Job Market Paper:

• Entrepreneurship, Human Capital and Wealth

    Job Market Paper   (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, University of Bristol 2023, Copenhagen Business school 2023

  This paper studies how financial constraints and human capital accumulation interact in shaping entrepreneurial decisions. We use Danish administrative data to provide new evidence on the role that human capital accumulation plays for selection into entrepreneurship. 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 account for our empirical findings in a quantitative general equilibrium life-cycle model and use it to analyze how human capital accumulation and financial constraints jointly determine i) the life-cycle patterns of entry into entrepreneurship ii) the productivity of businesses started at different stages of an individual's life-cycle and how they interact in affecting aggregate TFP and resource mis-allocation. Through counterfactual exercises we establish how most efficiency losses due to the presence of financial frictions stem from the fact that high human capital entrepreneurs run undercapitalized businesses, rather than high human capital individuals not selecting into entrepreneurship. We conclude by using the calibrated model to quantify the efficiency and welfare effects of a tax policy reform aimed at incentivizing business creation by young individuals.

Publications:

• Covid and Productivity in Europe: A Responsiveness Perspective

    Current Draft   (with Russell Cooper and Wolfram Horn )

  (accepted for publication 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. The estimated model is used to simulate the effects of the Covid-19 shock, with and without policy measures. As seen through 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. Depending on the country, we calculate that the aggregate drop in employment would have been between 1.0 and 1.9 percentage points higher without policy support. We do not find evidence of adverse productivity effects from these interventions. From these counterfactuals, we establish the importance of targeted subsidies and the sensitivity of employment responses to firm beliefs.

Working Papers:

• Teach the Nerds to Make a Pitch: Multidimensional Skills and Selection into Entrepreneurship

    Current Draft   (with Damiano Argan and Jacek Piosik )

  Using danish administrative data, in this paper we study how individuals' skill set composition affects self-selection into entrepreneurship. We use detailed education registry data on high school grades in math and danish language to measure analytical and communication skills. We show that highly specialized skill sets are rewarded on the labor market in terms of higher wages, but are negatively related to the probability of becoming an entrepreneur. We also find that for students with high math grades in high school the probability of starting a business is monotonically increasing in their oral grade in Danish, while it is not so for the rest of the population. Motivated by the evidence that students performing well in math run on average more profitable and bigger businesses, we propose an identification strategy to casually estimate the effect of skill multidimensionality on the probability of becoming an entrepreneur. For the population of high performing math students we use information on parents' human capital and exploit within-school, across-cohort variation in students' exposure to peers whose father has a university degree in humanities. We find that the most treated individual (90th percentile) in our sample has 1.1 percentage points higher probability of becoming an entrepreneur compared to the least treated one (10th percentile). The effect is economically significant, being equal to 20% of the overall share of entrepreneurs in the economy. We conclude by highlighting the importance of improving communication skills of individuals with high analytical abilities to incentivize the creation of high performing firms.