Publications / Under review:
Equilibrium Job Turnover and the Business Cycle (with Carlos Carrillo-Tudela and Melvyn Coles)
[revise and resubmit, Review of Economic Studies. working paper]
Summary: We develop and estimate a microfounded equilibrium business cycle model with aggregate productivity shocks. By incorporating on-the-job search, we systematically characterise the stochastic relationships between aggregate job creation and job destruction flows across firms, gross hire and quit flows [churning] by workers across firms, as well as the persistence and volatility of unemployment and worker job finding rates over the cycle.
Firm Cyclicality and Financial Frictions (with Filip Rozsypal)
[revise and resubmit, Review of Economic Studies. working paper]
Summary: We document that “young and small firms” are nearly twice as cyclical as large firms, while “old and small” firms are almost acyclical. High leverage firms are more cyclical than low leverage firms which suggests that financial frictions are likely to explain the excess cyclicality of “young and small” firms. Augmenting a heterogeneous-firm model to match these facts implies that financial policies targeted at young firms become less effective.
Capital and Labor Taxes with Costly State Contingency (with Andrea Lanteri and Alessandro Villa)
[2023, Review of Economic Dynamics. working paper, published version]
Summary: We analyze optimal capital and labor taxes in a model where (i) the government makes noncontingent announcements about future policies and (ii) ex-post state-contingent deviations from these announcements are costly. With Full Commitment, optimal fiscal announcements are unbiased forecasts of future taxes. In the absence of commitment, announcements are strategically biased, and costly state contingency generates endogenous fiscal commitment.
Search and Reallocation in the Covid-19 Pandemic: Evidence from the UK (with Carlos Carrillo-Tudela, Camila Comunello, Annette Jackle, Ludo Visschers, and David Zentler-Munro)
[2023, Labour Economics. working paper, published version] [Press coverage: The Conversation, VoxEU, Reasons To Be Cheerful (podcast)]
Summary: Using novel data, we document how individuals adjust their job search behaviour in response to changing employment patterns across occupations and industries in the UK. Workers changed their search direction in favour of expanding occupations and industries during the pandemic. However, non-employed workers and those with low education levels are more attached to their previous occupations and more likely to target declining ones.
Discounts, Rationing, and Unemployment
[2020, European Economic Review. working paper, published version]
Summary: Rising discount rates have a direct effect on unemployment, since hiring is an investment activity for firms in the presence of search frictions, and an indirect effect, since a rise in discounts reduces investment in capital, reducing the marginal product of labour and hence incentives to hire. Combined, the two discount measures can account for 52% of the peak rise in unemployment during the Great Recession.
Fiscal Policy with Limited-Time Commitment (with Andrea Lanteri)
[2020, The Economic Journal. paper, appendix, codes, published version]
Summary: We propose a theory of optimal fiscal policy with “Limited-Time Commitment” (LTC), where successive governments have commitment only over finite, overlapping horizons. Key results in the Full Commitment (FC) literature can often be sustained with a single period of commitment. In a model where LTC fails to implement the FC policy, one year (three years) of commitment recovers 1/3 (2/3) of the welfare losses relative to No Commitment.
Working papers / Work in progress:
Dispersion over the Business Cycle: Passthrough, Productivity, and Demand (with Mikael Carlsson and Knut-Eric Joslin)
[submitted. working paper]
Summary: We show that firm-level dispersion of demand shocks rises more than that of TFPQ shocks in recessions. Productivity shocks pass through incompletely to prices, so demand explains most of the cyclical variation in sales dispersion. Estimated demand curves show significant deviations from CES. In a quantitative model: i) firms react more strongly to demand uncertainty, ii) productivity dispersion negatively affects output by inducing markup dispersion.
Wealth, Quits, and Layoffs (with Piotr Denderski and Laura Harvey)
[working paper]
Summary: We document that workers’ risk of transitioning from employment to non-employment in the future has a “U shaped” relationship with past wealth. This result is robust to controlling for wages and a battery of covariates. We build a search model which can explain these facts. Low-wealth unemployed workers search for easy to find jobs with high EU risk, while high-wealth employed workers choose to quit to avoid the cost of working.
Sectoral Labour Flow Accounting: A Matching Function Approach (with Carlos Carrillo-Tudela, Camila Comunello, Ludo Visschers, and David Zentler-Munro)
[slides]
Summary: We develop a data-led structural framework for 1) measuring how workers direct their search effort towards different industries or occupations, and 2) providing measures of market tightness by industry and occupation. The novelty is to use realised worker flows to infer worker search effort and direction, when combined with vacancy data through the lens of a model of sector-specific matching functions.
Job Mobility and Unemployment Risk (with Piotr Denderski, Yusuf Mercan, and Benjamin Schoefer)
[work in progress]
Grants:
The impact of COVID-19 on unemployment and earnings inequality (with Carlos Carrillo-Tudela and Ludo Visschers)
[funded by the ESRC as part of the UKRI rapid response to Covid-19]
Summary: We investigate the impact of the pandemic on unemployment and inequality, paying particular attention to reallocation across industries and occupations differentially affected by Covid. See all our output at the project website!
COVID policy notes:
UK Labour Supply: Investigating Economic Inactivity (with Carlos Carrillo-Tudela, Camila Comunello, and David Zentler-Munro)
[policy note] [submitted to The House of Lords Economic Affairs Committee]
Summary: We investigate the rise in inactivity in the UK economy post-pandemic, and discuss it in relation to other advanced economies. Includes a summary of our work on the over 50s (below) as well as further analysis for the whole working age population.
Rising Inactivity in the Over 50s post-COVID (with Carlos Carrillo-Tudela, Camila Comunello, Ludo Visschers, and David Zentler-Munro)
[policy note] [Press coverage: The Economist, The New Statesman, The Conversation, et maintenant aussi en français!]
Summary: We investigate the rise in inactivity in the over 50s post-pandemic using the UK Labour Force Survey. We investigate the trends, changes during COVID, demographics, the role of specific industries and occupations, and implications for shortages across industries. We show that rising inactivity is driven mostly by lower income workers.
The Great Resignation (with Carlos Carrillo-Tudela, Camila Comunello, Ludo Visschers, and David Zentler-Munro)
[policy note] [Press coverage: The Conversation, Reasons To Be Cheerful Podcast]
Summary: We investigate the Great Resignation of workers post-pandemic using the UK Labour Force Survey. We find that workers are mostly not quitting to leave employment or change career, and instead are quitting to move to new jobs within the same sector.
Dormant papers:
Firm Dynamics at the Zero Lower Bound [2017 working paper, new version coming soon!]
Growth and Business Cycle Effects of Future Financial Crises [2016 working paper]
News articles and press coverage:
October 2022: The Economist — Where did all Britain’s 50-somethings go? — features our work on rising inactivity in the over 50s [link]