We argue that a substantial portion of the downward historical trend in U.S. research productivity is a composition effect resulting from self-selection in researcher ability and the dramatic expansion of the research sector. We estimate said effect with a Roy-like model of researcher supply using 1960-2021 U.S. microdata. Our results suggest that average researcher ability has decreased by half as a result of selection. The decline in efficiency-unit adjusted researcher productivity is therefore half of that documented in the literature. Embedding our model of researcher supply within a standard semi-endogenous growth model, we show that accounting for selection can lead to substantial upward revisions in model-predicted long-run growth rates.

We provide a number of insights into the nature and consequences of monopsony power through the lens of comparative advantage, where employers' power in wage setting stems from match-specific rents. Chief among them is that employers will apply larger wage markdowns to workers with greater comparative advantage at their firm. This leads to stronger monopsony power over more productive workers, provided the workers' comparative advantage aligns with their absolute advantage. Using Brazilian administrative data, we confirm this prediction: monopsony disproportionately affects high-wage workers within firms and workers at high-paying firms. The model, calibrated to our estimates for Brazil, predicts minimum wages increase both wages and formal employment for more productive workers while pushing less productive workers out of formal employment. 

This paper studies firm diversification over 6-digit NAICS industries in U.S. manufacturing. We find that firms specializing in fewer industries now account for a substantially greater share of production than 40 years ago. This reallocation is a key driver of rising industry concentration: specialized firms have displaced diversified firms among industry leaders---absent this reallocation concentration would have decreased. We then provide evidence that specialized firms produce higher-quality goods: specialized firms tend to charge higher unit prices and are more insulated against Chinese import competition. Based on our empirical findings, we propose a theory in which growth shifts demand toward specialized, high-quality firms. We conclude that one should expect rising specialization in a growing economy.  

Do larger firms operate in larger markets? This paper studies the sorting between firms and locations in U.S. retailing. I decompose retailers' production in a particular location into firm- and location-fixed effects (FE). A firm is assigned a larger FE if it produces more than other firms in the same markets; a location is assigned a larger FE if firms tend to produce more in this market than they do in other markets. I find a U-shaped relation: large- and small-FE retailers tend to operate in large-FE markets, while middle-FE retailers tend to operate in small-FE markets. I argue that the U-shaped sorting points toward models where profits depend on firms' market share in their operating locations, such as Kimball demand or oligopolistic competition. By incorporating the U-shape sorting, these models alter previous studies' predicted implications of the spatial expansion in retailing and placed-based policies that target small markets.

This paper studies firm diversification over 6-digit NAICS industries in U.S. manufacturing. We find that firms specializing in fewer industries now account for a substantially greater share of production than 40 years ago. This reallocation is a key driver of rising industry concentration: specialized firms have displaced diversified firms among industry leaders---absent this reallocation concentration would have decreased. We then provide evidence that specialized firms produce higher-quality goods: specialized firms tend to charge higher unit prices and are more insulated against Chinese import competition. Based on our empirical findings, we propose a theory in which growth shifts demand toward specialized, high-quality firms. We conclude that one should expect rising specialization in a growing economy.