Current Projects
Structural Change Accounting
with Manuel García-Santana, Lucciano Villacorta
Health, Consumption, and Inequality
with Jay Hong, Víctor Ríos-Rull
Working Papers
Buy Big or Buy Small? Procurement Policies, Firms’ Financing, and the Macroeconomy
with Julian di Giovanni, Manuel García-Santana, Priit Jeenas, Enrique Moral-Benito
Downloads: Working paper (June 2025); CEPR Discussion Paper DP17023 (July 2023); first version February 2022
Status: R&R at American Economic Review
Abstract: This paper examines the macroeconomic effects of public procurement. We exploit novel data to show that procurement eases firms’ borrowing constraints and has persistent effects on firm growth. Using a macroeconomic model with heterogeneous firms, asset- and earnings-based borrowing frictions, and government purchasing, we simulate revenue-neutral reforms that increase the share of small firms in procurement. We find that, despite helping financially constrained firms grow, these policies lead to non-trivial unintended negative effects. On net, the policies lead to a modest decline in GDP. The findings highlight how procurement design influences aggregate outcomes through firm-level financial frictions and reallocation dynamics.
Macroeconomic Development, Rural Exodus, and Uneven Industrialization
with Tomas Budí-Ors
Downloads: Working paper (June 2025); CEPR Discussion Paper DP17086 (December 2022); first version March 2022
Abstract: Economic development and industrialization are typically led by a few regions within a country. The initially laggard regions may catch up and industrialize (U.S. 1880-1940) or they may fail to industrialize, experience a population exodus, and help industrialization elsewhere (Spain 1940-2000). We build a model of structural change with multiple locations and sectors to uncover the economic forces shaping the emergence of these different patterns of development. We calibrate the economy to the development experience of Spain, and find that its large rural exodus and uneven regional industrialization originated from a decline in migration costs towards the most industrialized areas..
Dual Labor Markets and the Equilibrium Distribution of Firms
with Pau Roldan-Blanco
Downloads: CEPR Discussion Paper DP17762 (May 2024); first version July 2022
Abstract: We study the effects of dual labor markets --namely, the co-existence of fixed-term and open-ended contracts-— on the allocation of workers within and across firms, the equilibrium distribution of firms, aggregate productivity, and welfare. Using rich Spanish administrative data, we document that the use of fixed-term contracts is very heterogeneous across firms within narrowly defined sectors. Particularly, there is a strong relationship between the share of temporary workers and firm size, which is positive when looking at within-firm variation but negative when looking at the variation between firms. To explain these facts, we write a directed search model of multi-worker firms, with ex-ante firm heterogeneity in technology types, and ex-post firm heterogeneity in transitory productivity and in the composition of employment by contract type (fixed-terms or open-ended) and human capital accumulated on the job. In counterfactual exercises, we find that limiting the use of fixed-term contracts decreases the share of temporary employment and increases aggregate productivity, but it also reduces total employment and leads to an overall decline in total output and welfare. The increase in productivity comes from a better selection of firms, which more than offsets an increased misallocation of workers across firms.
Dual Labor Markets in Spain: a Firm-Side Perspective
with Ivan Auciello-Estevez, Federico Tagliati, Pau Roldan-Blanco
Downloads: Working paper (Banco de España, Documentos Ocasionales, #2310, April 2023)
An empirical companion paper to “Dual Labor Markets and the Equilibrium Distribution of Firms”
Education, Lifestyles, and Health Inequality
with Jesús Bueren, Dante Amengual
Downloads: CEPR DP19990 (March 2025)
Abstract: We study the effect of lifestyles on the education gradient of life expectancy. We use panel data on health behavior and health outcomes to estimate latent lifestyle types and their impact on health dynamics. We find that the higher frequency of health-protective lifestyles among the more educated individuals explains almost 1/2 of the education gradient in life expectancy. To understand lifestyle formation, we build a life cycle model where lifestyles and education are jointly chosen early in life. These two investments are complementary because of the more educated's higher income and the higher yield of their health-protective behavior. Importantly, with these complementarities, individuals with lower costs of healthier lifestyles self-select into higher education. Quantitatively, we find the three mechanisms similarly important in explaining the correlation between education and healthy lifestyles. We also find that the increase in the college wage premium over the last decades has widened the education gradient in lifestyles, resulting in a one-year increase in the education gradient of life expectancy across cohorts born in the 1930s and 1970s. Of this increase, 40% is driven by the direct effect of wage changes and 60% by the induced changes in the composition of college graduates and high school dropouts.
.
Old Working Papers
Durable Goods, Borrowing Constraints and Consumption Insurance
with Enzo Cerletti
Downloads: Working paper (May 2014, first version June 2012)
Abstract: We analyze the transmission of income shocks into durable consumption goods. We show that binding borrowing constraints lead to a substitution between goods of different durability upon arrival of an unexpected income change. The sign of this substitution depends on the persistence of the shock, whereas its size depends on the durability of goods and on their role as collateral for borrowing. An important consequence is that the response of nondurable consumption to income shocks may be an imperfect measure of household insurance against labor market risk. We use a calibrated two-good life-cycle model with labor market uncertainty and incomplete markets to quantify the actual amount of insurance implied by the observed transmission of income shocks to nondurable consumption. We find that young households have substantially less insurance against transitory shocks and more insurance against permanent shocks than commonly thought.
The Effects of Labor Market Conditions on Working Time: the US-EU Experience
with Claudio Michelacci
Downloads: working paper (September 2008)
Abstract: We consider a labor market search model where, by working longer hours, individuals acquire greater skills and thereby obtain better jobs. We show that job inequality, which leads to within-skill wage differences, gives incentives to work longer hours. By contrast, a higher probability of losing jobs, a longer duration of unemployment, and in general a less tight labor market discourage working time. We show that the different evolution of labor market conditions in the US and in Continental Europe over the last three decades can quantitatively explain the diverging evolution of the number of hours worked per employee across the two sides of the Atlantic. It can also explain why the fraction of prime age male workers working very long hours has increased substantially in the US, after reverting a trend of secular decline.