Research

This paper examines how monopsony power in the market for inventors—firms’ ability to depress wages by restricting employment—affects U.S. innovation and economic growth. Using an instrumental variable strategy, I estimate firm-level inventor labor supply elasticities and find that firms face less than perfectly elastic inventor labor supply, with larger employers wielding greater monopsony power. I develop and quantify a heterogeneous-firm growth model with size-dependent monopsony power that matches this evidence. Quantitatively, monopsony power reduces annual U.S. economic growth by 0.12 percentage points and welfare by 8% in consumption-equivalent terms through depressed R&D employment and misallocation.

[Paper, IMF WP]

Leading AI firms claim to prioritize social welfare. How should firms with a social mandate price and deploy AI? We derive pricing formulas that depart from profit maximization by incorporating incentives to enhance welfare and reduce labor disruptions. Using US data, we evaluate several scenarios. A welfarist firm that values both profit and welfare should price closer to marginal cost, as efficiency gains outweigh distributional concerns. A conservative firm focused on labor-market stability should price above the profit-maximizing level in the short run, especially when its AI may displace low-income workers. Overall, socially minded firms face a trade-off between expanding access to AI and the resulting loss in profits and labor market risks.

[Paper, IMF WP]

Need fluctuates over the business cycle. We conduct a survey revealing a desire for nonprofit activities to countercyclically expand during downturns. We then demonstrate, using comprehensive US nonprofit data drawn from millions of tax returns, that the public’s hopes are disappointed. Nonprofit expenditure, revenue, and balance sheets fluctuate procyclically: contracting during national and local downturns. This finding is evident even for a narrow group of nonprofits that the public most wishes would expand during downturns, for example, those providing critical needs such as food or housing. Our new facts contribute to the charitable giving, nonprofit, and business cycle literatures. 

[Paper, Working Paper]

This paper provides evidence that rising misallocation in the R&D sector contributed to the recent slowdown in U.S. productivity growth. I develop a growth accounting framework allowing for misallocation of R\&D resources across firms captured by wedges between their marginal costs and benefits of R&D. I show that R&D wedges can be measured from R&D returns and document large and persistent differences in R&D returns across U.S.-listed firms. Combining data and model, I estimate that frictions reduced productivity growth by 11% over 1975-2014 and that rising misallocation in the R\&D sector accounts for 32% of the growth slowdown.

[Paper, IMF WP]

Young workers adopt new technologies at higher rates than old workers. I develop an overlapping-generations model linking this lifecycle gradient to technology adoption, wages, and innovation. Using U.S. commuting-zone variation and a historical-births instrument, I show that younger workforces expand computer-science employment and raise wages, especially for young workers. Exposure through trade to youth waves in foreign markets also increases R\&D employment and patenting. Calibrated to these responses, the model attributes about one quarter of the late-1990s U.S. productivity acceleration to the baby boom's youth wave, partly recasting the IT boom as a demographic episode. Aging workforces therefore create a headwind to endogenous technology adoption and innovation.

[Paper, IMF WP]

How does informality shape the impact of minimum wage policy? We study this question using evidence from Mexico’s 145% real increase in the minimum

wage since 2016, together with a general equilibrium model featuring endogenous informality and household heterogeneity. Reduced-form estimates of the

implemented increases indicate limited effects on employment and formalization, alongside modest wage gains at the bottom of the formal wage distribution

that arguably reflect incomplete enforcement. The calibrated model reproduces these patterns but predicts that, under full enforcement, higher wage floors generate nonlinear effects: the share of firms reallocating toward informality rises sharply, lowering productivity and aggregate welfare. These losses fall disproportionately on low-skill households, who bear the brunt of the reduction in transfers caused by lower tax revenue yet, as predominantly informal workers, gain little directly from the minimum wage. The minimum wage’s effectiveness as a redistributive tool is therefore limited.

[Paper, IMF WP]

This paper studies how gradualism affects the welfare gains from trade, technology, and reforms. When workers face adjustment frictions, gradual shocks create less adverse distributional effects in the short run. We show that there are welfare gains from inducing a more gradual transition via temporary taxes on trade and technology and provide formulas for the optimal path for taxes. Our formulas account for the possibility that reallocation effort responds to policy and for the existence of income taxes and assistance programs. Using these formulas, we compute the optimal temporary taxes needed to mitigate the distributional consequences of rising import competition from China and the deployment of automation technologies substituting for routine jobs. Our formulas can also be used to compute the optimal timing of economic reforms or trade liberalizations. We study Colombia's trade liberalization in 1990 and conclude that optimal policy called for a more gradual reform.

[Paper]