Research

Working papers

• Recent Changes in Firm Dynamics and the Nature of Macroeconomic Trends

Ola Bengtsson Award

• Micro PPI-Based Real Output Forensics with Timo Boppart, Mikael Carlsson, Markus Peters 

• Preference Heterogeneity and Portfolio Choices over the Wealth Distribution with Gualtiero Azzalini, Zoltán Rácz

Work in progress

• More Than the Sum of Its Parts? Markups and the Role of Establishments with Joshua Weiss

We study how firms grow along two margins---their number of establishments and their sales at each establishment---and ask how variable markups distort each margin. Using Swedish data on the universe of services firms, we find two novel facts. First, each successive establishment a firm opens is smaller than its previous establishments, conditional on establishment age. Second, there is an increasing relationship between a firm’s sales per establishment and its markup, but no clear relationship between a firm’s number of establishments and its markup. We develop a model of competition between potentially multi-establishment firms to rationalize our findings, and calibrate it to the Swedish economy. The extensive margin of firms' decisions (how many establishments to open) is responsible for only 9% of losses relative to the first best; the remaining 91% is misallocation of production across the existing set of establishments. However, the extensive margin is important for the design and effectiveness of firm size-dependent policy due to a novel trade-off between the benefit of large firms increasing production at their existing establishments and the cost of them opening new, low quality establishments. In an alternative model in which size does not decline across a firm's successive establishments, losses from the extensive margin are ten times higher, and firm size-dependent policy is three times as effective.