Firm Heterogeneity and Racial Labor Market Disparities 

Black workers are more exposed to business cycle employment risk than white workers, even after adjusting for differences in industry and other factors. This paper shows that large employers play an outsized role in the excess sensitivity of Black employment, both in a variance decomposition with aggregate data and in micro-level regressions with individual controls. Motivated by this evidence, the paper develops and calibrates a search model with flexibly-specified racial disparities in hiring that vary with firm size. Large firms employ more Black workers, as in the data.

In a slack labor market, Black employment is more negatively affected, as firms become more selective about hiring. This effect is amplified at large firms due to spillover effects on wages, though the relative contributions of large and small employers depend on the form of racial disparities. The preferred specification explains 45% of the empirical worsening employment gap and 72% of the share that comes from large firms.

Global Borrowing Costs and Firms' Risk in Open Economies with Matias Moretti, Pablo Ottonello, and Diego Perez

We study the role of firm heterogeneity for economic transmission in open economies.  Using firm-level data from a panel of emerging markets, we document that increases in the global price of risk are followed by heterogeneous dynamics, with contractions for risky firms and expansions for risk-free firms.  By developing a quantitative heterogeneous-firm open economy model, we show that these cross-sectional empirical patterns can be explained by the presence of indirect channels that mitigate the negative response to external shocks.  We use the model to assess macroeconomic transmission during external crises and sudden stops.  Our findings indicate that allowing the exchange rate to depreciate during downturns plays a stabilizing role, by reducing risk exposure and facilitating the reallocation of economic activity across firms through larger relative price adjustments.

Intergenerational Occupation Choice

Parents' labor market experiences are influential for children's later earnings and career trajectories.  This paper examines a new channel through which these outcomes may be connected:  risk-taking in career choices.  The first section constructs a simple empirical measure of lifetime earnings risk for 22 early career occupations observed in the Panel Study of Income Dynamics.  Using linked parent and child data, the paper shows that parental layoffs are correlated with children earning less in their early careers and working in occupations with lower risk.  This sorting channel can explain at most 13% of the earnings gap.  These results are validated using an alternative measure of parents' exposure to macroeconomic shocks through their industry of employment.