Paper Abstracts and Downloads
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"Superstores or Mom and Pops? Market Size, Technology Adoption, and TFP Differences"
(Job Market Paper)
Abstract: Most theories of total factor productivity (TFP) emphasize production-side
frictions, such as barriers to technology adoption. I argue that for the retail sector, which
employs around one-fifth of the private workforce, cross-country TFP differences are
driven instead by demand-side factors. I hypothesize that in developing countries, the
use of highly productive large-scale retail formats, such as hypermarkets and supermarkets,
is limited by low household income and high household transportation costs. Thus less
productive "mom and pop" stores are used more widely in poorer countries. I formalize
my theory in a spatial model of technology adoption in which market size drives the mix
of retail formats used and retail sector TFP. When parameterized, the model suggests that
market size could account for roughly one half the retail TFP gap. I argue that policies which
deter car ownership reduce the size of the market for large-scale retail stores, and I
calculate that removing such policies could lead to sizeable TFP gains.
January 1, 2008 Version [.pdf ]
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"Why are Wages Smoother Than Productivity? An Industry-Level Analysis"
with Guillermo Ordoñez
Abstract: In this paper we document a new fact about the cyclical behavior of productivity
and wages. Using industry-level time series on wages and labor productivity, we
show that in high-wage industries, wages respond relatively little to industry productivity
shocks, whereas in low-wage industries, productivity movements result
in a relatively large movements in wages. In other words, wages are substantially
”smoother” than productivity over time in high-wage industries. To explain this fact we develop
a variant of the Thomas & Worrall (1988) wage contracting model. The two key features
of our model are match-specific skills, which serve to increase wage smoothing
in the contract, and exogenous match separations, which serve to reduce smoothing.
We show that, empirically, a higher fraction of the skills of the high-wage workers
are match-specific than the skills of low-wage workers, and that job separation rates
are lower for high-wage workers than low-wage workers. A calibrated version of the
model accounts quite well for the facts at hand. We conclude that match-specific capital
is a major factor driving the extent that risk sharing occurs between workers and firms.
March 2007 Version [ .pdf ]
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"Unionization, Wage Rigidity, and the Decline of Cyclical Job Separations"
with Burcu Eyigungor
Abstract:
Fifty years ago cyclical fluctuations in the U.S. unemployment rate were driven largely
by changes in job separation rates. Since then, job separation rates have become less and less
cyclical, and have accounted for an increasingly smaller share of unemployment volatility. What
accounts for this long-term decline in the importance of cyclical job separations? We argue that the
decline in unionization in the United States
is the driving force. Using disaggregated
time-series evidence on job separations rates, we show that most of the decline in separation volatility
is concentrated in industries and occupations where unionization rates fell the most. Furthermore, we
argue that the relative ayclicalilty of job separations in the last two recessions can be traced to the
large-scale de-unionization of the early 1980s.
We construct a search and matching model comprised
of a unionized sector and non-union sector, where unionized workers obtain contracts that favor rigid wages
and adjustment to negative shocks through layoffs. Future work will assess the model's quantitative
ability to match the decline in job separation volatility.
-- Draft in Progress --
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"Wage Rigidity and Industry Employment Fluctuations"
with Guillermo Ordoñez
Abstract: Shimer (2005) shows that a calibrated version of the Mortensen-Pissarides job search
model produces just 10% of the cyclical variation in unemployment and vacancies than can be
found in aggregate US data. A number of studies, such as those of Hall (2005) and Menzio (2006),
have proposed wage rigidity, which amplifies the effect of a productivity shock on hiring, as a
resolution to the puzzle. In this paper we explore the plausibility of the wage rigidity hypothesis
using industry-level data on wage rigidity and employment fluctuations, and an industry version of
Shimer's model. Our model predicts that the response of industry productivity shocks on industry
employment should be around three times higher in industries with the most rigid wages as in those
with the least rigid wages. In the data, however, we find virtually no link in the cross section of industries
between wage rigidity and the responsiveness of employment to productivity. We interpret our
findings as evidence against the wage rigidity hypothesis.
-- Draft in Progress --
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"Inflation Inequality in the United States" with Bart Hobijn
Review of Income and Wealth, Dec 2005 Abstract: Different spending patterns across households and differences in price increases across goods and services
lead to unequal levels of inflation faced by different households. In this paper we measure the
degree of inequality in inflation across U.S. households for the period 1987–2001. The broad picture
that emerges from our results is that over our whole sample period there are substantial differences in
the inflation experiences across U.S. households. We find that the cost of living increases were generally
higher for the elderly, in large part because of their health care expenditures, and that the cost of
living of poor households is most sensitive to the, historically large, fluctuations in gasoline prices. Still,
when looking at the whole population, we find that individual households that are confronted with
high inflation in one year do not generally face high inflation in the subsequent year as well. Dec 2005 Version [ .pdf ]
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
"Social Security and the Consumer Price Index for the Elderly" with Bart Hobijn
Current Issues in Economics and Finance, May 2003
Abstract: Some argue that social security benefits should be adjusted using a price index that reflects the
spending habits of the elderly rather than those of workers. This study suggests that if such an
index were adopted today, over the next forty years benefit levels would increase and the social
security trust fund could become insolvent up to five years sooner than projected.
May 2003 Version [ .pdf ]
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= |
