Work in progress
"The Global Rise of Asset Prices and the Decline of the Labor Share" (with Ignacio Gonzalez, American University) (Link) (Slides) (Replication files).
The labor income share has been decreasing across countries since the early 1980s, sparking a growing literature about the causes of this trend (Karabarbounis and Neiman, 2014; Piketty and Zucman, 2014; among many others). At the same time, there has been a steady increase in asset prices. We build a simple model to argue that the increase in the value of financial assets crowds out capital formation. The negative impact of asset prices on the capital-output ratio contributes to decline of the labor share if capital and labor are aggregate complements. Based on a common factor model, we find that this mechanism can account for up to 57\% of the labor share decline. We highlight three potential factors that operate through the same theoretical channel: capital income taxes, capitalized market power rents and corporate governance frictions.
"Close Encounters during a Pandemic: social habits and inter-generational links in the first two waves of
COVID-19" (with Annalisa Cristini, Università di Bergamo)
Face-to-face contacts outside the household and inter-generational links within the household are assessed in relation to COVID-19 spread and excess mortality. Using high-frequency data for 220 regions in 15 European countries from March to December 2020, we find that a standard deviation increase in the percentage of people having daily face-to-face contacts outside the household is associated with 5 new daily cases and 2.6 additional weekly deaths, while the incidence of intergenerational households exhibits a less robust association with both COVID-19 transmission and mortality. We compare results across the first and the second wave of pandemic and show that differences are related to the average age of the most affected groups. Our findings are robust to the inclusion of a number of controls, fixed effects, the chosen sample of countries, and the estimation method. We argue that type and frequency of social interactions are interweaved with a region culture and habits and carry relevant information for pandemic-related policy measures.