Shin Kikuchi

I am a 5th-year PhD student at MIT Economics.

My research interests are Macroeconomics, International Trade, and Political Economy.

Links/PDF: Email, CV

WORKING PAPERS

“The Granular Origins of Agglomeration”[Download PDF]
with Daniel G O’Connor
Last Updated, April. 2024

Abstract A few large firms dominate many local labor markets. This leaves workers vulnerable to firm-specific shocks. If one firm has a bad productivity shock in a small market, workers will be stuck with that unproductive employer, while in a large labor market, workers can move to another firm. Building on that insight, we present a model of local labor markets with a finite number of firms subject to idiosyncratic shocks. We show that there are increasing returns to scale which disappear as the number of firms goes to infinity. We also show that there can be under-entry of firms, especially in small markets. We then test the main mechanism in Japanese administrative data. We first confirm that payroll is less volatile in larger, less concentrated local labor markets. We also show that establishments with larger payroll shares adjust their employment less in response to a demand shock. Finally, we propose a quantitative, granular model of economic geography with free entry of firms and costly mobility of workers across sectors and commuting zones that we use to quantify the mechanism and do counterfactuals.

“Decomposing the Rise of the Populist Radical Right” [Download PDF]
with Oren Danieli, Noam Gidron, and Ro’ee Levy
Last Updated, Feb. 2024; Under Review

Abstract Support for populist radical right parties in Europe has dramatically increased in recent years. We decompose the rise of these parties from 2005 to 2020 into four components: shifts in party positions, changes in voter attributes (opinions and demographics), changes in voter priorities, and a residual. We merge two wide datasets on party positions and voter attributes and estimate voter priorities using a probabilistic voting model. We find that shifts in party positions and changes in voter attributes do not play a major role in the recent success of populist radical right parties. Instead, the primary driver behind their electoral success lies in voters’ changing priorities. Particularly, voters are less likely to decide which party to support based on parties’ economic positions. Rather, voters—mainly older, non-unionized, low-educated men—increasingly prioritize nativist cultural positions. This allows populist radical right parties to tap into a preexisting reservoir of culturally conservative voters. Using the same datasets, we provide a set of reduced-form evidence supporting our results. First, while parties’ positions have changed, these changes are not consistent with the main supply-side hypothesis for populist support. Second, on aggregate, voters have not adopted populist right-wing opinions. Third, voters are more likely to self-identify ideologically based on their cultural rather than their economic opinions.

“Welfare Effects of Polarization: Occupational Mobility over the Life-cycle” [Download PDF]
with Sagiri Kitao
Last Updated, July 2020

Abstract What are the welfare effects of polarization: wage and employment losses of middle-class workers relative to low- and high-skill groups? We build a model of overlapping generations who choose consumption, savings, labor supply, and occupations over their life-cycles, and accumulate human capital. We simulate a wage shift observed since the early 1980s and investigate individuals’ responses. Polarization improves welfare of young individuals that are high-skilled, while it hurts low-skilled individuals across all ages and especially younger ones. The gain of the high-skilled is larger for generations entering in later periods, who can fully exploit the rising skill premium.

SELECTED WORK IN PROGRESS

“Automation, Fragmentation, and Comparative Advantage”
Presented at Keio (Oct. 2022), Canon Global Institute (Dec. 2022), Columbia (Feb. 2023), Osaka (Apr. 2023), SWET (Aug. 2023), Musashi (Jan. 2024), Kyoto (Jan. 2024), Musashi (Jan. 2024), Aogaku (May. 2024), Waseda (June. 2024), Keio (June. 2024), Kobe (June. 2024)*

Abstract I study how automation and production fragmentation affect comparative advantage and structural change in an open economy. Previously, developing countries had a comparative advantage in low-skill-intensive manufacturing sectors because of their low-skill-labor abundance. Recently, however, I show that this relationship has weakened—or even reversed. This decoupling of skill and trade occurs because automation and production fragmentation allow developed countries to rely on low-cost machines or foreign labor rather than high-cost domestic labor. Therefore, developing countries today do not specialize in low-skill intensive manufacturing sectors and jump onto service sectors.