Working Papers

"Factor Allocation, Informality and Transit Improvements: Evidence from Mexico City" JMP [Download PDF]

The presence of the informal sector in the developing world creates wedges across firms that lower Total Factor Productivity (TFP). This paper examines the impact of transit improvements on aggregate efficiency by studying the relationship between commuting, trade, and informality. To do so, I combine a rich collection of administrative microdata and exploit the construction of new subway lines in Mexico City. I find that transit improvements lead to a reduction in informality rates by four percentage points in nearby areas to the new stations. This result indicates that workers reallocate to firms with higher total factor revenue productivity (formal firms). I develop a spatial general equilibrium model considering both the direct effects under perfectly efficient economies and the allocative efficiency margin. From a first-order approximation, I provide a formula that decomposes the welfare impact of commuting/trade shocks into a "direct" effect and an allocative efficiency term. I quantify and decompose the welfare gains of the new infrastructure after estimating the key elasticities of the model. Changes in allocative efficiency driven by the reallocation of workers to the formal sector explain approximately 13-23% of the total gains, and average real income per every dollar spent on infrastructure increases by 15% relative to a perfectly efficient economy.

"Measuring Imperfect Competition in Product and Labor Markets. An Empirical Analysis using Firm-level Production Data" (with Darío Tortarolo) [Download PDF] [Slides] (New version with exchange rate shocks coming soon)


We disentangle the extent of imperfect competition in product and labor markets using plant-level data. We derive a formula for the ratio between markups and markdowns assuming cost-minimizing firms that face upward-sloping labor supply and downward-sloping product demand curves. We then separate this combined measure of market power by estimating firm-level labor supply elasticities instrumenting wages with intermediate inputs. Our results suggest that both markets exhibit imperfect competition, but the variation is mainly driven by markups. Additionally, we estimate the relative gains of removing market power dispersion on allocative efficiency, finding that markups are more important on TFP than markdowns. 


Work in Progress

"Understanding Low Productivity in Developing Countries: Evidence from the Airline Industry" (with David Atkin and Amit Khandelwal)

"Trade and Competition in Product and Labor Markets" [Slides]

"Robot Adoption, Automation, and Labor Markets in a Global Economy" (with Mathieu Pedemonte and Tara Vishwanath) [Preliminary draft] [Slides]

"Chinese  Import Competition Effects on Domestic Firms: Disentangling the Role of Firms on Labor Markets" [Preliminary draft] [Slides]


"Purchasing Votes without Cash: Implementing Quadratic Voting Outside the Lab" (with Juan Camilo Cardenas and Cesar Mantilla), Presented at the ASSA meetings January 2015. [Download PDF]

"Condiciones de pobreza y el acceso a programas sociales de los hogares colombianos" (with Adriana Camacho), Chap 4. Colombia en Movimiento 2010-2013. Editorial UniAndes. [Download PDF]

"Family Size and Children Quality: New Evidence and New Exogenous Schocks in the Case of Colombian Households", Documento CEDE No 18, March 2013, Universidad de los Andes. [Download PDF

Contact Information:

Department of Economics, UC Berkeley

660 Evans Hall

Berkeley, CA, 94720