Research

(Abstract). Modern economies are organized as dense production networks, yet comovement is typically understood through observed Input-Output linkages and vertical cascade effects. This paper argues that this view is incomplete. I show that comovement fundamentally depends on horizontal complementarities: the extent to which sectors share upstream suppliers or downstream buyers. These similar demand and supply network structures induce simultaneous responses to idiosyncratic shocks, shaping the sign of comovement. The theoretical framework developed disentangles vertical from horizontal transmission, offering a unified view of comovement rooted in the horizontal geometry of common economic interactions rather than trade intensity. Complementing the vertical propagation, horizontal transmission generates systematic comovement that prevents shocks from averaging out but does not rely on cascading amplification for aggregate fluctuations. Using U.S. Input-Output data, I show that sectoral employment responses vary systematically with demand and supply distances, with nearby sectors exhibiting dampened or opposing responses and distant sectors comoving positively.

JEL: C67, D57, E32, J21

KEYWORDS: production networks, Input-Output economy, horizontal transmission, network distance, sectoral comovement, aggregate fluctuations

(Abstract). This paper examines the determinants of U.S. wage inequality between industries. It distinguishes two channels of Skill-Biased Technological Change: a quantity effect, mirroring variations in the distribution of capital and labour inputs, and a structural effect, reflecting differences in substitution elasticities across factors of production. Counterfactual exercises show that evolving technological heterogeneity in substitution patterns dominates wage dispersion. A quantitative decomposition reveals that structural forces, mostly reflecting substitutability of routine with non-routine labour, account for 94% of observed wage variance, exacerbated by stronger sorting and segregation effects. Upon neutralising structural differences, the quantity channel reckons merely 6-15%. Indeed, structural heterogeneity, rather than mere changes in factor quantities, is the dominant force behind U.S. wage inequality.

JEL: E24, J31, J82, L16

KEYWORDS: wage inequality, technological change, labour force composition, elasticity of substitution