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.

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

Biased Technological Change and Employment Reallocation (Joint with Christian Siegel), 2018
Previously circulated as 'Disentangling Occupation- and Sector-specific Technological Change', CEPR Discussion Paper, DP12663

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.

We wrote a post about our findings on at Chicago Booth; see here.

Capital Flows in an Aging World (
Joint with Nicolas Coeurdacier and Stephane Guibaud), 2018

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 capital flows across advanced and emerging countries and a significant portion of the prolonged decline in the world interest rate.

paper new version

Taxation and Self-employment

In this paper I study the relation between self-employment and the tax rates on wages and on self-employment income. Using variation in the statutory tax rates across countries, industries, and occupations, 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 extensive 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.

paper slides

Work in Progress

Labor, Technological Advances and Schooling (Joint with Moshe Buchinsky)

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?