Working Papers
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"Technology Boom, Labor Reallocation, and Human Capital Depreciation", joint with Johan Hombert Using matched employer-employee data from France, we uncover an ICT boom-cohort discount on the long-term wage of the large cohort of skilled workers entering in the Information and Communication Technology (ICT) sector during the late 1990s technology boom. Despite starting with 5% higher wages, these workers experience lower wage growth and end up with 6% lower wages fifteen years out, relative to similar workers who started outside the ICT sector. Other moments of the wage distribution are inconsistent with selection effects. These workers accumulate human capital early in their career that rapidly depreciates, implying that labor reallocation during technology booms can have long-lasting effects. Media coverage: Voxeu, Frankfurter Allgemeine Zeitung |
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"Higher Dividend Taxes, No Problem! Evidence from Taxing Entrepreneurs in France", joint with Charles Boissel
We exploit a large increase in the dividend tax rate in France that affected three-quarter of firms to estimate the effect of dividend taxation on corporate policies. Using administrative data covering the universe of firms and employees, we find in a differences-in-differences setting that affected firms swiftly cut dividends, both at the extensive and intensive margin, with an implied elasticity of around -0.5. Part of the resulting cash retention is used to increase investment and employment, with a positive elasticity around +0.20. The rest is accumulated as liquidity and used to extend credit to customers. Newly-taxed entrepreneurs do not appear to engage in income shifting to evade tax increase. |
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Misallocation and Capital Market Integration: Evidence from India, joint with Natalie Bau
Using the staggered liberalization of access to foreign capital across highly disaggregated Indian industries, we show that reducing capital misallocation increases aggregate productivity. The natural policy experiment allows us to credibly identify changes in firms' input wedges, addressing major challenges in the measurement of misallocation. For domestic firms with initially high marginal revenue products of capital (MRPK), liberalization increased revenues by 18%, physical capital by 60%, wage bills by 26%, and reduced the marginal revenue product of capital by 43% relative to low MRPK firms. There were no effects on firms with low MRPK. The effects of liberalization are largest in areas with less developed local banking sectors, indicating that foreign investors may substitute for an efficient banking sector. Finally, we develop a method to use natural experiments to estimate the lower bound effect of changes in misallocation on manufacturing productivity and conclude that the liberalization increased the aggregate productivity of the Indian manufacturing sector by at least 3.3%. Vox Dev Column Media Coverage: Ideas for India |
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Private Credit Under Political Influence: Evidence from France, joint with Anne Laure Delatte and Noémie Pinardon Touati
Formally independent private banks change their supply of credit to the corporate sector for the constituencies of contested political incumbents in order to improve their reelection prospects. In return, politicians grant such banks access to the profitable market for loans to local public entities among their constituencies. We examine French credit registry data for 2007--2017 and find that credit granted to the private sector increases by 9\%--14\% in the year during which a powerful incumbent faces a contested election. In line with politicians returning the favor, banks that grant more credit to private firms in election years gain market share in the local public entity debt market after the election is held. Thus we establish that, if politicians can control the allocation of rents, then formal independence does not ensure the private sector's effective independence from politically motivated distortions. |
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"Where Has All the Big Data Gone?", joint with Maryam Farboodi, Laura Veldkamp and Venky Venkateswaran
As the size of the financial sector has increased and ever more technology is deployed to process and transmit financial data, this could benefit society by allowing capital to be allocated more efficiently. Recent work supports this notion. Bai, Philippon and Savov (2016) document an improvement in the ability of financial prices to predict firms' future earnings. This "price informativeness" rises for firms in the S&P 500. We show that most of this rise comes from a composition effect. S&P 500 firms are getting older and larger. In contrast, the ability of the market to price new, small and growing firms, from whom most of productivity growth comes, is deteriorating. To understand the causes and social consequences of this shift, we formulate a model designed to show why investors prefer to process large firm data. We then use the model to explore why individual investors might make data processing decisions that deviate from the social optimum. The model provides a possible explanation for why the ever-growing reams of data processed by the financial sector have not delivered tangible, real, economic benefits, for the vast majority of firms. |
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"The Local Innovation Spillovers of Listed Firms
This paper provides causal evidence of local innovation spillovers, i.e. innovation by one firm fostering innovation by neighboring firms. First, I document that exogenous shocks to innovation by listed firms affect innovation by private firms in the same geographical area. I also find that such local innovation spillovers decline rapidly with distance. Second, I find that local innovation spillovers stem at least in part from knowledge diffusing locally through two channels: learning across local firms and inventors moving from their employer to both existing firms and newly started spin-outs. Finally, I study the two-way relationship between innovation spillovers and the availability of capital. I find that local innovation spillovers lead venture capital funds from outside the area to invest more in the local area, and that conversely capital availability amplifies local innovation spillovers. |
Work in Progress
"Public Health Insurance, Access to Credit and Wealth Accumulation", joint with Claire Célerier
In this paper, we exploit household level data over the 1984-2014 period to estimate the effect of publicly-provided health insurance on household overall financial situation. By using staggered expansions of Medicaid across states, we find that eligible households face lower out-of-pocket medical expenses, fail less to pay for basic expenses such as housing and food, and default less on their mortgages. We then look at the effect on household access to mortgage. Eligible household are more likely to hold mortgage debt, which translate into higher home equity, and wealth. Using mortgage application data to tease out demand and supply, we find that application are less likely to be denied when Medicaid coverage is extended. Lenders are therefore responding to the decline in financial risk due to lower out-of-pocket medical expenses. Overall, access to health insurance improves household financial situation.
Firms' Market Power and The Pattern of Trade, joint with Johan Hombert and Paul Beaumont
Acquisitions, Labor Reallocation and Productivity, joint with Paul Beaumont, Camille Hebert and Victor Lyonnet
"Monetary Policy, Deposits, and the Redistribution of Wealth", joint with Anne Duquerroy and Farzad Saidi
"Redistribution Effect of Negative Interest Rate: Evidence from Brazil", joint with Farzad Saidi and Daniel Streitz
