Joint work with Alonso Alfaro-Ureña. Conditionally accepted at the American Economic Journal: Microeconomics.
Abstract. We build a model of production network formation that enables econometric estimation of the determinants of supplier choice, like trade costs or matching frictions. The model informs an estimator obtained from a transformation of the multinomial logit likelihood function that conditions on two network statistics: the out-degree of sellers (a sufficient statistic for the seller marginal costs) and the in-degree of buyers (which is determined by decisions of buyers, like “make-or-buy”). In an empirical application, this estimator shows that a major Costa Rican highway contributed to shuffle the spatial distribution of firm-to-firm linkages.
Abstract. We explore the effect of a reduction in overall labor costs, indirectly induced by an Italian reform that weakened employment protection legislation, on the productivity distribution of manufacturing firms. Due to the unique institutional features of the Italian collective bargaining system, in the manufacturing sector the reform led to a clean reduction in average worker compensation, without altering the average structure of employment relationships. This decrease in labor cost resulted in a reduction in average total factor productivity (TFP) among less productive firms, and an increase at the upper end of the distribution. We pair these findings with increased entry and exit dynamics among low-productivity firms, suggesting the presence of an adverse selection mechanism at the bottom of the TFP distribution, enhanced by the reform. We formalize this concept via a general equilibrium model that links productivity to frictions in the markets for inputs.
Abstract. We study the effects of acquisitions on firms and their production networks in Türkiye using rich administrative firm-to-firm transaction data. Leveraging a staggered event-study design, we compare post-acquisition outcomes of target firms and their trading partners to matched controls. Acquisitions increase the intangible intensity of target firms but have no consistent effects on conventional performance measures. A key finding is that the network consequences of acquisitions depend on the acquirer’s origin. Domestic acquisitions lead to tangible capital deepening and strengthen existing buyer-supplier relationships along the intensive margin, while foreign acquisitions tend to shift production toward outsourcing and diversify network connections. We argue that these differences stem from variation in firms’ relationship capability: their ability to sustain productive links in a network governed by incomplete contracts.
Abstract. How much do worker skills, firm pay policies, and their interaction contribute to wage inequality? Standard approaches rely on latent fixed effects identified through worker mobility, but sparse networks inflate variance estimates, additivity assumptions rule out complementarities, and the resulting decompositions lack interpretability. We propose TWICE—Tree-based Wage Inference with Clustering and Estimation—a framework that models the conditional wage function directly from observables using gradient-boosted trees, replacing latent effects with interpretable, observable-anchored partitions. This trades off the ability to capture idiosyncratic unobservables for robustness to sampling noise and out-of-sample portability. Applied to Portuguese administrative data, TWICE outperforms linear benchmarks out of sample and reveals that sorting and non-additive interactions explain substantially more wage dispersion than implied by standard AKM estimates.
Abstract. This paper develops an estimator for quadratic forms in semiparametric models where covariates enter through an unknown function. The leading application is a generalized AKM wage decomposition: we estimate worker and firm variance components and sorting while flexibly partialling out observed worker and firm characteristics. The estimator combines leave-one-out bias correction with series approximation, is robust to heteroskedasticity and many fixed effects, and is consistent when both fixed effects and basis terms grow with sample size under a strengthened smoothness condition. Simulations show large bias reductions relative to plug-in estimators in nonlinear settings. In linked Portuguese employer-employee data, adding rich controls to linear AKM generates large discontinuities, whereas the generalized estimator yields coherent movements across control sets and basis richness, with sorting attenuating toward zero as flexibility increases.
Abstract. We study structural estimation on networks in the empirically common case of a single large observed graph. We propose an adversarial estimator that minimizes statistical distance between observed and simulated node-specific distributions of local network neighborhoods. The paper provides two theoretical results: population identification via a divergence characterization of the estimation objective, and consistency under growing-graph asymptotics with cross-observation dependence. A key contribution is computational. We provide a reproducible estimation workflow that integrates fixed-point simulation, efficient focal-neighborhood data construction, and alternating minimax training with stabilization tools suitable for large-scale runs. The workflow is model-agnostic in a broad class of network structural models and is straightforward to implement with modern software. In benchmark simulations, the procedure scales to large graphs and recovers structural parameters with high precision.
Abstract. We study staged entry with costly gatekeeping in a differentiated-products economy: entrepreneurs observe noisy signals before paying a resource-intensive activation cost. Precision improves selection but requires more resources, reducing entry and variety: welfare need not rise with precision. Under CES preferences, the activation cutoff is efficient as profit displacement offsets the consumer-surplus gain from variety. Welfare losses arise from verification costs shrinking the feasible set of varieties, not from misaligned incentives. Because the market responds efficiently to any given regime, these losses cannot be corrected via Pigouvian taxes.