Research

Working Papers

New! Self-Employment within the Firm (September 2023)

(with Vittorio Bassi, Jung H. Lee , Tommaso Porzio, Ritwika Sen, and  Esau Tugume)

We study the role of the internal organization of firms in developing countries in determining their size and productivity as well as the allocation of talent within and between firms. Barriers to within-firm labor specialization are an important driver of the small size and low productivity of manufacturing firms in Uganda. 

Nonlinear Pricing and Misallocation (January 2023)  -- R&R at American Economic Review

(with Gideon Bornstein)

We develop a general equilibrium model of heterogeneous firms that are allowed to engage second-degree price discrimination . We show how the deviation from the strong assumption of linear pricing breaks the relationship between markup dispersion and misallocation and instead point to misallocation across consumers of the same firm.

The Aggregate Importance of Intermediate Input Substitutability (September 2022) , -- R&R at Econometrica

(with Cian Ruane)

We estimate long-run elasticities of substitution between intermediate inputs for Indian manufacturing plants using India's trade liberalization for identification. We find a high degree of substitutability at the plant-level between 8 broad categories of material inputs, significantly above the Cobb-Douglas benchmark of 1; intermediates and value added as well as energy, materials, and services are complements even in the long run.

Equity Frictions and Firm Ownership (June 2021) -- R&R at Review of Economic Studies

Equity frictions have much larger effects on aggregate output than debt frictions. Frictions in equity markets also rationalize how there is higher wealth inequality in European countries in which debt, rather than  external equity, is the primary source if financing for firms.

Distribution Costs  (May 2022) -- R&R at AEJ: Macro

(with Cian Ruane)  

Distribution expenses incurred by Indian manufacturing firms are large -- over half of labor costs; disproportionately higher for larger firms and declined by one third between 2000 and 2010. Through the lens of a quantitative model, improvements in the distribution sector over that time lead to consumption gains of 41%.

Network-Based Hiring: Local Benefits; Global Costs (June 2020), NBER WP version

(with Arun G. Chandrasekhar and Melanie Morten)

Hiring a worker out of one's network, relative to a stranger, has potential two benefits: reducing moral hazard and removing asymmetric information. We show that while the former benefit is always welfare-improving, having the option to hire a friend whose type is known can lead to welfare losses.

Work in Progress

Houses and Families across Countries [WiM talk]

(with Kurt Mitman, Monika Piazzesi, and Martin Schneider)

We model the technology of housing services as a function of family size and show how this helps us explain several fact about expenditure shares, ownership status, and savings rates of couples vs singles. We leverage the presence of young (and not so young) adults living with parents to teasing out the importance of rental and credit markets for understanding differences in ownership rates across countries.

IneQuality

(with Gideon Bornstein)

We analyze how income inequality affects which kinds of products firms choose to offer and at which prices, We show that firms may distort quality levels for low-income households downwards in order to extract maximal rents from high-income consumers. This effect is particularly pronounces in markets with low competition. As a result, in these markets, consumption inequality is larger than income inequality.