Sorting Low-Income Workers [Paper] - Draft now available!
Latest version October 2025
Presented at UK Census User Conference UKDS (Manchester, June 2025)
Abstract. I study work incentives over the intensive margin of labour by exploring age eligibility rules, housing tenure and deprivation to identify the effects of the Universal Credit welfare system in the UK on low-income workers. Motivated by the descriptive evidence documented in this paper, I examine the discontinuity in the age eligibility cutoff in its relationship with hours of work. Using data from the UK Census 2021 for England and Wales, I estimate i) the impact of the increase in income allowance at the age eligibility cutoff and ii) the policy boost in the taper rate of the benefits system in November 2021, by implementing a regression discontinuity design and a propensity score matching estimation. The estimates suggest a positive and significant effect on worked hours induced by the increase in income benefits at the age eligibility cutoff and are indicative of sorting of low-income workers into industry sectors. I find a significant treatment effect on treated that raises worked hours in the class 16-30 hours per week and its associated probability by 0.6 percentage points. These findings underscore the importance of in-work progression policies and further income benefits increases that can support low-income workers in moving out from low employment contracts.
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Blog at the UK Data Service Data Impact Blog
Workforce Wage Gap in Space, Labour Market Transformations and Structural Inequality [Paper] - Draft now available!
Latest version December 2025
Presented at Labour Force and Annual Population Surveys User Conference UKDS (UCL, June 2025)
Abstract. This paper studies within space structural variations on wage inequality and the workforce wage gap in the UK. I first analyse the factors contributing to the workforce wage gap across geographical regions and the causes affecting wage inequality along the lines of vertical segregation, horizontal segregation and labour market transformations. I then examine the causal effects of the Gender Wage Gap Reporting Policy–a policy reform enacted in the Equality Act 2010 (Specific Duties and Public Authorities) Regulation 2017 in the UK–on the workforce wage gap. Using data from the British Quarterly Labour Force Survey, I implement a synthetic control method to examine the effects of the policy across geographical regions. Synthetic control method estimators estimate the treatment effects by finding a weighted combination of units for the control group that best resembles the characteristics of the treated group in the absence of the policy. I find a positive impact effect of the policy and after the policy implementation the average treatment effect on treated is 2.32%. The result is robust to a wide variety of synthetic control method model specifications.
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Illiquid Heterogeneous Banks, the Marginal Propensity to Lend and the Bank Term Funding Program [Paper] - Draft available upon request
Latest version August 2025
Abstract. This paper studies the redistribution effects of liquidity programs and regulations in an incomplete market economy with heterogeneous banks. I develop a theoretic environment in which liquidity frictions and illiquidity costs generate a redistribution of assets between banks and across assets that occurs through an imperfect substitution of resources. I demonstrate that through the effect on the price of illiquid assets, the model gives rise to an endogenous marginal propensity to lend different between large and small banks and between liquid and illiquid banks. I further show how the redistribution of liquidity affects equilibrium distribution of banks and the endogenous marginal propensity to lend. I validate the model using micro level data on US banks and I find a positive cross sectional effect on the banks' marginal propensity to lend. In examining the Bank Term Funding Program, the results indicate that the program tightened the marginal propensity to lend by 1 percent. Finally, I quantify the implications of the model and of the aforementioned program by calibrating it to US commercial banks.
Heterogeneous Banks, Liquidity Risk and the Distribution of Banks' Liquidity [Paper] [Appendix] - New draft available upon request
Latest version December 2025
Presented at Spring Midwest Macroeconomics Meeting (Fed of Kansas City, May 2025), Midwest International Trade & Theory Conference (Virginia Tech Blacksburg, March 2025), NASMES North American Summer Meeting of the Econometric Society (Vanderbilt Nashville, June 2024), T2M Theories and Methods in Macro Conference (Amsterdam, May 2024), RES Royal Economic Society Annual Conference (Belfast, March 2024), EWMES European Winter Meeting of the Econometric Society (Manchester, December 2023)
Abstract. This paper studies banks' size expansion, sorting of banks by type and how banks make decisions by internalising ex-ante and ex-post liquidity regulations. I first propose a theoretical model of heterogeneous banks in an incomplete market economy in which I design liquidity regulations that account for uninsurable deposit withdrawal shocks. The characterisation results show that ex-ante liquidity regulations allocate liquidity to large banks and lead to banks' size expansion through liquidity that originates from the inflow of deposits. The necessary conditions for the expansion in banks' size are the withdrawal effect on deposits that has to be internalised by banks and the measurability of the expanded set. I then show how the sorting of banks by type arises. Since the distribution of banks is part of the equilibrium, I find that 2.2 percent of banks are constrained at the medium liquidity constraint. I study the effect of liquidity regulations on liquidity crises. Ex-ante liquidity regulations mitigate the severity of liquidity crises by reducing the contraction in banks' liquidity to deposits by 24.03 percent less relative to ex-post regulations. The theoretical economy supports ex-ante liquidity regulations for banks to withstand a sudden outflow of deposits and counteract liquidity crises.
Non-Technical Summary at University of Liverpool Research News
Theories of Bank Heterogeneity, Liquidity, Credit Risk and Monetary Shocks: A Literature Review [Paper] - New draft available upon request
Latest version December 2025
Abstract. This paper reviews the theoretical and quantitative macroeconomic literature on bank heterogeneity. In the first part I present facts on the distribution of banks and I motivate own theoretical study of heterogeneous banks and monetary policy uncertainty by documenting the evidence of unconventional monetary policies in heterogeneously affecting banks according to their characteristics. I then discuss the specific features of the current state of heterogeneous banks theories, the ways they differ and what I believe are their limitations. I complement the analysis by empirically analysing the implications of monetary policy shocks on the rebalancing mechanism of banks' assets between liquid and illiquid assets. I find a 10.9 and 10.1 percent reduction in illiquid assets growth for banks with more liquid assets pre and post the financial crisis, respectively. The purpose of this paper is to raise consciousness of the importance of embedding heterogeneity in the financial sector of macroeconomic theories that aim to provide positive and normative analysis of monetary policies measures and to propose suggestions for further research.
Growth and Productivity: A Spatial Model of the Workforce Wage Gap
Latest version December 2025
Weakness in Italy's Core Inflation and the Phillips Curve: the Role of Labour and Financial Indicators, Bank of Italy Occasional Papers, with Antonio Maria Conti
Abstract. We investigate the dynamics of core inflation in Italy, with a special focus on the period of low inflation after 2014, and through the lens of a Phillips curve framework. Composite indicators for the Italian labour and financial markets are constructed and included in a Phillips curve. Several results emerge from the empirical analysis. First, a statistically significant trade-off between core inflation and economic activity is observed, especially when measures of slack are derived from labour market variables. Second, financial indicators can help to better characterize the dynamics of core inflation. Third, when controlling for financial indicators, the slope of the Phillips curve turns out to be flatter, except for when it is measured by the amount of slack based on broad labour market conditions. Fourth, a steepening in the Phillips curve emerges in the aftermath of the Global Financial Crisis, while a stabilization is evident at the end of the sample. Fifth, non-linear techniques suggest that the weakness in core inflation may be especially dependent both on the level of labour market tightness and on that of trend inflation. These findings have non-negligible implications for modelling and forecasting inflation dynamics in Italy.