Working Papers

“Does Skill Abundance Still Matter? The Evolution of Comparative Advantage in the 21st Century”
[Paper PDF]

Abstract

This paper documents that skill-abundant countries no longer have a comparative advantage in skill-intensive sectors. While this empirical relationship was strong, it weakened in the 1990s and disappeared by the 2000s. The decline is only evident in countries and sectors with high automation, with no significant variation due to offshoring. Using a quantitative trade model incorporating both automation and offshoring, I confirm that observed changes in automation can account for the evolution of comparative advantage while observed changes in offshoring cannot. Through the lens of the same model, I draw implications for the relationship between technology and inequality: automation increases skill premia in high-automation, developed countries and increases welfare globally, while offshoring has smaller, more evenly distributed welfare gains.

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

Abstract

A few large firms dominate many local labor markets. How does that granularity affect the geography of economic activity? And what does it mean for the efficiency of firm entry? To answer these questions, we propose a new economic geography model featuring granular firms subject to idiosyncratic shocks. We show that average wages increase in the size of the local labor market due to that granularity, and provide a sufficient statistic for the contribution of our mechanism. We further prove that too few firms enter in equilibrium. Using Japanese administrative data on manufacturing, we provide evidence consistent with our mechanism and quantify it. Our mechanism implies that markets with around 2 firms per sector have an elasticity of wages to population of 0.05 and firms capture only 85\% of their contribution to production in profits. In large markets like Tokyo, the elasticity is around 0.001, and firm entry is approximately efficient. Enacting optimal place-based industrial policy would increase the number of firms in modest-sized cities by more than 30\% and actually decrease the number of firms and people in Tokyo.

“Decomposing the Rise of the Populist Radical Right” [Paper PDF] [Slide 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” [Paper PDF] [Slide 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.

Publications

“Automation and the Disappearance of Routine Work in Japan” [Paper PDF]
with Ippei Fujiwara and Toyoichiro Shirota
Journal of the Japanese and International Economies, Volume 74, December 2024

“Who Suffers from the COVID-19 Shocks? Labor Market Heterogeneity and Welfare Consequences in Japan” [Paper PDF]
with Sagiri Kitao and Minamo Mikoshiba
Journal of the Japanese and International Economies, Volume 59, March 2021