For the 2020-2021 academic year, I will join the International Economics Section at Princeton University as a Postdoctoral Fellow. Starting in the Fall of 2021, I will become an Assistant Professor in the Department of Economics at the London School of Economics.
Revise and Resubmit at the Quarterly Journal of Economics
Abstract: This paper investigates the effects of becoming a supplier to multinational corporations (MNCs) using administrative data tracking all firm-to-firm transactions in Costa Rica. Event-study estimates reveal that after starting to supply to MNCs, domestic firms experience strong and persistent improvements in performance, including the expansion of their workforce by 26% and gains in standard measures of total factor productivity (TFP) of 6-9% four years after. Moreover, the sales of domestic firms to buyers other than the first MNC buyer grow by 20%, both through a larger number of buyers and larger sales per buyer. We propose a simple model by which TFP and reputation affect the number of buyers, but TFP alone affects sales conditional on buying. We find a model-based increase in TFP of 3% four years after. Finally, we collect survey data from managers in both domestic firms and MNCs for further insights on mechanisms. Our surveys suggest that becoming suppliers to MNCs is transformative for domestic firms, with changes ranging from new managerial practices to better reputation.
Abstract: This paper estimates the effects of foreign multinational corporations (MNCs) on workers. To that end, we combine microdata on all worker-firm and firm-firm relationships in Costa Rica with an instrumental variable strategy that exploits shocks to the size of MNCs in the country. First, using a within-worker event-study design, we find a direct MNC wage premium of nine percent. This premium reflects above market wages rather than compensation for disamenities. Next, we study the indirect effects of MNCs on workers in domestic firms. As MNCs bring jobs that pay a premium, they can improve the outside options of workers by altering both the level and composition of labor demand. MNCs can also enhance the performance of domestic employers through firm-level input-output linkages. Shocks to firm performance may then pass through to wages. We show that the growth rate of annual earnings of a worker experiencing a one standard deviation increase in either her labor market or firm-level exposure to MNCs is one percentage point higher than that of an identical worker with no change in either MNC exposure. Finally, we develop a model to rationalize the reduced-form evidence and estimate structural parameters that govern wage setting in domestic firms. We model MNCs as paying a wage premium and buying inputs from domestic firms. To hire new workers, domestic firms need to incur recruitment and training costs. Model-based estimates reveal that workers in domestic firms are sensitive to improvements in outside options. Moreover, the marginal recruitment and training cost of the average domestic firm is estimated at 90% of the annual earnings of a worker earning the competitive market wage. This high cost allows incumbent workers to extract part of the increase in firm rents coming from intensified linkages with MNCs.
Revise and Resubmit at the European Economic Review
Abstract: We study the firm and sector-level effects of an industrial policy designed to support the development of the IT sector in Romania. In 2001, Romania introduced an unexpected personal income tax break to programmers with eligible bachelor's degrees and who work on software development for firms in eligible IT sector codes. In 2013, policy-makers suddenly expanded the scope of the original tax break to cover more bachelor's degrees and sector codes in IT. We first use firm-level data and difference-in-difference designs around each policy episode to show that treated firms experience strong and long-lasting growth. We then employ sector-level data and a synthetic control design to show that after the introduction of this policy in 2001, the IT sector grew faster in Romania than in otherwise similar countries. Finally, downstream sectors relying more on IT services also grew faster in Romania after 2001. Our results suggest that this policy has been effective in promoting the development of the IT sector, a sector typically seen as key to the transition to a knowledge economy.
Journal of Urban Economics, Volume 102, November 2017, Pages 52-75
Abstract: Terrorism has become a primary concern for city dwellers around the world. This paper uses the 2005 attacks on the London Tube to provide causal evidence of the negative impact of terrorism on the value of proximity to public transportation. These attacks brought major transit stations into the spotlight as high-risk locations. As a result, surrounding communities became less attractive places in which to live and conduct business. I ﬁnd that house prices closer to the major transit hubs of London fell by 6% for one year. This shock spread to Manchester as well: house prices closer to major transit hubs dropped by 9–14% for 3 to 4 years. I also show that new ﬁrms are less likely to locate near major stations after the attacks, particularly those relying on foot traﬃc. Among incumbent ﬁrms, those serving customers in person are most hurt by the attacks.
Research Paper of the Central Bank of Costa Rica, Nr. 002/2018
The Evolution of Labor Earnings and Inequality in Costa Rica: Micro-Level Evidence (draft available soon)
Research Paper of the Central Bank of Costa Rica, 2019