Nasir Hossein Dad 

We study the impact of firms lobbying activities on innovation and aggregate productivity in the United States. We build a quantitative model where firms make decisions about lobbying and R&D investments to grow. Lobbying can either complement R&D by increasing its returns or substitute for R&D as an alternative way to boost profits, making the net effect theoretically ambiguous. To determine which effect dominates on average, we use firm-level lobbying data and a shift-share instrumental variable strategy to estimate the causal effect of lobbying on R&D expenditure. We find that lobbying significantly reduces R&D expenditure at the firm level. We calibrate the model to the U.S. economy and find that eliminating lobbying would lead to a 3.5% increase in aggregate productivity. The gains are primarily driven by improvement in firm-level productivity distribution, through an increase in firm-level innovation. We then use the model to evaluate the impacts of U.S. Senator Elizabeth Warren’s proposal to tax lobbying progressively and find that such a policy could increase aggregate productivity in the U.S. by 1.57%. 

I study the impact of equity frictions and policy distortions on aggregate productivity, investments in productivity and average firm size. I document that economies with deeper equity markets have higher productivity, invest more in productivity, have larger firms on average and exhibit lower elasticity of productivity to distortions. I build and calibrate a general equilibrium model with endogenous entry and productivity investments and find that equity frictions and policy distortions can account for up to 50 percent of TFP losses. I show that the equity frictions amplify the productivity effect of distortionary policies by affecting productivity investment channel, dampening aggregate productivity and economic growth.

We examine the impact of labor market polarization on educational attainment using micro-data and a quantitative life-cycle model with endogenous human capital decisions. Empirically, the share of employment in low-skill and high skill occupations are rising between the period 1980-2005, while share of employment is falling in middle-skill occupations. During the same period, educational attainment is stagnant. Quantitatively, the changes in relative wages can account for a 25% increase in educational attainment, sorting into occupations accounts for 5% and distribution of human capital accounts for 65% increase.

We investigate how entrepreneurial human capital shapes the outside option of entrepreneurs when they return to paid work. To the extent that entrepreneurial human capital investment is specific to business ventures, and thus unrecoverable upon exit, former entrepreneurs suffer a wage loss when returning to paid work. Using data on Portuguese work histories, we find that entrepreneurial wage loss is 13 percent immediately after returning to paid work and persists for 8 years. We show that wage losses increase with entrepreneurial experience: the wage loss of return entrepreneurs with 1 year of entrepreneurial experience persists for 4 years while those with 10 years of experience do not surpass never-entrepreneurs in our sample time frame. Our results imply that return entrepreneurs select into sectors and locations with relatively low wages.