Ariell
Reshef
Ph.D. Candidate
New York University, Department of Economics
Abstracts
Job Market Paper
“Is Technological Change Biased Towards the Unskilled in
Services? An Empirical Investigation”
The leading explanation for the
increase in the U.S.
college premium over the last 40 years is aggregate skill biased technological
change (SBTC). This explanation overlooks shifts in the economy's sectoral
composition and excludes the possibility of different directions of
technological biases in different sectors. I estimate a two-sector general
equilibrium model which fits the U.S. aggregate and sectoral trends
in relative wages, prices and employment during 1963-2005. Technological change
is inferred by directly exploiting general equilibrium restrictions and
optimality conditions. The estimates reveal that in the growing skill intensive
services sector technological progress has been unskilled biased, i.e. average
productivity of less skilled workers increased faster than it did for skilled
workers. In the unskilled intensive goods sector in contrast, the opposite bias
is estimated. Convolution of these two forces leads to inferring SBTC at the
aggregate level, in spite of the diverging trends in goods and services. Faster
productivity growth of unskilled versus skilled workers in services is
consistent with a shift in the mix of occupations: unskilled workers in
services have continuously re-allocated into more computer complementary
occupations to a greater extent than skilled workers. In contrast, the
occupational mix in the goods sector moderately shifted in the opposite
direction, which is consistent with faster productivity growth for skilled
workers. Taking explicitly into account the sectoral composition of the economy
can change our view on the direction of technological change over the last 40
years.
“Skill Biased Financial Development: Education, Wages and
Occupations in the U.S.
Financial Sector”, with Thomas Philippon
Over the past 60
years, the U.S.
financial sector has grown from 2.3% to 7.7% of GDP. While the growth in the
share of value added has been fairly linear, it hides a dramatic change in the
composition of skills and occupations. In the early 1980s, the financial sector
started paying higher wages and hiring more skilled individuals than the rest
of economy. These trends reflect a shift away from low-skill jobs and towards
market-oriented activities within the sector. Our evidence suggests that
technological and financial innovations both played a role in this
transformation. We also document an increase in relative wages, controlling for
education, which partly reflects an increase in unemployment risk: Finance jobs
used to be safer than other jobs in the private sector, but this is not longer
the case.
Paper.
“The Power of Exports”, with William Easterly and Julia Schwenkenberg
We document extremely high concentration of 6-digit export
classifications across goods, destinations and world trade market shares. Export
values tend to follow a power law, especially at the upper tail of the
distribution. We characterize the distribution of exports along these
dimensions with a mix of Pareto and log-normal distributions. The Pareto
component accounts for most of the variation across exports for less-developed
countries and captures differences in productivities. The log-normal component
is more important for developed countries, and captures demand shocks.
Paper coming online
soon!
“Trade and Harmonization: if your institutions are good, does it matter
if they are different?”, with Roumeen Islam
Good
institutional quality (function) and similar institutional design (form) can
promote international trade by reducing transactions costs. We evaluate the
relative importance of function versus form in a gravity model, using an
indicator of different legal systems as a proxy for differences in form
together with indicators of overall institutional quality. We find that good
institutions promote trade much more than similar legal systems and have much
more explanatory power. This effect is economically large – up to 10 times the
effect of different legal systems. Moreover, better infrastructure matters as
much as good institutions.
Paper.
“Heckscher-Ohlin and the Global Increase of Skill Premia: Factor
Intensity Reversals to the Rescue”
This paper advances the claim that
trade liberalization has been a strong force behind the global increase of
skill premia, in particular in skill-scarce, developing countries. By
introducing skill-intensity reversals, the Heckscher-Ohlin framework captures
the stylized facts of the global increase in skill premia, both in developed
and in less-developed
countries. I support the model by
evidence on industrial structure and changes in relative prices. The calibrated
model is also successful quantitatively: small changes in relative goods prices
are consistent with much larger increases in skill premia that have been
observed in the data. This suggests that tariff reductions might have been a
strong driving force behind the increase in global inequality and weakens the
conclusion that other forces have been dominant. The analysis also suggests an
explanation for protection of skill-unintensive sectors both in developed- and
less-developed countries.
Paper.
“Why Does Capital Flow to Rich States?”,
with Sebnem Kalemli-Ozcan, Bent Sorensen and Oved Yosha
We study the
determinants of net capital income flows within the United States. We analyze a simple
multi-state neoclassical model in which total factor productivity varies across
states and over time and capital flows freely across state borders. The model
predicts that capital will flow to states with relatively high output growth.
Since relative growth patterns are persistent such states are also high output
states, which implies that high output will be associated with inflows of
capital and net outflows of capital income. Our empirical findings correspond
well to the predictions of the model and indicate persistent net capital income
flows and net cross-state investment positions between states which are an
order of magnitude larger than observed capital income flows between countries.
Thus, our results imply that frictions associated with national borders are
likely to be the main explanation for “low" international capital flows.
Paper.
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