Research

Publications

Job Polarization and Structural Change
(Joint with Christian Siegel), 2018
American Economic Journal: Macroeconomics, 10(1): 57-89.
Job polarization is a widely documented phenomenon in developed countries since the 1980s: employment has been shifting from middle to low- and high-income workers, while average wage growth has been slower for middle-income workers than at both extremes. We show that polarization has started as early as the 1950-60s in the US, and that this process is closely linked to the shift from manufacturing to services. Based on these observations we propose a structural change driven explanation for polarization. In order to analyze not only the evolution of employment shares, but also of relative wages, we extend one of the standard frameworks of structural change by modeling the sectoral choice of workers in a Roy-type setup. Introducing this novel feature does remarkably well in matching the sectoral labor market outcomes over the past 50 years.
slides

The AEA featured some data from the paper in their Chart of the Week (from 15 January 2018).
The Guardian featured some of the findings in an article on Sunday 20 August 2017; see here. They were also covered in the Japan Economic News.

The Minimum Wage and Inequality, 2016
Journal of Labor Economics, Part 1, 34(1): 237-274.
In the last 30 years wage inequality increased steeply while real minimum wages fell. In this paper I demonstrate that a general equilibrium model with endogenous skill choice is required to correctly evaluate the implications of minimum wage changes. The minimum wage not only truncates the wage distribution, but also affects skill prices and therefore changes the incentives that people face when making educational decisions. The calibrated model suggests – in line with recent empirical literature – that even though minimum wages affect the bottom end of the wage distribution more, their impact on the top end is significant as well.
Working Papers

NEW Engines of Sectoral Labor Productivity Growth (Joint with Christian Siegel), 2019
We study the origins of labor productivity growth and its differences across sectors. In our model, sectors employ workers of different occupations and various forms of capital, none of which are perfect substitutes, and technology evolves at the sector-factor cell level. Using the model we infer technologies from US data over 1960-2017. We find sector-specific routine labor augmenting technological change to be crucial. It is the most important driver of sectoral differences, and has a large and increasing contribution to aggregate labor productivity growth. Neither capital accumulation nor the occupational employment structure within sectors explains much of the sectoral differences.

NB: This paper and "Biased Technological Change and Employment Reallocation" (see below) jointly supersede a previous paper entitled "Disentangling Occupation- and Sector-specific Technological Change" which was circulated as CEPR Discussion Paper, DP12663.

NEW Capital Flows in an Aging World (Joint with Nicolas Coeurdacier and Stéphane Guibaud), 2019
We investigate the importance of worldwide demographic evolutions in shaping capital flows across countries and over time. Our lifecycle model incorporates cross-country differences in fertility and longevity as well as differences in countries’ ability to borrow inter-temporally and across generations through social security. In this environment, global aging triggers uphill capital flows from emerging to advanced economies, while country-specific demographic evolutions reallocate capital towards countries aging more slowly. Our quantitative multi-country overlapping generations model explains a large fraction of long-term capital flows across advanced and emerging countries.

NEW Self-employment and Tax Evasion: Evidence from Industry–occupation Data, 2019
In this paper I study whether the choice to become self-employed is in part
driven by the opportunities it provides in income tax evasion. Using  variation in the statutory tax rates across countries, industries, and occupations, and controlling for country–industry and industry–occupation fixed effects, I find that while the share of self-employed is strongly positively correlated with the tax rate on wage income, it is weakly negatively correlated with the tax rate on self-employed income. The asymmetry between the effects of the tax rates suggests that those who choose self-employment partly do so in order to evade taxes. This margin of
adjustment – between employment and self-employment – should be taken into
account when considering the effects of tax rates on labor income, on taxable income and on welfare.

Work in Progress

Labor, Technological Advances and Schooling (Joint with Moshe Buchinsky and Tamás K. Papp)

Biased Technological Change and Employment Reallocation (Joint with Christian Siegel), 2018
To study the drivers of the employment reallocation across sectors and occupations between 1960 and 2010 in the US we propose a model where technology evolves at the sector-occupation cell level. This framework allows us to quantify the bias of technology across sectors and across occupations. We implement a novel method to extract changes in sector-occupation cell productivities from the data. Using a factor model we find that occupation and sector factors jointly explain 74-87 percent of cell productivity changes, with the occupation component being by far the most important. While in our general equilibrium model both factors imply similar reallocations of labor across sectors and occupations, quantitatively the bias in technological change across occupations is much more important than the bias across sectors.
slides

We summarized our findings and their implications in a (nontechnical) VoxEU column and a post on ProMarket.org, the blog of the Stigler Center at the University of Chicago Booth School of Business.

NB: This paper and "Engines of Sectoral Labor Productivity Growth" (see above) jointly supersede a previous paper entitled 'Disentangling Occupation- and Sector-specific Technological Change', CEPR Discussion Paper, DP12663.

Dormant Projects

Some Tax Evasion - More Redistribution: A Political Economy Model of Tax Evasion

Income Inequality and the Progressivity of Taxes in a Coalition Formation Model

Increasing Skill Premium and Skill Supply - Steady State Effects or Transition?