Work in Progress

Being Young in Spain and the Scars from Recessions, 2023  (with Ismael Gálvez-Iniesta and Matthias Kredler). Manuscript, Universidad Carlos III de Madrid. Link 

Abstract: Evidence from Spanish administrative data suggests that the Great Recession may have had long-lasting effects on employment and wages, with heterogeneous impacts across different demographic groups. To assess the long-run effects of recessions on workers' careers, we develop a model of cyclical fluctuations in the labor market. Young workers in the model are more likely to be employed under temporary contracts than older workers, increasing their likelihood of facing a job separation when a recession hits. Low job-finding rates during recessions imply that displaced workers will likely face a long period of unemployment and lower skill accumulation, feeding into worse future labor market outcomes. Our results imply that high-school graduates entering the economy at the start of the GR suffered the highest lifetime earnings losses of about 82 thousand euros. High-school dropouts and college graduates experienced losses of about 42 and 47 thousand euros. The interaction between skill accumulation and the dual labor market drives the long-lasting effects of recessions, particularly for young workers entering the economy when a recession starts.

Labor Supply and Occupational Choice, 2022 (with Luisa Fuster, Gueorgui Kambourov, and Richard Rogerson). NBER Working Paper 30492. Link 

Abstract: We document a robust negative relationship between mean annual hours in an occupation and the dispersion of annual hours within that occupation. We study a unified model of occupational choice and labor supply that features heterogeneity across occupations in the return to working additional hours and show that it can match the key features of the data both qualitatively and quantitatively. Occupational choice in our model is shaped both by selection on comparative advantage and selection on tastes for leisure. Our quantitative work finds that the dominant source of differences in hours across occupations is selection on tastes for leisure.

Public Financing with Financial Frictions and Underground Economy, 2021 (with Luisa Fuster and Tomás R. Martinez). Working Paper 32495, Universidad Carlos III de Madrid. Link NEW VERSION 

Abstract: What are the aggregate effects of informality in a financially constrained economy? We develop and calibrate an entrepreneurship model to data on matched employer-employee from both formal and informal sectors in Brazil. The model distinguishes between informality on the business side (extensive margin) and the informal hiring by formal firms (intensive margin). We find that when informality is eliminated along both margins, aggregate output increases 9.3%, capital 14.7%, TFP 5.4%, and tax revenue 37%. The output and TFP increases would be much larger if informality were only eliminated on the extensive margin, a result that supports the view that the informal economy can play a positive role in an economy with financial frictions. Finally, we find that the output cost of financing social security in our baseline model is about twice as large as the one in an economy with no frictions.

Hours, Occupations, and Gender Differences in Labor Market Outcomes, 2017 (with Luisa Fuster, Gueorgui Kambourov, and Richard Rogerson). NBER working paper 23636. Link

Abstract: We document a robust negative relationship between the log of mean annual hours in an occupation and the standard deviation of log annual hours within that occupation. We develop a unified model of occupational choice and labor supply that features heterogeneity across occupations in the return to working additional hours and show that it can match the key features of the data both qualitatively and quantitatively. We use the model to shed light on gender differences in labor market outcomes that arise because of gender asymmetries in home production responsibilities. Our model generates large gender gaps in hours of work, occupational choices, and wages. In particular, an exogenous difference in time devoted to home production of ten hours per week increases the observed gender wage gap by roughly eleven percentage points and decreases the share of females in high hours occupations by fourteen percentage points. The implied misallocation of talent across occupations has significant aggregate effects on productivity and welfare.

Occupations, Life cycle Wage Growth, and Inequality, with Luisa Fuster, Gueorgui Kambourov, and Richard Rogerson.

Dual Employment Protection Legislation and teh Size Distribution of Firms, with Roman Fonsati and Matthias Kredler. 

Household Risk, and Insurance over the Life cycle, with Luisa Fuster, Gueorgui Kambourov and Richard Rogerson. 

The Optimal Propagation of Real Shocks in a CIA Economy, with Ricardo Cavalcanti.