Working Papers

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• Scars of Pandemics from lost Schooling and Experience: Aggregate Implications and Gender Differences through the Lens of COVID-19
  Joint with Remi Jedwab, George Washington University, Paul Romer, New York University, and Asif Islam, World Bank
  Using estimates of returns to experience and the returns to schooling for a large sample of countries, we assess the long term costs of the disruption to human capital accumulation from pandemics using COVID-19 as a guide. HICs experience the bulk of the costs. We measure returns separately for men and women and find that the asymmetric impact of COVID-19 is limited to the period of the shock.

 

• Minimum Wage, Informality and Non-Compliance
  Joint with Jinho Kim, University of Oxford. 
  We study the effect of the minimum wage in Indonesian household and firm level panel data. A higher minimum wage increases non-compliance, raises the wage distribution and brings people from the informal sector into the formal sector, while also rationing out marginal workers, consistent with an extension of the Burdett-Mortensen (1998) framework. We calibrate the model economy and find that the minimum wage has a negative overall impact on the size of the formal workforce.

 

•  Rule of Law, Economic Structure and Development
  Joint with Juliana Yu Sun, Singapore Management University. 
  Weak rule of law is related to a proliferation in sub-standard intermediate goods. We argue this is particularly costly in industries that use relationship-specific investments. We develop a model economy that suggests a differences in differences regression specification, and use the estimated coefficient to compute the aggregate impact of this proliferation. It accounts for the full variation in GDP per capita levels around the world.

 

• Capital Depreciation and Industry Competition: Theory and Evidence
  Joint with Alicia H. Dang, Union College.
  We show that, in a standard Ramsey model extended to allow for many industries and for oligopolistic competition, it is natural for industries with more rapid depreciation to have a higher cost of capital, and thus to be able to support fewer firms in equilibrium, leading to higher markups. We show that depreciation is indeed linked with less competition in US data (in the form of higher markups).

   

• Macroeconomic shocks and productivity: Evidence from an estimated Ideas' production function
  Joint with Xiaohan Ma, Texas Tech University. 
  We show that the persistence of productivity shocks is linked to the parameters of the production function for ideas. Thus, instead of assuming that productivity shocks are highly persistent, we can interpret that persistence in terms of the parameters of the ideas production function, providing a new perspective on the unification of growth theory and business cycle theory. We use this insight to estimate these parameters using macroeconomic series, finding that intertemporal knowledge spillovers are negative, and to explore which shocks propagate through the ideas production function.

     

• Joint Determination of Product and Labor Market Policies in a Model of Rent Creation, Rent Division and Self-employment.
  Joint with Alain Delacroix, Université du Québec à Montréal. In progress, new version soon. 
  A general equilibrium model of occupational choice is used to study who benefits and loses from a variety of policies that in practice are often clustered together. 
  
  
• Between Alpha and Beta: Modeling the impact of Regulatory Constraints on the Hedge Fund Industry. 
  Joint with Anna Ilyina, International Monetary Fund. 
  A large panel of hedge fund returns provides strong evidence of an impact of both size and talent on hedge fund returns, consistent with the controversial model of Berk and Green (2004). We study the implications of these features for the industry response to proposed changes in regulation. Leverage caps can have a large impact on the industry, whereas changes in due diligence costs have little effect on the industry as they mainly impact the smallest funds. 

 

• What do Historical Patterns of Structural Transformation tell us about China'’s Future?
  (Prepared for the Shanghai Forum 2017 at Fudan University) The economic structure of China is roughly in line with where historical patterns of structural transformation suggest it should be. The future of China likely lies in pushing the frontier in an increasing number of fields. Policy implications are discussed.

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