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European Job Market for Economists (EEA)
Allied Social Science Associations (ASSA)
Secondary: Development Economics.
"The Rise of Intangible Capital and the Macroeconomic Implications” (with A. Chiavari) (Job Market Paper)
Intangible capital, which includes investments in research and development, and intellectual property product, has risen dramatically in the last decades, however little is known about its importance in production. We estimate a standard production function augmented with intangible capital and show that its input share has tripled since the 1980s and this increase has come at the expense of labor in production. We label this finding as Intangible Capital Biased Technological Change. Further, we provide empirical evidence consistent with intangible capital being significantly more sunk, meaning that it entails higher investment adjustment costs than traditional capital. Finally, due to the presence of high adjustment costs, we show that intangible capital tends to be (mis)allocated (i.e., the average product of intangible capital is more dispersed than the average product of traditional capital). Using a structural framework of firm dynamics, we show that a shift in production from a flexible input – labor – to an input with high adjustment costs – intangible capital – can explain a sizable fraction of some of the major trends documented for the US economy, such as the rising average firm size, dispersion of total factor productivity revenue, sales-weighted profit rates and increasing industry concentration.
"How Does Caste Affect Entrepreneurship? Birth versus Worth” - BGSE Working Paper 1104
I investigate the relative importance of the caste system in explaining resource misalloca- tion in India and quantify its impact on aggregate productivity. I document three main stylized facts. First, firms of historically disadvantaged castes have a higher average rev- enue product of capital, arpk, relative to firms owned by high castes, whereas no signifi- cant differences in the average revenue product of labor, arpl, exist. Second, across-caste dispersion in arpk is primarily driven by small and young firms. Third, the majority of this dispersion is concentrated in financially underdeveloped regions in India. In a quantita- tive model of entrepreneurship, I find that the majority of across-caste dispersion in arpk is explained by differences in access to credit and that such asymmetries reduce aggregate total factor productivity by 6% to 10%.
Research Papers in Progress
“Demand Segmentation and Markup Dispersion" (with Akhil Ilango)
We document the role of ethnic networks in segmenting the local demand and its implication for local firm growth and aggregate misallocation. We focus our analysis on firms in rural India, where caste networks are salient. First, we show that there is a homophily in the consumer demand (i.e., low (high) caste individuals buy from firms owned by low (high) caste entrepreneurs). This, in turn, creates dispersion in firm growth and markups across castes. To identify this demand effect, we use exogenous changes in regional rainfall intensity as an instrument for local demand shocks. We find that the Low Caste (LC) consumers experience a positive income shock due to rainfall and that this translates into higher per-capita consumption. Further, we show that regional increase in the LCs’ demand translates into higher output growth for the firms with LC owners relative to others and this in turn reduces cross-sectional dispersion in markups. Using a quantitative model of firm dynamics, we highlight the segmented demand channel in determining firm growth and misallocation.
“High-Speed Internet in Spain and its Implication for Scale, Market Power and Labor Share" (with Alessio Romarri, Andrea Sy, Jurica Zrnc)
“Market Competition and Investment Dynamics” (with Jing-Woei Chein and Ayanda Hlatshwayo)
Exploratory research grant by CEPR-PEDL