|
Research Interests
Corporate Finance, Innovation and Entrepreneurship, Labor and Finance |
Help Ukrainian people!
If you are an Economist and want to contribute effort to stop Russia’s war in Ukraine, sign up for "Economists for Ukraine"
About my Research
My research is at the juncture of corporate finance, innovation and entrepreneurship, and labor and finance.
Innovation: I study the drivers of innovation, entrepreneurship and technological change and their economic impact on firms and workers.
Labor and Finance: I research the impact of firms on workers (e.g., income, employment, labor mobility).
Labor & Finance Conference
I am organizing Labor & Finance Conference in New York in May 2023. If interested in attending, please register here https://sites.google.com/view/labor-and-finance-conference.
I am organizing Labor & Finance Conference in New York in May 2023. If interested in attending, please register here https://sites.google.com/view/labor-and-finance-conference.
Publications (including Forthcoming and Accepted)
1. Destructive Creation at Work: How Financial Distress Spurs Entrepreneurship (Online Appendix). The Review of Financial Studies 2020
- AFA; EFA; Tel Aviv Finance Conference; Economics of Entrepreneurship and Innovation Conference; Mitsui Labor and Finance Symposium; Finance, Organizations & Markets Conference (FOM); Columbia Macro Lunch; Annual Meetings of the Society of Labor Economics (SOLE); Labor and Finance Group meeting; selected for presentation at the Colorado Finance Summit/PhD session; Carnegie-Mellon University; Berkeley; Columbia; Cornell; Federal Reserve Board, Georgetown; Ohio State; Stanford; University of Colorado; University of Maryland; University of Minnesota; University of North Carolina; University of Texas-Dallas; University of Toronto
- Using U.S. Census firm-worker data, I document that firms' financial distress has an economically important effect on employee departures to entrepreneurship. The impact is amplified in the high-tech and service sectors, where employees are key assets. In states with enforceable noncompete contracts, the effect is mitigated. Compared to typical entrepreneurs, distress-driven entrepreneurs are high-wage workers who found better firms, as measured by jobs, pay, and survival. Startup jobs compensate for 33% of job losses at the constrained incumbents. Overall, the financial inability of incumbent firms to pursue productive opportunities increases the reallocation of economic activity into new firms.
2. Heterogeneous Taxes and Limited Risk Sharing: Evidence from Municipal Bonds. The Review of Financial Studies 2021, with Pab Jotikasthira (SMU), Chris Lundblad (UNC), and Tarun Ramadorai (Imperial College)
- AFA; EFA; Brandeis Municipal Finance Conference; Adam Smith Workshops in Asset Pricing and Corporate Finance; SFS Finance Cavalcade; Cornell University; Federal Reserve Board; Georgetown University; George Washington University; Georgia State University; Hong Kong University of Science and Technology; Lehigh University; London Business School; Ohio State University; Rice University; Southern Methodist University; University of Georgia; University of Houston; University of Nebraska; UNC; University of Rochester; University of Washington; Virginia Tech
- We evaluate the impacts of tax policy on asset returns using the U.S. municipal bond market. In theory, tax-induced ownership segmentation limits risk-sharing, creating downward-sloping regions of the aggregate demand curve for the asset. In the data, cross-state variation in tax privilege policies predicts differences in in-state ownership of local municipal bonds; the policies create incentives for concentrated local ownership. High tax privilege states have muni bond yields that are more sensitive to variations in supply and local idiosyncratic risk. The effects are stronger when local investors face correlated background risk and/or diminishing marginal non-pecuniary benefits from holding local assets.
3. Financial Disruptions and the Organization of Innovation: Evidence from the Great Depression.
Forthcoming at the Review of Financial Studies, with Asaf Bernstein (Colorado) and Filippo Mezzanotti (Northwestern)
- This paper was previously titled "Crisis Innovation"
- Online Appendix A; Online Appendix B
- AFA; WFA; EFA; NBER Productivity, Innovation and Entrepreneurship; NBER SI American History; Barcelona Summer Forum; IMF 4th Annual Macro-Financial Research Conference; FIRS; the WEFI; 2020 Virtual Economic History Seminar; Hass School of Business; Stanford University; Northwestern University Economic History Festival; University of Virginia; WFA (AFFECT); Labor and Finance conference in Chicago; Michigan State University Conference; Minnesota junior conference; HEC Entrepreneurship Conference; UT Dallas Conference; University of Auburn; University of Colorado; the Third Junior Entrepreneurial Finance and Innovation Workshop; the HKUST Finance seminar; Owen Graduate School of Management; Rutgers University; the Tuck School of Business
- We examine innovation after the Great Depression using data on a century’s worth of U.S. patents and a difference-in-differences design that exploits regional variation in the severity of the economic crisis. Harder-hit areas experienced large and persistent declines in independent patenting, which lasted for the next 70 years. This decline was larger for young and inexperienced inventors and lower-quality patents. In contrast, large firms had relative innovation increases, especially for inventors with the largest declines in independent patenting. Overall, the Great Depression contributed to the decline in technological entrepreneurship and accelerated the shift of innovation into larger firms.
4. Cutting the Innovation Engine: How Federal Funding Shocks Affect University Patenting, Entrepreneurship, and Publications. Forthcoming at the Quarterly Journal of Economics, with Alex Xi He (University of Maryland), Sabrina Howell (NYU), Elisabeth Perlman (U.S. Census Bureau), Joseph Staudt (U.S. Census Bureau)
- AEA; NBER Productivity, Innovation and Entrepreneurship; NBER SI Science of Science Program; NBER SI Labor/Education; NBER productivity seminar; Barcelona Summer Forum; MIT; NYU; Virtual Finance in the Cloud Conference; NSF SI Future of IP conference; APPAM, EPFL Innovation Seminar; the AIEA Seminar series; SEA; Berkley Finance Group; Berkley Innovation/Entrepreneurship; Duke
- NYU Stern Yuki Arai Faculty Award for Best Paper in Finance 2020
- This paper studies how federal funding affects the innovation outputs of university researchers. We link person-level research grants from 22 universities to patents, publications, and career outcomes from the U.S. Census Bureau. We focus on the effects of large, idiosyncratic, and temporary cuts to federal funding in a researcher’s pre-existing narrow field of study. Using an event study design, we document that these negative federal funding shocks reduce high-tech entrepreneurship and publications, but increase patenting. The lost publications tend to be higher quality and more basic, while the additional patents tend to be lower quality, less general, and more often privately assigned. These federal funding cuts lead to an increase in private funding, which partially compensates for the decline in federal funding. Together with evidence from industry-university contracts, the results suggest that federal funding cuts shift university research funding from federal to private sources and lead to innovation outputs that are less openly accessible and more often appropriated by corporate funders.
5. Entrepreneurial Spillovers from Corporate R&D. Forthcoming at the Journal of Labor Economics, with Sabrina Howell (NYU)
- AEA; NBER Corporate Finance; Five-Star NYU; Stanford Financing of Innovation Summit; LBS Summer Symposium; UW Summer Finance Conference; Yale Junior Conference; WFA-AFFECT; Junior Entrepreneurial Finance and Innovation Workshop
- This paper offers the first study of how changes in corporate R&D investment affect labor mobility. We document that increases in firm R&D have no measurable effect on employee mobility to other incumbent firms or on exit from employment, but do spur employee departures to join the founding teams of startups. These startups are more likely to be outside the R&D-investing employer’s industry, suggesting that the ideas moving via employees to startups would impose diversification costs on the parent. These startups also likely generate substantial spillover benefits, as they are more likely to be VC-backed, high-tech, and high-wage.
6. Artificial Intelligence, Firm Growth, and Product Innovation, Accepted by the Journal of Financial Economics, with Anastassia Fedyk (University of California, Berkeley), Alex He (University of Maryland), James Hodson (Jozef Stefan International Postgraduate School)
- NBER Economics of AI; EFA; AFA; NBER Corporate Finance; NBER SI Macroeconomics and Productivity; NBER Innovation Data; NBER productivity seminar; Federal Reserve Digitization Collab Week; FIRS; FOM Conference; Labor and Finance Group Conference; Society of Labor Economics; Society for Economic Dynamics; Northwestern; NYU; WashU; Emory; NY Fed Atlanta; Federal Reserve Digitization Collab Week; Richmond Federal Conference “Secular Trends in Macroeconomics and Firm Dynamics”; Tulane; Georgia State University; Michigan State University; University of Oklahoma; Triangle Macro-Finance Workshop; Tilburg University; Triangle Macro-Finance Workshop; Queen Mary University of London; AFFECT; NYU WAPFIN (Women Assistant Professors in Finance); UNC Junior Roundtable; Sao Paulo School of Economics; UC Berkeley; University of Illinois Chicago; University of Maryland; Vienna Graduate School of Finance; Frontiers in Economics for Ukraine; Colloquium on The Peril and Promise of Artificial Intelligence (AI) for Corporations
- We study the use and economic impact of artificial intelligence (AI) technologies among U.S. firms. We propose a new measure of firm-level AI investments, using a unique combination of detailed worker resume and job postings datasets. Our measure reveals a stark increase in AI investments across sectors in the last decade. AI-investing firms see higher growth in sales, employment, and market valuations. We use a novel identification strategy, instrumenting firm-level AI investments with firms' ex-ante exposure, based on alumni networks, to the supply of AI-skilled labor from universities historically strong in AI research. The positive growth effect of AI comes primarily through increased product innovation, reflected in trademarks, product patents, and updates to product portfolios. AI-powered growth concentrates among the ex-ante largest firms, leading to higher industry concentration and reinforcing winner-take-most dynamics. Our results highlight that new technologies can contribute to growth through product innovation.
7. Firm Investments in Artificial Intelligence Technologies and Changes in Workforce Composition. Forthcoming in the NBER Volume on Technology, Productivity, and Economic Growth, with Anastassia Fedyk (University of California), Alex He (University of Maryland), James Hodson (Jozef Stefan International Postgraduate School)
- AEA; NBER CRIW Conference on Technology, Productivity, and Economic Growth; Labor and Finance Conference; Stanford University Digital Innovation Lab; Federal Reserve Digitization Collab Week; Richmond Federal Conference “Secular Trends in Macroeconomics and Firm Dynamics”; the Jozef Stefan Institute Artificial Intelligence Lab; Yeshiva University
- We study the shifts in U.S. firms’ workforce composition and organization associated with the use of AI technologies. To do so, we leverage a unique combination of worker resume and job postings datasets to measure firm-level AI investments and workforce composition variables, such as educational attainment, specialization, and hierarchy. We document that firms with higher initial shares of highly-educated workers and STEM workers invest more in AI. As firms invest in AI, they tend to transition to more educated workforces, with higher shares of workers with undergraduate and graduate degrees, and more specialization in STEM fields and IT and analysis skills. Furthermore, AI investments are associated with a flattening of the firms’ hierarchical structure, with significant increases in the share of workers at the junior level and decreases in shares of workers in middle-management and senior roles. Overall, our results highlight that adoption of AI technologies is associated with significant reorganization of firms’ workforces.
8. Friends during Hard Times: Evidence from the Great Depression, with Diego Garcia (U Colorado) and Geoff Tate (U Maryland). Accepted by the Journal of Financial and Quantitative Analysis (JFQA)
- AEA; Corporate Finance Conference (Wash-U); EFA; LBS Summer Finance Symposium; FIRS; Financial Institutions, Regulation & Corporate Governance (FIRCG) Conference; Spring Finance Conference at the UT-Dallas
- Using a novel dataset of over 3500 public and private firms, we construct the network of firm connections through executives and directors on the eve of the 1929 financial market crash. We find that more connected firms have 17% higher 10-year survival rates on average. Consistent with a role in facilitating access to working capital, the results are particularly strong for small firms, private firms, cash-poor firms, and firms located in counties with high bank suspension rates during the crisis. Moreover, connections to cash-rich firms that increase their accounts receivable during the peak of the crisis are most important for survival. Our results suggest that network connections can play a stabilizing role during a financial crisis by easing the flow of capital to constrained firms.
Working Papers
1. Customer Data Access and Fintech Entry: Early Evidence from Open Banking, with Greg Buchak (Stanford) and Will Gornall (UBC). Revision requested by the Journal of Financial Economics
- NY Fed Fintech Conference; UTD Finance Conference; EFA; NFA; NBER SI Corporate Finance; NBER Economics of Privacy Conference; UBC Winter Finance Conference; Barcelona Summer Forum; FIRS; Esade Spring Workshop (Barcelona); Entrepreneurship and Innovation at Nova SBE; HEC Workshop on Entrepreneurship; OCC Conference; NFA; Rome Junior Finance Conference; UBC Winter Finance Conference; Columbia; Erasmus University in Rotterdam; Cheung Kong Graduate School of Business; HEC Lausanne; Maastricht University; NYU WAPFIN (Women Assistant Professors in Finance); Stanford; Stockholm School of Economics; UBC; Universidad Carlos III de Madrid; USC; Wharton
- Open banking is the trend of empowering customers to share their banking data with fintechs and other banks. We compile a novel dataset documenting that governments in 49 countries have implemented open banking policies and 31 more are in active discussions. Following adoption, fintech venture capital investment increases by 50%, with more comprehensive policies showing larger effects. We examine the policy tradeoffs with a quantitative model of consumer data production and usage. Our calibrations show that customer-directed data sharing increases entry by improving entrant screening ability and product offerings,
2. IPOs, Human Capital, and Labor Reallocation, with Paige Ouimet (UNC) and Rebecca Zarutskie (Fed Board). Revision requested by the Journal of Financial and Quantitative Analysis (JFQA)
- AFA; NBER Entrepreneurship; Texas Finance Festival; Dartmouth PE and Entrepreneurship conference; SFS Finance Cavalcade; Changing Role of Stock Markets in Capital Formation - NYU; Annual Meetings of the Society of Labor Economics; Darden & Cambridge Judge Entrepreneurship and Innovation Research Conference
- We examine the human capital of IPO-filing firms and how going public affects their labor force. IPO-filing firms have high average wages and limited industrial diversification. Moreover, we document that a successful IPO increases departures of high-skilled employees to startups and diversification though employment growth in non-core industries. While IPOs do not significantly affect earnings growth of pre-IPO workers, post-IPO hires receive larger earnings increases upon joining. These results are most consistent with agency mechanisms associated with the transition to public ownership. Overall, going public has significant implications for the firms’ overall labor force, the firm, and labor reallocation.
3. The Impact of Money in Politics on Labor and Capital: Evidence from Citizens United v. FEC, with Pat Akey (Toronto), Greg Buchak (Stanford), Ana-Maria Tenekedjieva (Fed Reserve Board)
- Jackson Hole; AFA; EFA; MFA; CICF; WFA (AFFECT); ASU; Labor and Finance Online Seminars; Columbia Women Economists Seminar series; Erasmus University in Rotterdam; Entrepreneurship Junior Group Online Seminars; Maastricht University; University of Bristol; University of Lugano; University of Luxembourg; Stanford; UBC; University of South Carolina
- The perceived increase in corporate political influence has raised concerns that corporations advance policies that benefit capital and harm labor. We examine whether money in politics harms labor using the surprise Supreme Court ruling Citizens United v. FEC (2010), which rendered bans on political spending unconstitutional, affecting roughly half of US states (treated states). In a difference-in-difference analysis, we find that treated states see increased political turnover and, surprisingly, increased labor income. We show evidence that these effects are driven by increased political competition whereby money allows for more political entry from firms that could not exert political influence in other ways. On net, the economic environment becomes more business-friendly and some of these gains are passed on to workers.
4. Pay, Employment, and Dynamics of Young Firms, with Wenting Ma (Umass), Chris Moser (Columbia), Paige Ouimet (UNC), Rebecca Zarutskie (Fed Board)
- AEA; AFA; Mitsui Labor and Finance Symposium; 24th SOLE Annual Meeting; the 2018 Columbia Junior Entrepreneurship and Innovation Workshop; the 2018 UNC Kenan Institute Frontiers of Entrepreneurship Conference; the 14th Annual FIRS Finance Conference; Columbia Junior Micro Macro Labor Conference; 4th Rome Junior Finance Conference
- Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.
Policy Work on Russian Full-scale Invasion of Ukraine
1. Assessing the Impact of International Sanctkions on Russian Oil Exports , with Benjamin Hilgenstock (KSE), Oleg Itskhoki (UCLA), Maxim Mironov (IE Business School), Elina Ribakova (IIF)
- We use a unique high-frequency Russian customs dataset to evaluate the impact of international sanctions on Russia – focusing on Russian crude oil and oil products exports, as they are the key sources of export earnings and government revenues. We study the effects of two focal sanctions measures – the EU embargo and G7 price cap on Russian seaborne crude oil, which both took effect on December 5, 2022. We find that Russia was able to redirect crude oil exports from Europe to alternative markets such as India, China, and Turkey but that export earnings were curbed substantially by the sizable discounts that Russian exporters had to accept in market segments where the impeding EU embargo lowered demand, e.g., exports from Baltic Sea ports – a dynamic that only became more pronounced after the embargo and price cap’s taking effect. However, we do not find crude oil discounts as large as those reflected in Urals prices towards the end of 2022. In particular, prices in market segments that are unaffected by lower European demand, e.g., exports from Russia’s Pacific Ocean ports, have not dropped in a meaningful way and shipments do not appear to comply with the price cap. What the EU embargo and G7 price cap have, thus, triggered is a fundamental fragmentation of the market for Russian crude oil. Based on our analysis, we conclude that a central focus of policy going forward should be the enforcement of existing sanctions on Russian oil – along with the lowering of the oil price cap. As far as oil products are concerned, we show that it is significantly less feasible to redirect exports away from the European market. This suggests that the EU embargo on oil products, which took effect on February 5, 2023, will prove to be a powerful additional tool to further curb Russian export and fiscal revenues.
Work-in-progress
Does Antitrust Enforcement Affect Industry Dynamics? Evidence from 40 Years of US DOJ Lawsuits, with Simcha Barkai (BC), Jessica Jeffers (Chicago), Ezra Karger (Chicago), and Ekaterina Volkova (U Melbourne) (draft coming soon)
- AEA (scheduled); EFA; University of Warwick; Labor and Finance conference; Junior Entrepreneurial Finance/Innovation Lunch Group; Columbia Women Economists Seminar series
- We construct a comprehensive dataset of antitrust lawsuits filed by the Department of Justice (DOJ) between 1980 and 2018, that includes the geographic scope and industries of the targeted companies. We find a continued secular decline in the number of antitrust lawsuits filed by the DOJ relative to the early 1980s, with wide variation across industries. We use this new dataset to study the systematic effect of antitrust lawsuits on industry dynamics, as measured by employment growth. We compare the employment growth of a nontradable industry located in a particular state that is the target of a DOJ lawsuit with the same non-tradable industry located in other states. In an event-study framework, we find that employment is relatively stable in the years leading up to antitrust lawsuits, but increases significantly in the years immediately following the lawsuit. The effect is stronger for local lawsuits and lawsuits remedying older violations. Our results suggest that antitrust enforcement has an important role in curbing anticompetitive behavior by firms and has a positive effect on aggregate outcomes.