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%. 

This paper studies the aggregate impact of equity and debt frictions in economies with systematic distortions. Using cross-country evidence, I document that deeper equity markets are associated with higher TFP, more investment in productivity, larger average firm size and weaker systematic distortions. I develop a model of heterogeneous firms in general equilibrium with endogenous entry and productivity investments financed through equity and debt. Equity and debt frictions, coupled with systematic distortions reduce aggregate productivity by 40%. Eliminating equity markets reduces TFP by 8% compared to 2% for eliminating debt markets. Lack of both equity and debt markets lowers TFP by 19%, nearly doubling the sum of stand-alone effects which highlights a strong amplification mechanism due to the loss of substitution between financial markets. The quantitative importance of both equity and debt frictions is larger in less distorted economies, whereby the returns to productivity investments are higher.  

We examine the impact of labor market polarization - the comparatively slow growth in employment and wages for middle-skilled jobs on educational attainment, using micro data and a quantitative model with endogenous human capital decisions. Empirically, we find bulk of the polarization of labor markets is driven by non-college graduates transitioning across occupation over time. Quantitatively, we find that changes in the relatively wages across occupation dampens educational attainment by 10.64 percentage points, whereas changes in the occupational sorting lowers educational attainment by 1.47 percentage points. Our results highlight that polarization of labor markets has negatively impacted the incentives to attend college and therefore slowed down the growth in educational attainment.

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.