan Africa")

Abstract: Least developed economies are characterised by poorly functioning labour markets: only a small fraction of workers is in paid employment, where productivity and wages are low. We incorporate a standard search framework into a two-sector model of development to assess the importance of different obstacles to job creation and productivity. The model provides new insights in the characterisation of poorly developed labour markets that are observed in the data, such as high wage dispersion. We estimate the model using micro data for six countries in Sub-Saharan Africa and highlight the empirical relevance of labour market frictions, entry costs and skills.

"Measuring Income Inequality", IZA World of Labor, July 2019 [paper]

Abstract: Economists use various metrics for measuring income inequality. Here, the most commonly used measures—the Lorenz curve, the Gini coefficient, decile ratios, the Palma ratio, and the Theil index—are discussed in relation to their benefits and limitations. Equally important is the choice of what to measure: pre-tax and after-tax income, consumption, and wealth are useful indicators; and different sources of income such as wages, capital gains, taxes, and benefits can be examined. Understanding the dimensions of economic inequality is a key first step toward choosing the right policies to address it. 

"Employment Adjustment and Labor Utilization", International Economic Review, 58(3), August 2017 [final version - June 2016] [Online appendix]

Abstract:  Standard models of labor adjustment suppose that firms can change only the size of their workforce (the extensive margin) and not the number of hours of their existing employees (the intensive margin) in response to shocks. I propose a general equilibrium search model that allows for adjustment on both of these margins. The model includes on-the-job search that generates different vacancy filling and attrition rates across firms. I calibrate the model to a unique matched employer-employee panel of Danish firms and simulate two labor market policies aimed at promoting job creation: hiring subsidies and a reduction in the official workweek.

"Family Background and Schooling Outcomes Before and During the Transition: Evidence from the Baltic Countries", Journal of Population Economics, 21, 2008 (with Mihails Hazans and Olga Rastrigina)

WORKING PAPERS

"Parental Wealth and Early Labor Market Outcomes" (with Johan Holmberg and Michael Simmons), 2023 (draft coming up soon)

Abstract: Individuals enter the labor market under different circumstances which can have implications for their careers. In this paper, we consider the role played by parental wealth for early career labor market outcomes of young adults using matched employer-employee data for the entire population of Sweden. We find that, even after controlling for a rich set of demographic characteristics, individuals at the bottom of family wealth distribution tend to have lower earnings, lower probability to be in employment, higher income volatility, and less stable jobs at the start of their careers, compared to those with the median wealth. Moreover, the bulk of the observed relationship between parental wealth and child log earnings can be attributed to the between-firm (as opposed to the within-firm) component, highlighting the importance of allocation of individuals across firms. Finally, we interpret our results using a model of savings and search, where workers job acceptance decisions depend on their wealth.

"The interaction of public and private sector employment in least developed countries" (with Juan Pablo Rud), 2022 [pdf]

Abstract: Public sector in least developed countries comprises a large share of wage employment, tends to pay higher wages, and provides greater job stability than the private sector. These differences can reflect institutional features of the public sector, productivity shortcomings in the private sector, heterogeneity in the selection of workers, or a combination of these factors. Most importantly, if the public sector has the power to attract the most talented workers in the economy, it might deprive the private sector of a key driver of growth. The aim of this project is to investigate the determinants and the effects of public sector employment characteristics in terms of job creation, productivity, workers’ composition, and wages in the economy. We do so in two steps. First, we produce a detailed empirical description of labour market outcomes in poor economies, focusing on the difference between the private and public sectors, based on individual-level data for a number of Sub-Saharan African countries. Second, we develop and estimate a frictional labour market model to quantify the effect of the public sector wage premia on wage employment and productivity growth.

"Output Shocks and  Firm Recruitment" (with Jesper Bagger, Francois Fontaine and Manolis Galenianos), 2022 [pdf]

Abstract: Theoretical models of employment dynamics predict that firms respond to a positive output shocks by hiring more workers, which in a frictional labor market require firms to exert recruitment effort. We merge an online job advertisement dataset from Denmark with a quarterly firm-panel on revenue to provide the first direct empirical evidence on the relationship between firm output shocks and firm recruitment effort, measured by online vacancy posting. First, quarterly revenue growth is highly volatile and only very weakly correlated with vacancy posting. Second, revenue growth is well described by a stochastic process with deterministic growth, and permanent and transitory shocks. Third, firms vacancy posting is strongly linked to permanent shocks, but unrelated to transitory shocks. A 1SD permanent revenue shock increases the probability that a firm posts a vacancy by more than 50 percent of the baseline probability, and increases the vacancy rate by almost 25 percent over its baseline value. Vacancy posting responses to transitory shocks are miniscule.  

"Reallocation of Labor Resources: Evidence from Danish Firm Data", 2013 [pdf]

Abstract:   This paper presents empirical evidence based on a unique dataset drawn from a matched employer-employee panel of Danish firms that illustrates the importance of reallocation of labor resources from less to more productive firms for aggregate productivity growth. This reallocation is more prominent when differences in the work hours across firms are accounted for. In addition, this study explores the dynamic interaction between hours and employment found at the firm level. Empirical facts presented here suggest that in the short run firms use the variation in hours to mitigate changes in the number of workers.

WORK IN PROGRESS

"On the Dynamics of Firm Employment and Output" (with Jesper Bagger, Francois Fontaine and Manolis Galenianos)

"Dual Jobs" (with Jesper Bagger, Manolis Galenianos and Rasmus Lentz)

"Do Prison Industries Steal Private Sector Jobs" (with Tanya Wilson)

EARLIER WORKING PAPERS

"Access to Secondary Education in Albania: Incentives, Obstacles, and Policy Spillovers", BICEPS Working Paper, 2006 (with Mihails Hazans) [pdf]

OTHER PUBLICATIONS (not peer-reviewed)

"Retirement and Early Retirement in Latvia: Employment Prospects and Economic Inequality", in: Ritma Rungule and Ilze Koroleva (ed.), Ageing of Society: Social Protection, Inequality and Labour Market Risks”, Chapter 4, pp. 83-107, Riga: LU FSI, December 2012 (in Latvian)  ISBN10 993450605X

"Reasons and Duration of Unemployment and Social Exclusion in Latvia", as a part of a project founded by Ministry of Welfare of Latvia, Riga: LU FSI, 2006-2007 (with Mihails Hazans and Jekaterina Dmitrieva)