Completed Papers

Earnings Dynamics Its Intergenerational Transmission: Evidence from Norway  (Quantitative Economics, 2022)
(with Elin Halvorsen and Serdar Ozkan)

Part of the Global Income Dynamics Project, which aims to produce a harmonized cross-country database containing detailed and relevant statistics on individual- and household-level wages, earnings, and related labor market measures. The STATA code used to produce the harmonized statistics in all countries was prepared by Serdar Ozkan and myself.

Working Papers

Technical Change and Entrepreneurship (July 2020, R&R AER)

Abstract. I document a significant decline in the share of entrepreneurs among US households over the last three decades. Most of this decline is accounted for by a drop in the share of entrepreneurs among college graduates. Using a standard entrepreneurial choice model with two skill groups—high- and low-skill individuals—I then argue that the decline is the outcome of two technological forces that have increased the returns to high-skill labor: the skill-biased technical change and the decrease in the price of capital. I find that these two forces account for three-quarters of the decline in the share of entrepreneurs. Paper

Skewed Business Cycles (April 2020, R&R QJE)
(with Fatih Guvenen and Nicholas Bloom)
Replication of Empirical Results
NBER version, 2019
Review in, May 5, 2020

Abstract. Using firm-level panel data from the US Census Bureau and almost fifty other countries, we show that the skewness of the growth rates of employment, sales, and productivity is procyclical. In particular, these distributions display a large left tail of negative growth rates during recessions and a large right tail of positive growth rates during booms. We find similar results at the industry level: industries with falling growth rates see more left-skewed growth rates of firm sales, employment, and productivity. We then build a heterogeneous-agents model in which entrepreneurs face shocks with time-varying skewness that matches the firm-level distributions we document for the United States. Our quantitative results show that a negative shock to the skewness of firms’ productivity growth (keeping the mean and variance constant) generates a persistent drop in output, investment, hiring, and consumption. This suggests the rising risk of large negative firm-level shocks could be an important factor driving recessions. Paper

Heterogeneous Passthrough from TFP to Wages  (December 2022) UPDATED
(with Mons Chan and Ming Xu)

Abstract. We examine the passthrough of firms’ idiosyncratic productivity shocks to workers’ wages using rich matched employer-employee data from Denmark which allows us to control for unobserved worker and firm heterogeneity. We find an average elasticity of incumbent workers’ hourly wages to firms’ productivity of 0.08. The passthrough of firm shocks to wages is strongly asymmetric, in that wages are twice as responsive to negative shocks as to positive shocks. Failing to account for workers’ endogenous mobility underestimates the passthrough of negative shocks and reverses the asymmetry. Passthrough decreases with labor market share and productivity but increases with income and ability. Recessions reduce passthrough from positive shocks to zero but do not affect passthrough of negative shocks. Workers with wage growth after switching to a new firm typically move from low to high-productivity firms; In contrast, workers with a decline in wages after switching move between firms of similar productivity. Paper

The Great Micro Moderation 
(with Nicholas Bloom, Fatih Guvenen, Luigi Pistaferri, John Sabelhaus, and Jae Song)

Abstract. This paper documents that individual income volatility in the United States has declined in an almost secular fashion since 1980—a phenomenon that we call the “Great Micro Moderation.” This finding contrasts with the conventional wisdom, based on studies using survey data, that income volatility—a simple measure of uncertainty—has increased substantially during the same period. The finding of declining volatility is consistent with a handful of recent papers that use administrative data. We substantially extend the existing empirical findings of declining volatility using data from both administrative and survey-based data sets. A key contribution of our paper is to link patterns of income volatility on the worker side to outcomes (and volatility) on the firm/employer side. With the information revealed by these linkages, we investigate several potential drivers of this trend to understand if declining volatility represents a broadly positive development—declining income risk and uncertainty—or a negative one, i.e., declining business dynamism. Paper

Work in Progress

Why are the Wealthiest so Wealthy? NBER SI Slides
(with Elin Halvorsen, Serdar Ozkan, and Joachim Hubmer)

Taxing the Rich
(with V.V. Chari, Elena Pastorino, Patrick Kehoe)

Firm Productivity and Labor Quality 
(with Mons Chan, Frederic Warzynski, and Ming Xu)

Are Minimum Wages and Income Taxes Complements or Substitutes?
(with Shiv Dixit

Work Before PhD

Does the BIC Estimate and Forecast Better than the AIC? (with Carlos Medel).  Economic Analysis Review, 2013. Paper.