"Advertising for Consideration"
with Carmen Astorne-Figari and Aleksandr Yankelevich. Forthcoming, Journal of Economic Behavior and Organization
"Financial Frictions and Productivity: Evidence from Mexico"
Quarterly Review of Economics and Finance, Volume 66, November 2017, Pages 294-301
"A Quantitative Theory of Tax Evasion"
Journal of Macroeconomics, Volume 53, September 2017, Pages 107-126
"An Evaluation of Real-time Forecasting Performance across 10 Western U.S. States"
with Keith R. Phillips. Journal of Economic and Social Measurement, vol. 34, No. 2-3, 2009.
"Error Correction Exchange Rate Modeling for Mexico: 1980-2001"
with Thomas M. Fullerton. International Journal of Applied Econometrics and Quantitative Studies, Vol.2-3, 2005.
"The returns to entrepreneurship: selection, non-pecuniary benefits, and necessity in Mexico"
with Jesica Torres, new draft coming soon
"Size-dependent policies, talent misallocation, and the return to skill."
with Jesica Torres, revision requested by the Review of Economic Dynamics
We study the allocation of talent in knowledge-based hierarchies subject to a payroll tax that increases with firm size. The tax distorts the allocation of talent across occupations, as well as the sorting of all infra-marginal agents, thus attenuating the strength of the positive sorting throughout the entire economy. This talent misallocation results in lower output, smaller firms, higher self- employment, less wage employment, and lower returns to skill for the most able workers and managers. We quantify the effects of size-dependent policies in two sets of numerical exercises. First, we calibrate a distorted benchmark economy that matches the establishment-level evidence on size-dependent compliance of labor regulations in Mexico. Perfect enforcement of the average effective tax rate increases output by 2%, while the average return to skill for workers (managers) increases by 35% (1%). Eliminating labor regulations increases output by 5%, while the average return to skill for workers (managers) increases by 50% (2%). Second, when we introduce size-dependent policies like those observed in Mexico in an undistorted economy calibrated to the U.S., output decreases by as much as 12%, while the returns to skill for workers (managers) decrease by as much as 60% (7%).