I am a Post-Doctoral Fellow in Economics at the University of Mannheim, funded by the
Collaborative Research Center TR 224
"Economic Perspectives on Societal Challenges - Equality of Opportunity, Market Regulation, and Financial Stability"
of the German Science Foundation (DFG).
My research focuses broadly on international economics and organizational economics. I am particularly interested in studying how firm behavior shapes economic performance.
DER SPIEGEL writes an
about my research on The Costs and Benefits of Home Office during the Covid-19 Pandemic, joint with Harald Fadinger.
I co-organized a workshop on Trade Policy and Firm Performance in the Global Economy on 13-14 June 2019 jointly with Harald Fadinger and Yanping Liu, sponsored by the Collaborative Research Center TR 224. See here for the program.
My Home is My Castle - The Benefits of Working from Home During a Pandemic Crisis: Evidence from Germany
with Jean-Victor Alipour and Harald Fadinger
[Abstract], [Media Coverage]
Abstract: This paper studies the impact of working from home (WFH) on work relations and public health during the COVID-19 pandemic in Germany. Combining administrative data on SARSCoV-2 infections and short-time work registrations, firm- and worker-level surveys and cell phone tracking data on mobility patterns, we find that working from home eectively shields workers from short-time work, firms from COVID-19 distress and substantially reduces infection risks. Counties whose occupation structure allows for a larger fraction of work to be done from home experience (i) fewer short-time work registrations and (ii) less SARS-CoV-2 cases. At the firm level, an exogenous increase in the take-up of WFH reduces the probability to file for short-time work by up to 71 p.p. and the probability of being very negatively affected by the crisis by up to 77 p.p. Much of the changes in the organization of work relations are likely to be permanent and to have effects well beyond the crisis. Health benefits of WFH appeared mostly in the early stage of the pandemic and became smaller once tight confinement rules were implemented. Before confinement, mobility levels were lower in counties with more WFH jobs and counties experienced a convergence in traffic levels once confinement was in place.
Human Capitalists, Reallocation and the Global Division of Labor
Awarded the FIW International Economics Conference Best Paper Award 2019, Vienna
and the Walther-Rathenau Best Paper Award [Link]
Abstract: The rise of top inequality in the United States and many other countries in recent decades is well documented but its causes remain controversial. Using data on equity ownership and income streams of corporate top earners in the U.S. and the U.K., this paper assesses the role of reallocation towards "superstar firms" for top earners. If economic activity is reallocated toward the largest firms in the economy, this affects equity prices, top earners' marginal product and their incentives. Exploiting the global rise of trade in intermediate inputs as a source for economic reallocation, I assess three predictions of this hypothesis: (i) equity prices increase more for superstar firms, (ii) the value of equity ownership and labor incomes of top earners in superstar firms increase, (iii) equity ownership responds more elastically than labor incomes which changes the compensation structure of top earners. The results suggest that focusing on the income skill premium fundamentally underestimates the returns to globalization for top earners. Furthermore, the reallocation-channel rationalizes the prevalence of capital incomes vis-à-vis labor incomes for top earners.
Capital (Mis)allocation and Incentive Misalignment
with Alexander Schramm and Alexander Schwemmer
Abstract: This paper studies how the allocation of capital within firms is shaped by short-termist incentives. We first present empirical evidence on the existence of within-firm (mis)allocation of capital caused by distortions of managerial incentives using the reform of the FAS 123 accounting statement in the U.S. as a quasi-natural experiment. Based on within-firm variation across investments with different durabilities, we find that firms systematically shifted expenditures towards less durable investments in response to a shift towards more short-term incentives. This reform-induced alteration of the firm-specific capital mix effectively shortened the durability of firms' capital stock. By calibrating a dynamic model of firm investments in which managers determine investment policies, we then seek to quantify the impact of such incentive distortions on output, investment and capital (mis)allocation. Equity-based compensation contracts can induce managers to make investment decisions corresponding to quasi-hyperbolic time preferences and relatively small deviations in incentives induced by the accounting reform caused substantial distortions within and across firms. Overall, this reform-induced shift in capital structures away from the social optimum lowered long-run profits by about 0.54% on average.
The Costs and Benefits of Home Office during the Covid-19 Pandemic - Evidence from Infections and an Input-Output Model for Germany
with Harald Fadinger
[Abstract], [Media Coverage]
C.E.P.R. COVID Economics: Vetted and Real-Time Papers, Vol. 9, p. 107-134, Apr. 2020
Abstract: We study the impact of working from home on (i) infection risk in German regions and (ii) output using an input-output (IO) model of the German economy. We find that working from home is very effective in reducing infection risk: regions whose industry structure allows for a larger fraction of work to be done from home experienced much fewer Covid-19 cases and fatalities. Moreover, confinement is significantly more costly in terms of induced output loss in regions where the share of workers who can work from home is lower. When phasing out confinement, home office should be maintained as long as possible, to allow those workers who cannot work from home to go back to work, while keeping infection risk minimal. Finally, systemic industries (with high multipliers and/or high value added per worker) should be given priority, especially those where home office is not possible.
Foreign Competition and the Durability of U.S. Firm Investments
with Philippe Fromenteau and Jan Tscheke
[Abstract], [Media Coverage], [Working Paper Version]
RAND Journal of Economics, Vol. 50(3), p. 532-567, Fall 2019
Abstract: How does the exposure to product market competition affect the investment horizon of firms? When tougher competition reduces future profitability, firms have an incentive to shift investments towards more short-term assets. To study this mechanism empirically, we formulate a stylized theoretical framework of firm investments and derive a within-firm estimator that uses variation across investments with different durabilities. We exploit the Chinese WTO accession as a competition shock for US firms to estimate the effects of product market competition on the composition of firm investments using expenditures across different assets within listed US manufacturing companies. We find that firms that experienced tougher competition shifted their expenditures towards investments with a shorter durability. We find this effect to be larger for firms with lower total factor productivity.
Trade in Tasks and the Organization of Firms
with Dalia Marin and Alexander Tarasov
[Abstract], [Data and Code], [Media Coverage], [Working Paper Version]
European Economic Review, Vol. 107, p. 99-132, Aug. 2018
Abstract: In this paper, we incorporate trade in tasks into Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that offshoring of production tasks and of managerial tasks can lead to more decentralized management and to larger executive wages in open economies. We study the predictions of the model with original firm level data and find that offshoring firms are 18% more decentralized than non-offshoring firms. We also find that offshoring of managers increases the level of decentralized management in open industries, but reduces the level of decentralized management in sufficiently closed industries.
Globalization and the Evolution of Corporate Governance
[Abstract], [Data and Code] [Media Coverage], [Working Paper Version]
European Economic Review, Vol. 102, p. 39-61, Feb. 2018.
Abstract: How does globalization affect the balance of power between managers and firm owners? This paper studies the effect of economic integration on governance practices within firms. I propose a theory of endogenous corporate governance investments in industry equilibrium with monopolistic competition. Firms can use investments into better corporate governance as a cheap substitute to performance compensation to mitigate agency problems. International integration alters the demand for managers in the economy such that firms may reduce their corporate governance investments and offer higher performance payments. This globalization-induced deterioration of corporate governance in the economy diminishes the welfare gains from globalization. Using data on governance practices in U.S. manufacturing corporations, I provide empirical evidence that conforms to the model predictions. Firms in industries that experienced substantial trade liberalization between 1990 and 2006 have changed their governance practices allowing for more managerial slack and offered higher equity payments to their CEOs. These effects are particularly large in relatively dynamic industries that are characterized by large exit rates.
Democratization, Contracts and Comparative Advantage
with Felix Samy Soliman
[Abstract], [Working Paper Version]
Economics Letters, Vol. 173, p. 73-77, Dec. 2018.
Abstract: We study how the international spread of democracy shaped the comparative advantage of countries. Using data on the "Third Wave of Democratization" between 1976 and 2000 we find that democratizing countries shifted their exports towards more contract intensive goods that require a larger portion of relationship-specific inputs. This shift is observed on the intensive margin (volumes of industry-level exports) as well as the extensive margin of trade (number of goods a country exports). Using an instrumental variable strategy based on democracy waves, alternative proxy variables and subsamples suggests that the effects of democratization on trade specialization are causal.
Work in Progress
Trade Adjustment and Competition in the Eurozone
with Harald Fadinger