Working Papers:

• Covid and Productivity in Europe: A Responsiveness Perspective

    Current Draft   (with Russell Cooper and Wolfram Horn )

  (R&R at the European Economic Review)

  This paper studies the effects of Covid-19 on manufacturing output, employment and productivity across a set of European countries. Using a quantitative firm dynamics model with endogenous entry and exit, key parameters of adjustment costs and market power are estimated to match country-specific responsiveness of firms to exogenous shocks. We find that most heterogeneity in firm responsiveness reflects differences in labor adjustment costs. The estimated model is used to simulate the effects of the Covid-19 shock, with and without policy measures. Through these counterfactual exercises, the main impact of the policy interventions, treated here as work-sharing schemes targeted to low profitability firms and “no-firing” obligations, was to mitigate the drop in aggregate employment by keeping firms in business. We do not find evidence of adverse productivity effects from these interventions. Depending on the country, we calculate that the aggregate drop in employment would have been between 1.4 to 2.6 percentage points higher without policy support. From these counterfactuals, we establish the importance of targeted subsidies and the sensitivity of employment responses to firm beliefs.

Work in Progress:

• Entrepreneurship Over The Life-Cycle: The Role of Human versus Financial Capital Accumulation

  (with Jacek Piosik )

  Presented at: Theories and Methods in Macroeconomics 2022 (T2M2022), Spring Meeting of Young Economists (SMYE2022), Barcelona Summer Forum 2022 , EUI Alumni Conference 2022, Vigo Workshop on Dynamic Macroeconomics 2022, EEA-ESEM Congress 2022

  In this paper we use the Danish full population administrative data to show that the probability of becoming an entrepreneur is hump-shaped in age. We ask to which extent this life-cycle pattern is driven by the need of future entrepreneurs to accumulate wealth in order to overcome borrowing constraints or the need to accumulate skills. We document that the probability of becoming an entrepreneur is essentially flat along the family wealth distribution, and slightly increasing after the 90th percentile. We also show that future entrepreneurs do not seem to save more, compared to workers of the same age, prior to starting the business. Next, we document that entrepreneurs are self-selected along several measures of human capital and skills. We show that entrepreneurs, compared to workers of the same age, on average i) earned higher wages before starting their business ii) experienced higher growth rates in wages iii) have more years of education and labor market experience. We also show that this self-selection, in terms of human capital, is even stronger across high productive entrepreneurs. To quantify the relative importance of entrepreneurial human capital accumulation versus wealth in affecting individuals’ decisions to start a business we propose a quantitative general equilibrium life-cycle model with human capital accumulation, financial frictions and occupational choices. The model is used to disentangle the role of wealth versus skills in affecting self-selection into entrepreneurship and to quantify the role of these two factors on entrepreneurial outcomes. The calibrated model is also used to study efficiency and welfare effects of policies that introduce lower income taxes for young individuals to start businesses.

• Anatomy of Entrepreneurial Skills

  (with Damiano Argan and Jacek Piosik)