Research

Innovation, Demand for Skills and Productivity Growth (Job Market Paper) [PDF]

Young firm activity shares have been declining in the U.S. and the decline has been particularly pronounced in the high-tech sector post-2000. Do labor market frictions play a role in declining young firm activities and the associated slower productivity growth? Using a longitudinal worker-firm matched dataset from the U.S. Census Bureau, I document that declining young firm activities are accompanied by: 1) a decline in the growth rate of the demand for skills in the high-tech sector, and 2) a flattening of the life cycle of skilled labor accumulation of high-tech firms. By developing an endogenous growth firm dynamics model that is consistent with the micro-level skilled labor accumulation over the firm life cycle, I show that rising frictions in skilled labor adjustment can explain the joint evolution of young firm employment shares and demand for skills. These frictions influence productivity growth through affecting the stock of human capital firms possess. A calibrated model shows that a rise in skilled labor adjustment costs lowers productivity growth by 75 basis points in the high-tech sector. A rise in entry costs, on the other hand, is not likely the main driver for declining young firm activities, as it implies an increase in demand for skills. Finally, productivity gain (loss) from reallocation can be offset by the general equilibrium effects of reallocation on aggregate demand for skills.

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices

(with Michael J. Cafarella, Gabriel Ehrlich, John Haltiwanger, Ron Jarmin, David Johnson, Edward Olivares, Luke Pardue and Matthew Shapiro), work in progress

How do Firms Innovate? A Product Price and Quantity Based Assessment

work in progress

Firms as Surrogate Intermediaries: Evidence from Emerging Economies [PDF]

(with Hyun Song Shin), working paper

A firm can finance investment either by borrowing or by drawing on cash balances, so that financial asset and liability changes tend to have opposite signs. In contrast, financial intermediaries borrow in order to lend, so that financial asset and liability changes have the same sign. Large non-financial firms in China and India behave like intermediaries rather than textbook non-financial firms. We explore the role of nonfinancial firms in the shadow banking system. The evidence from China and India is in contrast to US non-financial firms, which conform to the textbook predictions.

Media Coverage: Financial Times on February 7, 2014 in the article “Original sin in emerging markets: it's back”; Live Mint joint with Wall Street Journal on Feb 11, 2014 in the article “Is BoP statistics an accurate descriptor of external debt position?”; FT Alphaville Blog on February 18, 2014; The Economist on April 5, 2014 in the article “Financial Indulgence”