Job Market Paper (2018 version)

"Trade liberalization and inequality: a dynamic model with firm and worker heterogeneity." Appendix.

Abstract: Trade liberalizations are associated with higher wage inequality, but nearly the entire related literature is silent about the transition process. I address these limitations by developing a micro-founded model highligthing the reallocation dynamics between heterogeneous firms and workers. On the transition path following a trade reform, expanding high-paying exporters benefiting from new opportunities abroad increase wages to recruit better workers faster. Increased competition leads domestic firms' workers to accept wage cuts to delay their employers' exit and keep their job. I provide micro-empirical evidence supporting the main novel mechanisms. Results from the calibrated model suggest an overshooting response of inequality.

Work in Progress

"The characteristics of worker flows by firm growth: empirical evidence from a matched firm-worker dataset from France"

Abstract: This paper investigates the effects of firm growth on hiring and separations and contributes to the literature on worker flows by studying the wages and characteristics of new and separated workers. First, I show that separations are an essential and robust component of firm growth. I argue that this may be the result of a more intense search for better matches at faster growing firms. Second, I find that wage offers to new hires increase with firm hiring rates. This is partly the result of the selection of more experienced workers. However fixed unobservable and variable observable worker characteristics cannot fully explain this relationship: the residual wage of new hires is significantly associated with the firm hiring rate. We interpret this as direct evidence of the firm-level upward-sloping labor supply curve predicted by the canonical models. We provide estimates of the slope of the curve using an instrumental variable approach to control for supply shocks. We find that a 10% increase in the hiring rate results in a wage increase of 1%.

"Reallocation, industry structure and the effects of banking deregulation", with Jonathan Vogel and Jaromir Nosal

Abstract: What is the contribution of industry reallocation and productivity changes to the economic gains resulting from banking deregulation? How does local industrial structure determine the outcomes of banking deregulation? This study uses the staggered reforms of the banking sector in the U.S. between 1977 and 1997 to empirically investigate these questions. In the private sector, we show that the deregulation-induced reallocation of workers was directed towards industries with lower GDP per worker. Moreover, employment gains were associated with a reduction in productivity. Nevertheless we find that these effects are offset by across the board within-industry productivity gains. In addition, total output and aggregate productivity increased because of the reallocation of workers out of unemployment, self-employment and non-private industries towards the more productive private sector. Finally we find that initial industry mix can explain up to one third of the variation in state aggregate responses.

Matthieu Bellon
Ph.D. Candidate
Department of Economics
1022 International Affairs Building
420 West 118th Street
New York City, NY 10027

Phone: (917) 331-5847