I am on the job market and will be available for Interviews at the Allied Social Science Associations (ASSA), January 3-5, Philadelphia, US
A substantial fraction of job holders are under-employed, i.e., in jobs for which they are over-qualified. This paper proposes a model to analyze the mechanisms behind under-employment and its consequences for the functioning of the labor market. We show that under-employment is generally inefficient: in a competitive market, there are too many high-skill workers employed in low-productivity firms, and there are not enough high productivity firms. Under-employment generates a trickle-down phenomenon, in which unemployment trickles down from the high-skill groups to the low-skill groups. The trickle-down of unemployment exacerbates inequality across worker-skill groups by redistributing shocks from the high-skill groups to the low skill groups. As a result, high-skill workers enjoy not only higher expected income but also lower income volatility.
Income mobility across generations is usually estimated using the father-son earnings elasticity p. This paper shows that a large component of the intergenerational income process is missed by this measure: there are unobservables that are transmitted by parents and not captured by their son's earnings. Sons of successful families may preserve the high prospects for their descendants even when their own earnings are not very high and there are no reasons for the great grandfather-great grandson earnings elasticity to be p3. I provide a theoretical framework where dynasties move across careers -- labels that encompass the relevant information on the future perspectives of a dynasty --, rather than across income levels. I then characterize the intergenerational income process under this more general assumption. I propose an empirical application of the model in the contemporary US (using the PSID) where a career is approached by the main occupation at the most disaggregated level: the implied process is much more persistent than suggested by the mere father-son earnings elasticity.
In this paper, I identify a new compensating differential. Using a very detailed range of occupations at the Metropolitan Statistical Area (MSA) level in the United States, I capture a prestige malus: the relative wage of 2 occupations is negatively correlated with the relative rank that they grant to workers in a certain MSA. This “social status” spillover exerted by the local labor structure on labor supply is quite high: in 2011, in the United States, an additional rank earned on the local social scale (normalized between 0 and 100) is associated with a wage malus of 0.35-0.45% and an excess labor supply of 1.2-1.6%. These results can be empirically distinguished from other spillovers (knowledge spillovers or amenities).
Do tropical typhoons smash community ties? - paper - picture
The extent to which communities redistribute resources after natural disasters allegedly depends on the balance of power between needy households and potential givers. Matching objective and precise data on a wave of tropical typhoons with a panel household survey in Vietnam, I find less redistribution in villages where the median household is less affected than the average household, and thus unwilling to have redistribution implemented. These transfers fall below 8 cents for an income loss of 1 when the distribution of losses is highly skewed in favor of spared families and reach 25 cents in the opposite case.
Leaders' misbehaviors may durably undermine the credibility of the state. Using individual level survey in the aftermath of geo-localized social protests in Africa, we find that trust in monitoring institutions and beliefs in social coordination strongly evolve after riots, together with trust in leaders. As no signs of social unrest can be recorded before, the social conflict can be interpreted as a sudden signal sent on a leader's action from which citizens extract information on the country's institutions. Our interpretation is the following. Agents lend their taxes to a leader with imperfect information on the leader's type and the underlying capacity of institutions to monitor her. A misbehavior is then interpreted as a failure of institutions to secure taxes given by citizens and makes agents (i) reluctant to contribute to the state effort, (ii) skeptical about the contributions of others.
Star wars: the empirics strike back (with A. Brodeur, M. Lé, M. Sangnier) - paper - appendix - picture
Journals favor rejection of the null hypothesis. This selection upon tests may distort the behavior of researchers. Using 50,000 tests published between 2005 and $2011$ in the AER, JPE, and QJE, we identify a residual in the distribution of tests that cannot be explained by selection. The distribution of p-values exhibits a two-humped camel shape with abundant p-values above 0.25, a valley between 0.25 and 0.10, and a bump slightly below 0.05. The missing tests (with p-values between 0.25 and 0.10) can be retrieved just after the 0.05 threshold and represent 10% to 20% of marginally rejected tests. We propose a method to measure the number of missing tests and decompose it along articles' and authors' characteristics.
Work in progress:
How does unemployment affect macroeconomic fluctuations? One answer naturally arises from the observation that workers can borrow against their labor contract. Accordingly, in credit-constrained environments, the value of the collateral -- the labor contract -- determines their capacity to transfer consumption across periods. Turbulences in labor markets affect the structure of aggregate demand through two channels. First, unemployed households lose their access to credit. This channel is direct and linear. Second, unemployment risk may constrain employed households, by reducing sufficiently the value of their contract. This channel only appears for sufficiently large recessions. In the end, the state of labor markets determines the share of hand-to-mouth consumers in the economy and consequently the degree of intertemporal mismatch between demand and supply.
Optimal unemployment benefits (with R. Barnichon and S. Fujita)
Endogenous defaults (with P. D'Erasmo, N. Gennaioli, A. Martin)
In countries with low financial development and weak tax monitoring, austerity plans may have dramatic recessionary effects because they affect the degree of informality of the economy. We argue in this paper that firms face a trade-off between tax payments and access to credit when choosing to declare their activity. A tax hike has a direct effect on the degree of tax evasion but also an indirect one through credit markets. A tax increase tightens the credit constraints of firms and depresses even further their incentives to be transparent. Using a dataset of about 30'000 Greek firms per year over the period 2002-2011, we provide evidence that firms adjust their declared profitability, and this adjustment depends on the tax burden and their need for credit. We then calibrate our model and show that leakages due to tax evasion are quite high : a 22% increase in tax rates only delivers a 2.6% increase in tax receipts. The investment slack is the result of a contracting demand for credit by small and medium size firms explained by tax evasion.
Human capital and social stratification - paper
Natural disasters and economic disruption - paper