WORKING PAPERS
Wealth and the Geography of Job Ladders (new draft coming soon)
Workers’ wealth shapes career dynamics by influencing job search and migration decisions. While economic opportunities concentrate in large cities, high living costs often prevent many workers from taking advantage of them. I develop a framework in which wealth interacts with spatial search frictions to explain why some individuals remain stuck in low-paying jobs at the bottom of the ladder while others climb to the top. High living costs in productive cities amplify the trade-off between wages and unemployment risk, strengthening precautionary motives that lead low-wealth workers to accept lower-paying jobs. Using French administrative data, I document two facts that highlight the role of wealth. First, job ladder heterogeneity across cities is larger for low-wealth workers. Second, financial constraints limit upward mobility by reducing access to high-wage jobs in productive cities. The estimated model replicates these patterns, showing that the disproportionate sorting of low-wealth workers into low-paying jobs in high-productivity locations amplifies wage and wealth inequality. Altogether, the model accounts for approximately 30% of the residual wage inequality observed in the data, of which roughly two-thirds is due to local job ladder heterogeneity. Finally, place-based policies that improve insurance against earnings risk in high-productivity cities lead to welfare gains by enabling financially constrained workers to access steeper job ladders.
Presented at: EEA Congress 2025; XXVIII Vigo Workshop on Dynamic Macroeconomics (2025); 13th Warwick Economics PhD conference (2025)
Financial Market Participation and Earnings Risk (joint with Alberto Pobbe)
We study the role of earnings risk in shaping participation in financial markets. We document two facts, using data from Italy and the U.S., which serve to motivate our analysis. First, participation in financial markets has declined since the 1990s. Second, the variance of the persistent component of labor income has almost doubled over the same period. Using a life-cycle portfolio choice model with uninsurable labor income, borrowing constraints, and participation costs, we show that an increase in the persistent earnings risk reduces participation in the financial market. Meanwhile, an increase in the transitory risk has no effect. The effect of a higher persistent risk is weaker for younger workers, as they have a stronger incentive to accumulate wealth, and whenever they can afford it, they will prefer to participate.
Presented at: SAEe 2024
WORK IN PROGRESS
Local Job Polarization and Within Occupation Inequality (joint with Alberto Pobbe)