Research

We document that labor training requirements for high-skilled occupations increased in the U.S. from 2006 to 2019. These greater training requirements reduce the extent to which workers displaced from shrinking occupations can relocate to expanding (high-skilled) occupations, thus potentially affecting both the equilibrium occupational structure and the unemployment level. We build a quantitative model in which labor is displaced by task-replacing technological change embodied in robots (“tasks shock”) and the extent of occupational switching depends on the destination occupations' training requirements. We find that: (i) task-displacing technological change increases steady-state unemployment, but it reduces unemployment along the transition; (ii) in contrast, a comparable shock to capital embodied technological change produces larger unemployment rates with respect to the tasks shock, both in the transition and the steady state; and (iii) greater training requirements in high-skilled occupations increase steady-state unemployment and affect the occupational structure along the transition, but the shape of their effect depends on the size of the technological shock.

We document the emergence of spatial polarisation in the United States during the 1980-2008 period. This phenomenon is characterised by stronger employment polarisation in larger cities, both at the occupational and the worker levels. We quantitatively evaluate the role of technology in generating these patterns by constructing and calibrating a spatial equilibrium model. We find that faster skill-biased technological change in larger cities can account for a substantial fraction of spatial polarisation in the United States. Counterfactual exercises suggest that the differential increase in the share of low-skilled workers across city size is due mainly to the large demand by high-skilled workers for low-skilled services and, to a smaller extent, to the higher complementarity between low- and high-skilled workers in production relative to middle-skilled workers.

We document a secular change in the structure of government consumption spending: Over time the government purchases relatively more private-sector goods, and relies less on its own production of value added. This process alters the transmission of fiscal policy, by dampening the response of hours, public value added, and the labor share to government spending shocks, while leaving the response of total output unchanged. We rationalize these facts in a general equilibrium model where a decline of the public-sector relative productivity drives the changing structure of government spending, which in turn modifies the transmission mechanism of government spending shocks.

We document that employment polarization in the 1980-2008 period in the U.S. is largely generated by women. For the latter, employment shares increase both at the bottom and at the top of the skill distribution, generating the typical U-shape polarization graph, while for men employment shares decrease in a similar fashion along the whole skill distribution. We show that a canonical model of skill-biased technological change augmented with a gender dimension, an endogenous market/home labor choice and a multi-sector environment accounts well for gender and overall employment polarization.

We investigate the effect of structural transformation on the process of economic growth. Using a two-sector growth model we show that, in addition to Baumol's cost disease, structural transformation from goods to services generates other predictions that are in line with cross-country growth facts: an increase in the real investment rate, a decline in the real interest rate and the marginal product of capital, and an acceleration of investment-specific technological change as the share of services increases. The model calibrated to US data can account for the elasticity of real investment rates to the share of services measured in cross-country data.

We show that the effect of a sectoral shock on the composition of sectoral shares crucially depends on whether the goods produced in the sector are home-substitutable or not. When a productivity shock hits the market sector that produces non-home-substitutable goods (e.g. manufacturing goods), the shock largely affects the composition of consumption shares of market sectors. On the other hand, when a shock hits the market sector that produces home-substitutable goods (e.g. service goods), relocation in shares mainly occurs between the sector and the home sector. We compare our results to those of the traditional three-sector model without a home sector, and show that the missing of the home substitution effects predicts completely different implications for the response of consumption shares to sectoral shocks.

Using new home production data for the United States, we estimate a model of structural transformation with a home production sector, allowing for both non-homotheticity of preferences and differential productivity growth in each sector. We report two main findings. First, the estimation results show that home services have a lower income elasticity than market services. Second, the slowdown in home labor productivity, which started in the late 70s, is a key determinant of the rise of market services. Our counterfactual experiment shows that, without the slowdown, the share of market services would have been lower by 7.5 percent in 2010.

There is an extensive literature discussing how individuals’ marriage behavior changes as a country develops. However, no existing data set allows an explicit investigation of the relationship between marriage and economic development. In this paper, we construct new cross-country panel data on marital statistics for 16 OECD countries from 1900 to 2000, in order to analyze such a relationship. We use this data set, together with cross-country data on real GDP per capita and the value added share of agriculture, manufacturing, and services sectors, to document two novel stylized facts. First, the fraction of a country’s population that is married displays a hump-shaped relationship with the level of real GDP per capita. Second, the fraction of the married correlates positively with the share of manufacturing in GDP. We conclude that the stage of economic development of a country is a key factor that affects individuals’ family formation decisions.

We use a Dixit-Stiglitz setting to show that aggregate productivity fluctuations can be generated through changes in the dispersion of firms’ productivity. When the elasticity of substitution among goods is larger than one, an increase in the dispersion raises aggregate productivity because firms at the top of the distribution produce most of output. When the elasticity is smaller than one, an increase in the dispersion reduces aggregate productivity because firms at the bottom of the distribution use most of inputs. We use individual firm level data from Spanish manufacturing firms to test the relationship between the dispersion of firms’ productivity and aggregate productivity. The estimated coefficients are consistent with the predictions of the model: we find that an increase in the coefficient of variation of firms productivity of 1% increases aggregate productivity by 0.16% in sectors with an elasticity of substitution larger than one while the same increase in the standard deviation reduces aggregate productivity by 0.36% in sectors with an elasticity of substitution smaller than one.

I construct a two-sector general equilibrium model of structural change to study the impact of sectoral composition of gross domestic product (GDP) on cross-country differences in GDP growth and volatility. For an empirically relevant parametrization of sectoral production functions, an increase in the share of services in GDP reduces both aggregate total factor productivity (TFP) growth and volatility, thus reducing GDP growth and volatility. When the model is calibrated to the US manufacturing and service sector, the rise of the service sector occurring as income grows can account for a large fraction of the differences in per capita GDP growth and volatility between high-income economies and upper middle income economies.

We create new datasets on capital flows and bank balance sheets to document how the Spanish crisis of the mid-1860s fits the main characteristics of a twin crisis. Next, we describe the particular banking system of Spain, characterized by the coexistence of the Bank of Spain with multiple local banks of issue and a number of joint-stock banks (sociedades de crédito). We analyze the microeconomic behavior of each bank and find that, overall, the banks of issue performed well during the crisis. In contrast, the crisis had a dramatic impact on the sociedades, most of which suspended payments.

In this paper I show that the intensity at which intermediate goods are used in the production process affects aggregate total factor productivity (TFP). To do this, I construct an input–output model economy in which firms produce gross output by means of a production function in capital, labor, and intermediate goods. This production function is subject, together with the standard neutral technical change, to intermediates-biased technical change. Positive (negative) intermediates-biased technical change implies a decline (increase) in the elasticity of gross output with respect to intermediate goods. In equilibrium, this elasticity appears as an explicit part of TFP in the value added aggregate production function. In particular, when the elasticity of gross output with respect to intermediates increases, aggregate TFP declines. I use the model to quantify the impact of intermediates-biased technical change for measured TFP growth in Italy. The exercise shows that intermediates-biased technical change can account for the productivity slowdown observed in Italy from 1994 to 2004.

I construct a two-sector growth model to study the effect of the structural transformation between manufacturing and services on the decline in GDP volatility in the US. In the model, a change in the relative size of the two sectors affects the transmission mechanism that relates sectoral TFP shocks to endogenous variables. I calibrate the model to the US and show that, for given stochastic sectoral TFP processes in manufacturing and services, structural change generates a decline in the volatility of both aggregate TFP and GDP, in the volatility of each broad component of GDP (manufacturing consumption, services consumption and investment) and in the volatility of labor. Numerical results suggest that the structural transformation can account for 28% of the reduction in the US GDP volatility between the periods 1960–1983 and 1984–2005.

Housing prices diverge from construction prices after 1997 in four major countries. Besides, total-factor productivity (TFP) differences between construction and the general economy account for the evolution of construction prices in the US and Germany, but not in the UK and Spain.

I show that an input-output production structure reinforces persistence in the pricing behavior of firms using a Calvo mechanism. In particular, the optimal price today depends upon the expected optimal prices in the infinite future and those set in the infinite past. This is due to a part of a firm's marginal cost being represented by other firms' price. It follows that the effect of the marginal cost on inflation in the new Keynesian Phillips curve is dampened by the presence of the input-output structure. This helps in explaining the difference between the most recent empirical evidence on price adjustment frequency in the U.S. (Bils and Klenow, 2004) and structural estimates of the new Keynesian Phillips curve.