Research

I study how knowledge facilitates firm-level growth across space. Using US Census microdata, I identify establishments specialized in knowledge production for other establishments of the firm. Firm growth is disproportionately concentrated near these establishments, suggesting that within-firm geographic frictions inhibit the perfect replication of knowledge across production units in space. I show that these specialized knowledge establishments relate to increased learning and adoption of firm knowledge in the firm’s production establishments. These findings motivate a dynamic model of firm growth via the accumulation of knowledge in which firms jointly determine where to locate their production of knowledge and output. The firm’s problem is dynamic, combinatorial, and features many continuous state and choice variables, so I solve it using a novel computational algorithm. I estimate the model and use it to understand the effects of geographic shocks. Counterfactual analysis demonstrates that firms’ knowledge investment decisions amplify the welfare effects of local productivity shocks by 21% and propagate these effects to other regions.

How similar are labor and product market power? Using US Census Bureau data on establishment shipments, we show that measuring product market concentration at the location where sales takes place, as opposed to where production occurs, breaks the otherwise tight connection between the two. We find that the strength of the relationship is dictated by the tradability of output in the sector. We develop a multi-region general equilibrium model featuring both types of market power that can rationalize our empirical findings. Equipped with our model, we study how labor and product market power jointly shape the passthrough of productivity to the real wage following a reduction in trade costs.

Using a unique dataset of 30,000 ZIP codes, we examine wage convergence and divergence patterns in the US since 1994, revealing several key insights. First, wage growth follows a U-shaped pattern as a function of initial wages, with convergence below the median and divergence above it. Second, convergence stems from rapid wage growth in low-wage ZIP codes across all commuting zones, driven by their specialization in low-wage services experiencing significant aggregate growth. Third, divergence is driven by “Superstar ZIP Codes” concentrated in high-wage commuting zones that specialize in high-wage business service industries that exhibit fast local wage growth. Finally, while Superstar ZIP codes contribute nearly half of US wage growth over the past 30 years, they generate limited local wage growth spillovers but significantly drive up house prices in their commuting zones.

Slides for a version of the paper using Compustat

We investigate whether ideas are getting harder to find by examining firms’ production of patents over the last four decades. We construct a new bridge matching U.S. patents to the universe of U.S. firms, and exploit data on firms’ payroll, R&D and SG&A expenditures to construct a range of knowledge stocks. We find that elasticities with respect to all of these knowledge stocks rise over time for patents breakthrough patents, and patents weighted by external citations, but fall for patent value. These results suggest that while ideas are getting easier to find, valuable ideas are increasingly elusive.

Empirical researchers often have to map data provided for a "reporting" spatial unit, say counties in 1900, to a "reference" one, say, counties in 2010. We discuss a general method to create such crosswalks: computing the share of the area of each reporting unit nested in a given reference unit. Using these shares, data can be re-aggregated from the reporting to the reference units. We apply the method to construct a crosswalk for US county-level data since 1790 to present-day counties or commuting zones. We also provide the code to generate other crosswalks given maps of reporting and reference units.