Firm Heterogeneity and Racial Labor Market Disparities (job market paper)

Black workers are more exposed to business cycle employment risk than white workers, even after adjusting for differences in industry and other cycle exposure factors. This paper introduces a new channel to explain the excess sensitivity of Black employment: employer heterogeneity in hiring practices. There are persistent differences in the hiring rates of Black and white workers across firms of different sizes. In an empirical decomposition, the behavior of small firms appears to contribute most to the average racial employment gap. Meanwhile, the change in the hiring gap at large firms contributes most to the variation in the racial employment gap over the business cycle. The second half of the paper introduces a search model with employer size-specific information frictions that captures these patterns. The abundance of available workers during downturns encourages firms to be more selective about the workers they hire. This can produce larger changes in hiring rates for the disadvantaged workers at firms with better screening technology.

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.

Firm Heterogeneity and Global Risk Premium with Matias Moretti, Pablo Ottonello, and Diego J. Perez

This paper studies the macroeconomic transmission of fluctuations in global risk premium to open economies. We combine new measurement of firms' responses to fluctuations in global risk premium with a quantitative model of heterogeneous firms subject to default risk. In the data, risk-free firms exhibit mild responses to changes in risk premium, suggesting that the aggregate transmission is mostly governed by the direct effects of risk premium on firms' borrowing costs. We discuss the implications of our findings for the effectiveness of alternative stabilization policies in addressing risk premia fluctuations.

Firm Market Power and the Gender Wage Gap with Erin Gibson, Gustavo González, and Leticia Juarez