Shin Kikuchi

I am a 6th-year PhD student in Economics at MIT. I specialize in trade and macroeconomics often at the intersection with labor economics. I also work on projects in political economy. All of my research uses micro-data.

Before my PhD, I worked as a business analyst at McKinsey & Company. I hold both an MA and a BA in Economics from the University of Tokyo.

I am on the 2024-2025 job market.

Primary Fields: Trade and Macro
Secondary Fields: Labor and Political Economy

Links/PDF: Email, CV

JOB MARKET PAPER

“The Evolution of Comparative Advantage: Why Skill Abundance No Longer Matters” [Download PDF]

Abstract This paper documents new facts about the evolution of comparative advantage and explores the causes and implications of this evolution. The key finding is that a country's skill abundance once implied a comparative advantage in skill-intensive sectors, but this relationship weakened in the 1990s and disappeared by the 2000s. I show that larger declines in the importance of skill abundance occur in countries and sectors with higher levels of automation, with no significant—or even opposite—variation observed with offshoring. A multi-sector quantitative trade model incorporating both automation and offshoring finds that automation, rather than offshoring, is the primary driver behind the change in comparative advantage, and that, without automation, skill abundance would have remained important after 2000. Automation increases skill premia in high-automation, developed countries and increases welfare globally while offshoring yields positive but smaller and more evenly distributed welfare effects.

WORKING PAPERS

“The Granular Origins of Agglomeration” [Download PDF]
with Daniel G O’Connor

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
VOXEU
Reject and Resubmit at Journal of Political Economy

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

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.

“Automation and the Disappearance of Routine Work in Japan” [Download PDF]
with Ippei Fujiwara and Toyoichiro Shirota
Revise and Resubmit at Journal of the Japanese and International Economies

Abstract We examine the implications of automation technology in Japan since 1980, comparing different local labor markets with different degrees of automation exposure. First, we do not find that automation reduces the employment rate within demographic groups and that automation encourages workers to move from regular to non-regular employment. Second, we show that automation shifts employment from routine occupations in the manufacturing sector to service sectors, while increasing the share of establishments and sales in the manufacturing sector. Finally, we show that this shift in labor demand is attributed to younger generations and non-college-educated workers.

Selected Work in Progress

“Geography of Business Interactions: Evidence from Business Card Exchange Data”
with Shota Komatsu, Juan Martínez, Kentaro Nakajima, Takanori Nishida, Kensuke Teshima, and Junichi Yamasaki

Abstract In-person business meetings are a critical driver of agglomeration benefits, yet the scarcity of data has hindered exploration into their nature. This study leverages a novel dataset obtained from a business card exchange application, used by 0.4 million workers in Tokyo, to examine the impact of geographical distance on business card exchanges and other types of business networks. By analyzing the moving of firms, we find a distinct pattern in how the frequency of business card exchanges decreases with distance, particularly noting a significant drop beyond a 500-meter radius. Additionally, we observe that the rate of decline in these exchanges due to distance closely correlates with the level of industry agglomeration, and we find similar drops in other types of business networks such as patent collaborations. These findings highlight the pivotal role of very local interaction in fostering agglomeration benefits.

“Optimal Industry Mix with Granular Shocks”
with Daniel G O’Connor

Abstract When firms are subject to granular and industry-wide shocks, regions overspecialize, leaving workers overexposed. Using German employer-employee matched data, we study the optimal industrial policy incorporating heterogeneity in occupation, industry, and region.

“Trade, Deindustrialization, and Service-led Growth”
with Tishara Garg and Edward Wiles

Abstract We examine the impact of trade liberalization on structural change patterns in India. Leveraging district-level variations in sectoral composition, we find that districts with greater tariff reductions experienced larger declines in manufacturing employment shares. By extending Matsuyama’s 1992 model of deindustrialization to include a non-tradable service sector, we demonstrate analytically and through simulations that India's observed deindustrialization and service-led growth can be qualitatively attributed to trade liberalization. We aim to structurally estimate the model parameters to quantify the role of trade liberalization in driving these structural changes.

“Long-run Implications of Labor Market Power in the United States”
(approved US Census Project)

Policy Papers/Notes

“Who suffers from the COVID-19 shocks? Labor market heterogeneity and welfare consequences in Japan” [Download PDF]
with Sagiri Kitao and Minamo Mikoshiba
Journal of the Japanese and International Economies, Volume 59, March 2021

Abstract Effects of the COVID-19 shocks in the Japanese labor market vary across workers of different age groups, genders, employment types, education levels, occupations, and industries. We document heterogeneous changes in employment and earnings in response to the COVID-19 shocks, observed in various data sources during the initial months after the onset of the pandemic in Japan. We then feed these shocks into a life-cycle model of heterogeneous agents to quantify welfare consequences of the COVID-19 shocks. In each dimension of the heterogeneity, the shocks are amplified for those who earned less prior to the crisis. Contingent workers are hit harder than regular workers, younger workers than older workers, females than males, and workers engaged in social and non-flexible jobs than those in ordinary and flexible jobs. The most severely hurt by the COVID-19 shocks has been a group of female, contingent, low-skilled workers, engaged in social and non-flexible jobs and without a spouse of a different group.

“Heterogeneous Vulnerability to the COVID-19 Crisis and Implications for Inequality in Japan” [Download PDF]
with Sagiri Kitao and Minamo Mikoshiba
VOXEU

Abstract We study how the COVID-19 crisis could affect earnings inequality across heterogeneous individuals in Japan. We use the Employment Status Survey (ESS) to identify groups of individuals who are more vulnerable to the COVID-19 shocks, which likely affect workers in different industries, occupations, and employment types in different magnitude. We assess the impact using various data and early evidence including expenditures data from the JCB Consumption NOW during the first weeks of the pandemic. Our study identifies significant heterogeneity in vulnerability to the COVID-19 shocks across workers of different types. We find that the crisis will hit low-income groups by more and is likely to significantly exacerbate inequality through multiple channels, calling for urgent and large-scale assistance targeted towards affected individuals.