Working Papers

Technology Boom, Labor Reallocation, and Human Capital Depreciation, joint with Johan Hombert
During the late 1990s boom, one-third of skilled labor market entrants joined the Information and Communication Technology (ICT) sector. We use French linked employer-employee data to study their wage dynamics. 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 in other sectors. The long-run wage discount is not explained by selection, job losses or persistently low demand for ICT services. It is concentrated in STEM occupations, consistent with obsolescence of technical skills accelerating during a technological boom.
Media coverage: Voxeu, Frankfurter Allgemeine Zeitung

Higher Dividend Taxes, No Problem! Evidence from Taxing Entrepreneurs in France, joint with Charles Boissel
This paper investigates how the large increase in dividend tax rate in France in 2013 affected firms' performance and corporate investment. Using administrative data covering the universe of firms for the period 2008--2016 and a quasi-experimental setting, we find that firms swiftly cut dividend payments. Firms use this tax-induced increase in liquidity to invest more, particularly so when facing high demand. For every additional euro of undistributed dividends, firms increase their investment by 0.2 euro, leading to higher sales growth. Heterogeneity analysis fails to find any group of firms having to cut their investment, thereby clearly rejecting models in which dividend tax reforms affect the cost of capital. Overall, our results suggest that entrepreneurs are credit constraints in equilibrium, despite paying dividends and do not hold enough liquidity to seize investment opportunities when they arise randomly in the economy.

Misallocation and Capital Market Integration: Evidence from India, joint with Natalie Bau
We show that foreign capital liberalization reduces capital misallocation and increases aggregate productivity using a natural experiment. The staggered liberalization of access to foreign capital across disaggregated Indian industries allows us to identify changes in firms' input wedges, overcoming major challenges in the measurement of the effects of changing misallocation. For domestic firms with initially high marginal revenue products of capital (MRPK)/high sales to capital ratios, 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. We find that this liberalization episode increased the aggregate productivity of the Indian manufacturing sector by at least 6.5%.
Vox Dev Column ; VoxEU
Media Coverage: Ideas for India

Where Has All the Big Data Gone?, joint with Maryam Farboodi, Laura Veldkamp and Venky Venkateswaran (Invited for RFS dual submission)
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.

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.
Media coverage: Le Monde, France Culture, Liberation, Alternatives Economiques ; Les Echos

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.

Bank Deposits and Redistributive Effects of Monetary Policy, joint with Anne Duquerroy and Farzad Saidi
This paper documents that accommodative monetary policy can have contractionary effects on a large part of the real economy if it does not translate to lower funding cost for banks. For identification, we exploit the existence of regulated-deposit accounts offered to households in France the rate on which is not a direct function of the monetary-policy rate but, instead, guaranteed and set by the government. This introduces a funding-cost gap among deposit-funded banks. Using administrative credit-registry data, covering the universe of loans in France, we find that when regulated-deposit dependent banks face higher funding cost following monetary-policy changes, they contract their lending to large firms, but engage in greater risk taking by shielding small firms and entrepreneurs. We argue that this impairment of the transmission of monetary policy to deposit rates has redistributive effects by favoring more constrained borrowers especially in areas that are on weaker growth paths.

Work in Progress


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