Published and Forthcoming Articles
- Labour Economics (2023)
- with Myrto Oikonomou and Yannick Timmer
We study the labor market effects of information technology (IT) during the onset of the COVID-19 pandemic, using data on IT adoption covering almost three million establishments in the US. We find that in areas where firms had adopted more IT before the pandemic, the unemployment rate rose less in response to social distancing. IT shields all individuals, regardless of gender and race, except those with the lowest educational attainment. Instrumental variable estimates--leveraging historical routine employment share as a booster of IT adoption--confirm IT had a causal impact on fostering labor markets' resilience. Additional evidence suggests this shielding effect is due to the easiness of working-from-home and to stronger creation of digital jobs in high IT areas.
- Journal of Money, Credit, and Banking (accepted)
- with Francesco Manaresi
We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database, covering all the credit relationships of Italian corporations, to measure idiosyncratic supply-side shocks to credit availability and estimate a production model augmented with financial frictions. We find the effect of credit supply to be asymmetric: contractions harm TFP growth, halting productivity-enhancing activities; credit expansions have limited effects. We find that a credit crunch was followed by a productivity slowdown while a sustained growth of credit supply did not lead to productivity increases at firms. This suggests a role of financial stability in preserving productivity growth.
- Journal of Monetary Economics (2022)
- with Yannick Timmer
What are the implications of information technology (IT) in banking for financial stability? Data on US banks’ IT equipment and the background of their executives reveals that higher pre-crisis IT adoption led to fewer non-performing loans and more lending during the global financial crisis. Empirical evidence indicates a direct role of IT adoption in strengthening bank resilience; this includes instrumental variable estimates exploiting the historical location of technical schools. Loan-level analysis shows that high-IT banks originated mortgages with better performance, indicating better borrower screening. No evidence points to offloading of low-quality loans, differences in business models, or enhanced monitoring.
- Journal of Banking and Finance (2021)
- with Brandon Tan, Deniz Igan, Maria Soledad Martinez Peria, and Andrea Presbitero
The COVID-19 pandemic could result in large government interventions in the banking industry. To shed light on the possible consequences on markups, we rely on the experience of the Global Financial Crisis and exploit granular data on government interventions in more than 800 banks across 27 countries between 2007 and 2017. Using a multivariate matching method, we find no evidence of an increase in markups. Interventions—especially longer and larger ones—have no significant impact on prices but they increase costs, mostly because of higher loan impairment charges, lowering markups.
- Harvard Business Review (non peer reviewed )
- with Nick Bloom
Cloud computing has “democratized computing” by bringing it to the masses of firms. First, cloud computing has seen massive growth. Less than 0.5% of firms had adopted it in 2010, whereas 7% had by 2016, which is an annualized growth rate of almost 50%. Second, the adoption of cloud computing has occurred across the U.S., not just in one region — albeit with heaviest and earliest adoption in urban and educated areas. But third, and most strikingly, cloud computing – unlike other technologies like PCs and e-commerce – has been adopted first by smaller and younger firms.
- with Marvin Cardoza, Francesco Grigoli, and Cian Ruane
This paper documents that workers tend to find jobs through their employers' production networks, contributing to a more efficient reallocation of workers across firms. Employer-employee data, matched with the universe of firm-to-firm transactions for the Dominican Republic, reveals that one fifth of workers who change firm move to a buyer or supplier of their original employer---significantly more than predicted by standard labor market characteristics. Hiring from buyers or suppliers accounts for the majority of net job flows to higher wage and productivity firms. An event-study shows that moving to a buyer or supplier results in a persistent 6.7 p.p. increase in earnings relative to other movers. One third of this premium is due to supply chain movers earning more than other workers hired at the same firm. The findings are rationalized with a simple model of on-the-job search in which workers are more likely to find out about job opportunities at buyers and suppliers, and form more productive matches with these firms. We present evidence that this higher match quality can be explained by human capital transferability along the supply chain. Our results point to a new channel through which factors affecting the supply chain, such as international outsourcing or contracting frictions, affect labor market dynamism.
- with Kosha Modi, Yannick Timmer, and Maria Soledad Martinez Peria
This paper relies on administrative data to study determinants and implications of US banks' Information Technology (IT) investments, which have increased six-fold over two decades. Large and small banks had similar IT expenses a decade ago. Since then, large banks sharply increased their spending, especially those which were more exposed to competition from fintech lenders. Other local-level and bank-level factors, such as county income and bank income sources, also contribute to explain the heterogeneity in IT investments. Analysis of the mortgage market reveals that fintechs' lending behavior is more similar to that of non-bank financial intermediaries rather than IT-savvy banks, suggesting that factors other than technology are responsible for the differences between banks and other lenders. However, both IT-savvy banks and fintech lend to lower income borrowers, pointing towards benefits for financial inclusion from higher IT adoption. Banks' IT investments are also shown to matter for the responsiveness of bank lending to monetary policy.
- R&R American Journal of Health Economics
- with Anne-Line Koch Helsø and Adelina Yanyue Wang
We study the costs of hospitalizations on patients’ earnings and labor supply, using the universe of hospital admissions in Denmark and full-population tax data. We evaluate the quality of treatment based on its ability to mitigate the labor market consequences of a given diagnosis and propose a new measure of hospital quality, the ``Adjusted Earning Losses'' (AEL). We show that AEL contains significant additional information relative to traditional measures and does not suffer from worse selection issues. We document a sizeable heterogeneity in quality across hospitals and a large decline in the labor cost of hospitalizations between 1998 and 2012.
- with Toni Ahnert, Sebastian Doerr, and Yannick Timmer
This paper provides novel evidence on the importance of information technology (IT) in banking for entrepreneurship. To guide our analysis, we build a parsimonious model of bank screening and lending. The model predicts that IT in banking can spur entrepreneurship by making it easier for startups to borrow against collateral. We empirically show that job creation by young firms is stronger in US counties that are more exposed to IT-intensive banks. Consistent with a strengthened collateral channel, entrepreneurship increases by more in IT-exposed counties when house prices rise. Instrumental variable regressions at the bank level further show that banks’ IT adoption makes credit supply more responsive to changes in local house prices, and reduces the importance of geographical distance between borrowers and lenders. These results suggest that IT adoption in the financial sector can increase dynamism by improving startups’ access to finance
- with Deniz Igan, Maria Soledad Martinez Peria, and Andrea Presbitero
We examine trends in bank competition since the early 2000s. The Lerner index—arguably the most commonly used measure—shows evidence of a marked increase in market power in advanced economies, especially after the global financial crisis. But other frequently used indicators of banking sector competition seem much more muted. We show that the significant drop in policy rates that occurred in the aftermath of the crisis could explain the seeming disconnect. Adjusting the Lerner index for the impact of policy rates reveals that market power has been fairly constant in advanced economies—consistent with the other signals and similar to the pattern observed in emerging markets.
- with Ben Klopack
This paper investigates the effect of ''price parity'' clauses in vertical contracts between hotels and online travel agencies on average prices. These restrictions require a hotel to set its lowest prices for a given room on a travel agency's website and have come under recent scrutiny by antitrust regulators. We exploit two recent policy changes in Europe: a settlement in 2014 in Germany that banned price parity clauses by the largest online travel agency and subsequent regulatory action in 2015 in Sweden, Italy, and France. Using a differences-in-differences strategy, we find that these regulatory actions were associated with a decrease in prices of between 9% and 15%.
- Staff Discussion Notes No. 2021/002
- with Chiara Maggi, Jiayue Fan, José Garrido, Federico Diez, Romain Duval, Maria Soledad Martinez Peria, Sebnem Kalemli-Ozcan
The COVID-19 pandemic has increased insolvency risks, especially among small and medium enterprises (SMEs), which are vastly overrepresented in hard-hit sectors. Without government intervention, even firms that are viable a priori could end up being liquidated—particularly in sectors characterized by labor-intensive technologies, threatening both macroeconomic and social stability. This staff discussion note assesses the impact of the pandemic on SME insolvency risks and policy options to address them. It quantifies the impact of weaker aggregate demand, changes in sectoral consumption patterns, and lockdowns on firm balance sheets and estimates the impact of a range of policy options, for a large sample of SMEs in (mostly) advanced economies.
- Covid Economics (Issue 36)
- with Sophia Chen, Deniz Igan, and Andrea Presbitero
We use high-frequency indicators to analyze the economic impact of COVID-19 in Europe and the United States during the early phase of the pandemic. We document that European countries and U.S. states that experienced larger outbreaks also suffered larger economic losses. We also find that the heterogeneous impact of COVID-19 is mostly captured by observed changes in people’s mobility, while, so far, there is no robust evidence supporting additional impact from the adoption of nonpharmaceutical interventions. The deterioration of economic conditions preceded the introduction of these policies and a gradual recovery also started before formal reopening, highlighting the importance of voluntary social distancing, communication, and trust-building measures.
- Global Financial Stability Report (Chapter 4), October 2020
- with several coauthors
THE GREAT LOCKDOWN: DISSECTING THE ECONOMIC EFFECTS
- World Economic Outlook (Chapter 2), October 2020
- with several coauthors (see Box 1 and 2 in particular)
Rising Corporate Market Power: Emerging Policy Issues
- Staff Discussion Notes No. 2021/001
- with several coauthors (see part about banking industry in particular)