Past Presentations 2022

Abstract: This paper explores heterogeneous effects of automation technologies on employment rate across regions from different income groups, and investigates mechanisms through proportion of skilled workers. Automation, measured by both robotic penetration and ICT trade volumes, is replacing US labour force. Exploiting variations across US commuting zones with different income levels, I find insignificant employment response in high income areas, while the magnitudes of employment reductions are more sizeable and significant in low and middle income areas. Leveraging shift-share IV strategies and generalised model specifications, further evidence supports that these patterns can be explained by a simple net job creation channel, as displacement effects outweigh productivity effects in low income CZs with lower proportion of skilled labour, and job creations are complementing job destructions in high income CZs with higher skill shares. Such technical changes are more pronounced for manufacturing sectors.

Abstract: Although the financial position of households is found to be key for individual consumption responses to fiscal shocks, little is known empirically if household financial conditions are relevant for the spending multiplier. I explore this hypothesis using a historical sample for the U.S., a novel strategy to characterize periods with different borrowing conditions, and instrumenting government purchases with two standard spending shocks in a local projection framework. I find a spending multiplier above unity only when the economy is characterized by a larger share of households facing tight borrowing conditions, with both consumption and investment contributing importantly. The sizable response of consumption can be explained in connection to a tighter labor market, driven by stronger labor demand. The findings hold when changing the shock identification scheme, the model specification, the sample period, and the calibration of the state variable.

Abstract: This paper studies the role of conscription (compulsory military service) in promoting long-lasting beliefs and attitudes related to nation-building. We exploit random variation from a yearly lottery in Argentina, which determined who was conscripted over the twentieth century. Based on survey data from over 3,000 men exposed to the lottery, we find that conscription durably fostered a stronger national identity and promoted social integration, improving attitudes between out-group members within the country. On the other hand, we find no evidence that it affected civic values such as voting, not justifying tax evasion, and not taking the law into one's own hand. The composition of participants’ social networks and the presence of heterogeneous effects arising from differential exposure to diverse peers during the military suggest that bonding with out-groups explains the effects, though not completely. We implement text analysis tools on the contents of an open-ended question and find evidence consistent with national values and social integration, but not civic values, being actively inculcated in the military.

Abstract: This paper explores how the local sectoral composition influence the worker’s adjustment to a large economic shock. The identification strategy relies on regional variations in employment contraction of the construction sector across Spanish provinces and administrative panel data that tracks all the workers’ labor market histories (MCVL). The construction workers in heavily exposed provinces suffered a significant decline in total earnings between 2007 and 2012. This effect is explained by workers experiencing long periods of unemployment rather than wage cuts. I construct a reallocation index based on worker characteristics and local employment size within the sector. This index captures the degree to which workers from the construction sector can reallocate into other sectors. Then, I examine how sectoral composition contributes to ameliorating the shock’s impact. I provide evidence that the local sectoral composition influences workers’ likelihood of changing sectors. Individuals with more evenly distributed characteristics across sectors are less affected by the shock because they are more likely to change sectors. It implies that workers are less likely to adapt to shocks when a region has a high level of sectoral concentration. I find evidence that short-term labor market adjustment is intersectoral rather than interregional, even under asymmetric exposure. 

Abstract: We study public persuasion in elections with binary outcomes, like referendums. In our model, one or multiple senders attempt to influence the election outcome by manipulating public information about a payoff-relevant state. We allow for a wide class of sender preferences, ranging from pure self-interest to a broad set of social welfare functions, including utilitarian preferences. Our main result identifies a single-crossing property that ensures the optimality of censorship policies, which reveal intermediate states while censoring extreme states. This holds in large elections under both monopolistic and competitive persuasion. The single-crossing property holds for all self-interested senders and more generally under a mild condition for the distribution of voters’ preferences. We analyze how a sender’s optimal censorship policy changes with his preferences and voting rules, and characterize the asymptotic properties as the electorate size goes to infinity. Finally, our results shed new lights on whether media competition maximizes voter welfare. 

Abstract: In this paper I measure the effect of exposure to a foreign language in school on student achievement and labor market outcomes. I exploit a policy change in Mexico that introduced English instruction in elementary schools through the National English Program in Basic Education (NEPBE) in 2009. I construct a novel database, which contains nation-wide information of elementary school students linked to school panel data on characteristics like hours of English instruction as well as to their labor market records in adulthood. Using a Two-Way Fixed Effects (TWFE) model, I find that exposure to English instruction reduces the likelihood that an individual participates in formal sector employment. It is likely that this result is due to exposure affecting enrollment in high school and college, as my analysis focuses on young adults aged 16-24. Focusing on a sub-sample that is unlikely to be enrolled by age 16, I find that the exposure to English instruction has no effect on wages. However, I do find a positive effect among high achieving individuals. On the other hand, exposure reduced men's mobility, but increased women's. This could be explained by women substituting jobs in agriculture for manufacturing industries. Furthermore, within manufacturing, I find a strong substitution of low-English intensive jobs for high-English intensive ones. I also evaluate the effect of exposure to English instruction on students’ achievement to determine if part of the effect on wages is due to a reallocation of resources towards English instruction in primary schools, which can potentially affect the formation of human capital. I find no effects on Language and Math test scores, which suggests that the estimated effect of exposure to English language on wages is not reflecting changes to general cognitive skills. 

Abstract: The endogeneity of network formation has been a major obstacle to the empirical study of peer influence for many important types of networks, including friendship networks, buyer-supplier networks, banking networks, etc. This paper puts forward the first causal identification strategy in the literature to study the effect of endogenously formed peer relationships. I prove that causal identification holds under general conditions and needs neither a network formation model nor an outcome model to be specified. This is because the propensity scores of the unobserved confounders can be non-parametrically identified and estimated from the distribution of network links. Using the proposed method, I empirical estimate the causal effect of high school friendships on female students’ bachelor’s degree attainment. While previous literature finds that being exposed to more high-achieving boys in high school makes girls less likely to obtain a bachelor’s degree, I show that this is not true when these high-achieving boys are considered friends by the girls. In fact, one additional high-achieving male friend increases the probability that a female student graduating from college by 3 p.p. Further analysis suggests that this positive impact is not a result of increased academic ability but instead comes from a significant confidence boost. These results imply that rather than shielding girls from high-achieving boys, it would be more effective to foster friendship and close interactions among them. 

Abstract: Why do investors redeem and run? In this paper we investigate the dynamics of the decision making process of an investor and a financial intermediary in an open-end fund market using a relationship game with Bayesian updation of beliefs to understand what causes run like behavior among investors.This theoretical framework lays importance on the beliefs of the investor highlighting the key role of three factors that determines formation and length of the stay of the investor in the market; asymmetric information, portfolio quality of the financial intermediary and outside options which in turn can explain investor runs.

Abstract: I study the impact of school consolidation on school enrollment and schooling quality using its staggered roll out in the Indian state of Rajasthan. Rajasthan merged 23% of its government elementary schools to high schools in the years 2014, 2016 and 2017. Media reports and anecdotal evidence showed that consolidation led to declining school enrollment levels and lower learning outcomes. Combining the government orders on consolidation and administrative data on schools, I rule out that consolidation has a negative impact on enrollment or learning outcomes. Enrollment has not declined by more than 0.9 percent due to consolidation. The proportion of high scorers in middle school exams did not decline by more than 0.36.

Abstract: This paper studies the effects of China's economic stimulus of 2009-10 on industry investment performance and allocation trends within provinces. We identify industries with strong, weak and without government support by collecting keywords from official government documents, and estimate the differential impact by applying a difference-in-difference strategy. Quantitatively, industries with government back-up are encouraged to invest more after 2009. However, qualitatively, it results in a less efficient investment of industries with strong government intervention, which causes a poor post-stimulus allocation trend within provinces, particularly in state-dominant sectors and regions with high corruption levels or less-developed financial systems. We further confirm that this is related to the sharp increase in bank loans and severe over-investment after 2009. Overall, our findings support the view that the stimulus-driven credit expansion in China results in more resources being allocated to sectors with weaker growth prospects. 

Abstract: The effect of the US Federal Reserve FOMC Policy Meetings on asset prices has been a subject of debates in the recent academic literature. In this paper, I contribute to this debate by studying how currencies, equity implied volatility and equity prices behave on the weeks surrounding the US Federal Reserve FOMC Policy Meetings. I find a common pattern in global currencies and equity implied volatility on the even weeks surrounding FOMC meetings. These particular weeks concentrate the majority of the positive returns of non hard G10 currencies and equity implied volatility reversions since 1994. This pattern is similar to an existing pattern shown by the S&P 500 on these weeks. I also find an explanation to this common movement across these asset classes. I show that repetitive calendar effects and a small number of aleatory shocks not associated to the US Federal Reserve explain the majority of these movements.

Abstract: This paper documents real-time transmission of anti-refugee sentiment, right-wing voting and other salient political opinions via international migration networks. It shows that social and political change at the origins spills over to 1st- and 2nd-generation immigrants living elsewhere. These spillovers are stronger for immigrants less socially integrated into their host societies. Three channels facilitate the transmission: local co-ethnic diasporas, social media connections to the origins, and cross-border family ties. Using the variation in exposure to the European Refugee Crisis across countries and time periods, I show that salient events trigger learning from the origins: cross-border spillovers of anti-refugee sentiment activate when the Crisis hits the origins and contribute to the spread of right-wing populist voting. Using the new data from Google Trends and Facebook, I show that (i) elevated attention to events at the origin, and (ii) network homophily are the mechanisms behind these cross-border spillover effects. Additional evidence from the staggered passage of same-sex marriage laws across European countries reveals similar spillover effects. 

Abstract: The SSI program requires recipients earn less than $1,673 per month to remain eligible. This income threshold can be onerous to young adults attending college who need money for basic needs. This paper studies the Student Earned Income Exclusion (SEIE) which allows young SSI recipients to attend school while working. SSI beneficiaries receive up to $794 per month but this amount usually decreases by 50 cents for each dollar of earned income. However, SEIE allows SSI recipients under age 22 who attend school to exclude up to $1,930 of their monthly earnings before SSI benefits are reduced. In this paper, I will study whether SEIE affects education and labor supply. Using the Survey of Income and Program Participation (SIPP), I compare changes in the education and labor decisions of SSI recipients around the SEIE eligibility cutoff at age 22. Findings show that SSI beneficiaries a few months older than 22 – and therefore ineligible for SEIE – are less likely to enroll in school, less likely to work, and less likely to work while enrolling in school compared to those who are a few months shy of 22.

Abstract: This paper analyzes the costs and benefits of internal and external R&D activities. Using Dutch production and innovation surveys between 2000 and 2018, I document an increasing trend of R&D activities across industries and present evidence suggesting that internal and external R&D are complementary. To rationalize these findings, I build and estimate a dynamic discrete choice model of R&D, which explicitly includes specific investment costs of R&D. I find that the cost of doing external R&D is 3 to 15 times higher than the internal R&D, reflecting the transaction costs of such contract and explaining the observed small share of external R&D firms in the data. For firms in the highly-intensive R&D sector, the benefits of doing both internal and external R&D exceed the costs. I also find that the complementarity of these two R&D activities can be attributed to two sources; the cost and revenue sides. Finally, I simulate the effect of two types of R&D subsidization programs. Suppose the government does not prefer any particular R&D activity. In that case, a 20% subsidy of all R&D costs yields the most significant change in the share of R&D-active firms. On the other hand, if the government discriminates against firms to contract out their R&D while preferring firms to conduct only in-house R&D, the share of R&D-active firms practically unchanged. 

Abstract:  I study the effect of parental illness on child health in rural Bangladesh. Using a set of health conditions that I argue are as good as random, I find that parental illness has a significant negative effect on child height. Fathers’ and mothers’ illnesses have equally detrimental effects. I also find a comparable effect for children in joint families, suggesting that the intra-household safety nets are ineffective in protecting children against parental illness. Finally, I explore several potential mechanisms through which parental illness may affect child health, such as financial burden, food intake, parental health investment, time allocation, stress, and fertility choice. 

Abstract:  I study the effect of parental illness on child health in rural Bangladesh. Using a set of health conditions that I argue are as good as random, I find that parental illness has a significant negative effect on child height. Fathers’ and mothers’ illnesses have equally detrimental effects. I also find a comparable effect for children in joint families, suggesting that the intra-household safety nets are ineffective in protecting children against parental illness. Finally, I explore several potential mechanisms through which parental illness may affect child health, such as financial burden, food intake, parental health investment, time allocation, stress, and fertility choice. 

Abstract: This paper leverages granular data on fixed broadband access, and links it with administrative data from North Carolina public schools to assess how exposure to fiber broadband affects student standardized test scores. I implement difference-in-differences estimators that exploit within-student variation in high-speed broadband availability and find that exposure to high-speed broadband increases student math and reading test scores by on average 0.004 and 0.001 standard deviations respectively, however, these effects grow over time such that 6 years of exposure increase test scores by 3.8 and 2 percentage points. Furthermore, I explore potential mechanisms that could explain my results. In particular, I present evidence for increased firm competition, as well as, increased usage of supplementary educational materials (e.g. Khan Academy) and rule out income effects. 

Abstract: We estimate the impact of competition on VAT pass-through in isolated oligopolistic markets as defined by a number of Greek islands. Using daily gasoline prices and a difference-in-differences methodology, we study how changes in VAT rates are passed through to consumers in islands with different number of retailers compared to unaffected islands that have the same number of competitors. We find that both the pass-through and the speed of speed of price adjustment is increasing in the competitiveness of the market. 

Abstract: This paper proposes a new strategy for the identification of monetary policy shocks in structural vector autoregressions (SVARs). It combines traditional sign restrictions with external variable constraints on high frequency monetary surprises and central bank’s macroeconomic projections. I use it to characterize the transmission of US monetary policy over the period 1965-2007. First, I find that contractionary monetary policy shocks induce a decline in output, overturning the implications of standard sign-restricted SVARs. Second, I show that the identified monetary policy shocks and structural monetary policy equations are consistent, respectively, with historical readings of the times and Taylor-type rules. Finally, I propose an algorithm for robust Bayesian inference in SVARs identified with external variable constraints, providing further evidence in support of this approach.

Abstract: This paper quantifies the local economic effects of 147 Special Economic Zones (SEZs) that were established in India between 2005 and 2013. Combining census data on the universe of Indian firms with georeferenced data on SEZs, we find that SEZ establishment increased non-farm employment in SEZ-hosting municipalities and neighboring localities (up to a distance of 10km) while agricultural employment declined. This indicates a sectoral shift towards more productive jobs. We further show that small (informal) firms hire more workers, marginal employment declines and employment gains are centered around men. We provide suggestive evidence that the observed increase reflects new economic activity rather than relocated activity from neighboring jurisdictions.

Abstract: This paper investigates the impact of the arrival of Airbnb on the local consumption amenities in Madrid. We exploit the exogenous variation created by the timing and the unequal distribution of Airbnb listings across the urban geography to identify its effects on food and beverage establishments. Using an instrumental variable strategy, we find positive local effects on both the number of restaurants and their employees: an increase in ten Airbnb rooms in a given census tract translates into one more restaurant, and the same increase in a given neighborhood generates nine new tourist-related employees. The results are robust to sample composition, spatial spillovers and alternative measures of local consumption amenities. This paper contributes to the literature on the economic impacts of the platform economy on urban areas by providing evidence of positive economic externalities from short-term rentals. 

Abstract: The relationship between income inequality and economic growth has been debated for a long time. This paper seeks to take into account the cross-country latent group patterns by using the latest econometrics techniques, Grouped Fixed Effects (GFE), to examine the growth-inequality nexus. The estimation results from a broadly balanced panel with 70 economies from 2000-2018 indicate that there exists non-linear effects, heterogeneity and latent group patterns simultaneously in the short-run. Especially, we find the worldwide economies form three group structures. However, three economies, namely Ireland, Sierra Leone and Zimbabwe do not have any group patterns with any other economies. The results are valid for both Gini index, Gini disposable index and Gini market index, respectively. The non-linear relationship is also robust in several robustness checks. The short-run positive impact on economic growth can be treated as a complement to previous studies and Kuznets Curve.

Abstract: Poor adoption of formal health insurance in India has been a cause for concern. This paper studies the role of informal networks in explaining this phenomenon in the context of a free public health insurance scheme in the Indian states of Andhra Pradesh and Telangana. We provide a theoretical framework to explain the role played by informal networks in affecting the adoption of free health insurance. We identify two channels of influence: informal financial networks that insure risk, and informal information networks that disseminate information. Using household panel data from the Young Lives Survey we empirically test our theoretical predictions. We find that access to informal financial network discourages the adoption of formal insurance amongst households. On the other hand, we do not find any significant role of information networks in affecting insurance adoption. We further find considerable heterogeneity in these baseline effects across location and access to medical facilities. 

Abstract: This paper studies how systematic monetary policy shapes the effects of government spending shocks in the U.S. To identify the role of systematic monetary policy, we use a novel identification design, which combines a narrative account of the FOMC members’ policy preferences with an instrument that exploits the mechanical rotation of voting rights in the FOMC. We document quantitatively significant real effects for systematic monetary policy. On average, the FOMC increases the federal funds rate, counteracting the effect of expansionary fiscal spending shocks. However, a more dovish FOMC is significantly less aggressive in response to these shocks, thus accommodating a higher GDP growth and a larger fiscal multiplier. Under the counterfactual scenario where monetary policy is unresponsive to the fiscal shock, the multiplier in a three year horizon rises from zero to two. 

Abstract: We modify the standard production function estimation framework to incorporate endogenous disruptions in the productivity process due to lumpy firm investment. We investigate the differences between the existing (baseline) approach and our own (disruption) on a large proprietary panel of Greek Manufacturing firms. We find significantly different production function estimates and different results for subsequent inference. The implied average levels of productivity and magnitude of endogenous disruptions are different. The baseline model cannot capture the full dynamics of disruption costs, which extend across time. The decomposition of Aggregate Productivity Growth is substantially different under the disruption model.

Abstract: Poor air quality has been shown to harm health, but only focusing on one measure of human capital may underestimate the total welfare effects of air pollution. Air quality can also affect cognitive functioning, which may have permanent consequences, especially because human capital is a critical determinant of individual well-being, inequality, and economic growth. In this paper, I examine the relationship between fine particulate matter and learning outcomes among Indian children by leveraging the variation in pollution induced by the staggered roll-out of India’s rural road construction program. Using a representative repeated cross-sectional data on test scores and satellite measures of particulate matter, I compare within-district changes in test scores for children aged 5-16 years surveyed in different years, where districts have varying levels of particulate matter across years due to the road construction program. I show that high levels of air pollution significantly reduce reading and math test scores, with more pronounced effects for younger children..

Abstract: This paper examines the equilibrium impact of industrial robots on employment in Great Britain, at the level of both industry and district. It combines data on robot adoption by industry with district-level employment data for the period 1998-2018. The study adopts a shift-share instrumental variable research design, which uses robots' sectoral penetration rate in other European countries as an instrument. We find that one industrial robot increases employment by about 1.1 workers. This is equivalent to roughly 19,250 jobs between 1998 and 2018. Industrial robots lead to displacement effects in the transport industry which are more than offset with employment increases in services. Industrial robots in Britain are thus contributing to within-district across-industry worker reallocation, from heavy manufacturing industries to the service sector.

Abstract:  This paper proposes identification results and a consistent estimator for the marginal treatment effects in the Differences-in-Differences (DiD) setting where there are only two groups and two periods of time, the so-called 2X2 DiD setting. We show how the DiD design can be used to identify the MTE curve under a functional structure that allows for treatment heterogeneity among individuals based on the unobservable characteristics that drive selection into treatment. We then propose a control function approach for the estimation of the treatment effects, in which we identify the target parameters by controlling for the functional form of the unobserved heterogeneity. Simulation studies assert the desirable finite-sample properties of the estimator. 

Abstract:  The wage gap between black and white Americans has narrowed between the 1960s and the 1970s, but its progress has stalled since 1980. This study argues that routine biased technological change (RBTC) contributed to dampening wage gap convergence in 1980-2000, having a differential impact across races and along the wage distribution. Thus, I present new empirical evidence on occupational patterns by race and on determinants of wage disparities along the wage distribution, and rationalize them with an RBTC model in which firms engage in statistical discrimination. I show that, surprisingly, the share of employment in routine intensive occupations has increased for black workers, in contrast with a significant decrease observed for white workers. I decompose the wage gap changes using the Oaxaca-RIF methodology and show that differences in occupational sorting of the workforce increase wage disparities, thwarting wage convergence between races at the bottom of the wage distribution. Together, these new empirical findings and model provide insights to better understand the mechanisms behind racial disparities at the end of the 20th century.

Abstract:  This paper sheds light on the link between search frictions and price discrimination. I study a homogenous goods model where consumers discover prices via sequential search and firms receive binary signals about consumer valuations. The presence of a sufficiently informative signal enables the existence of equilibria with on-path search at intermediate levels of search costs. At low search costs, a structurally different equilibrium is played in which there is no on-path search, but consumers use the threat of searching to ensure low prices. Consumer welfare is maximal when search is costless. However, expansions of the set of consumers that search on-path lead to increased prices. Firm entry is generally only pro-competitive when it eliminates a monopoly and search costs are small. 

Abstract:  Following the cession of the region of Thessaly to Greece in the 1880s, agricultural estates that relied on customary Ottoman law were recognized by the Greek state as private properties. This legal change drastically altered land relations and property rights of the agricultural population. Thessaly was transformed into a region with large ownership estates based on formalized rights of use, and forms of small ownership created in the aftermath of repudiated rights of cultivation. Using historical data at the community level for property rights and population, we exploit how this change in ownership status affected regional development. Communities that transitioned towards a small ownership regime increased their respective population faster compared to other communities. Examining the underlying mechanism, we document that municipalities with higher shares of small ownership experienced positive effects on their shares of married and illiterates.

Abstract: Differences in children's skills manifest early in life and this skill gap has negative consequences for the human capital stock of a country and its development. To study potential reasons for this gap and its degree of persistence in a developing country setting, I am estimating a dynamic structural model with data from Indonesia. I take into account potential contributing factors to the skill gap like maternal education, income or environment and measure their influence on incentives to invest in children and consequently children's skill development (cognitive skills and health). Investment inputs studied are education expenditure and nutrition. I allow the substitutability of inputs and their productivity to vary over childhood to capture the varying degree of importance of inputs across periods. I find that the studied inputs are complements, with nutrition and education being more complementary in early childhood. With the help of policy experiments, I intend to quantify the impact of education and income on child development, and evaluate child development policies to increase intergenerational mobility (e.g. cash transfers, price subsidies, nutrition supplementation).

Abstract: Using German Socio-Economic Panel (GSOEP) microdata this paper contributes new empirical evidence by examining the implications of motherhood and fatherhood for wages of a sample of women and men between 2005-2015. Making use, for the first time for this research question, of a difference-in-differences approach, the study uncovers inequalities among women and men in terms of parenthood wage effects. Moreover, the study takes this analysis a step further and investigates additional possible correlations between educational background (vocational versus general background) and motherhood wage gaps by exploiting, for the first time, the difference between skills acquired through a vocational educational path versus those developed following a general one, as one of the keys factors to help to shed light on the motherhood wage gap. Results support the idea that women with a vocational background suffer from a wider motherhood wage penalty if compared to those women having a general background, which is likely due to the higher rate of vocational skills depreciation.

Abstract:  Firms’ markups cyclicality is at the heart of monetary policy transmission in the New Keynesian model. Using US Compustat data and employing local projection techniques, we uncover a novel empirical fact: dominant firms have a more countercyclical markup response after an unexpected contractionary monetary policy shock. Using a heterogeneous firms New Keynesian model with demand accumulation and endogenous markups that evolve over the life-cycle of producers, we show that this is due to the different demand elasticities faced by the firms. Dominant firms face a more inelastic demand, which implies a lower pass-through rate from costs to prices. Therefore, after a contractionary monetary policy shock, dominant firms pass less the reduction in marginal costs to prices compared to competitors, and increase their markups by more, as documented empirically. After calibrating the model to US micro-level data, we find that considering firms’ heterogeneous demand elasticities has important implications for monetary policy amplification

Abstract: The decrease in the volatility and persistence of US inflation was accompanied by a decline in the public's attention to inflation. This decline in attention weakens the effectiveness of make-up policies and negative interest rates and can lead to inflation-attention traps: prolonged periods of a binding lower bound and low inflation due to slowly-adjusting inflation expectations. To mitigate the drawbacks of lower attention, it is optimal to increase the inflation target as attention declines. Accounting for the lower bound fundamentally changes the normative implications of declining attention. While lower attention raises welfare absent the lower-bound constraint, it decreases welfare when accounting for the lower bound.

Abstract: This paper studies a two-period trading model for a divisible asset in inelastic supply with two frictions: on trading flows and on market participation. An exogenous Trading Network determines trading relationships among agents and a negative demand shock changes the market structure over time. At first, all agents are buyers in the Primary Market. Subsequently, a Secondary Market can arise with decentralized trading: at most one agent , the seller, offloads her asset holdings to her buyers defined by her networks connections. I show that this framework leads ex-ante homogenous traders to behave strategically and that the network structure completely characterizes equilibrium - namely asset prices and demands. The model boils down to a static network game of strategic substitutes played in the Primary Market. Highly connected agents emerge as market makers, buying more in the first period and selling at higher prices in the second market. The model captures the dynamics of Private Equity Financing Rounds, for example, and it highlights how private investors behavior and their access to secondary markets drive equity valuation. 

Abstract: I analyze the relationship between individualism and preferences for redistribution, using variation in immigrants’ countries of origin to capture the impact of cultural values and beliefs on personal attitudes towards income redistribution and equality. Using global individual-level survey data for more than one million individuals (including 65,000 migrants) in a large number of countries around the world, I find strong support for the hypothesis that more individualistic cultures are associated with lower preferences for redistribution. At the same time, cultural assimilation in this dimension seems to take place relatively fast, where the impact of the destination culture starts to dominate the origin culture when an individual has lived as long in the country of destination as she did in her country of origin. Moreover, I find no statistically significant effect of the origin culture on an individual’s preferences for redistribution if migration took place before the age of 10. The results are confirmed using a variety of robustness checks, including the grammatical rule of a pronoun drop as an instrumental variable. 

Abstract: The role of values for individuals’ choices is well established, and there is a growing interest in how they are determined and change over the lifecycle. Yet, little attention has been paid to the fact that individuals hold a variety of values and that there may be costs when these are not consistent with each other. This paper examines the dynamics of values over the lifecycle and the importance of consistency. Because individuals tend to hold consistent values, life events affect values both directly and indirectly through spillover effects that create interdependence when seeking consistency in values. I build a theoretical framework that jointly analyzes the dynamics of values and life events, taking into account that the latter are endogenous. I then use UK cohort data with measures of attitudes at several ages to estimate values’ inter-dependency. Relying on individuals’ histories, I quantify the impact of several life events on a set of values. The empirical results suggest that values are linked to each other in a non-reciprocal way, that they change over the lifecycle due to life events, and that spillover effects exist and are important.