Working Papers
Working Papers
ECB Working Paper, Revise and Resubmit at American Economic Journal: Macroeconomics
This paper studies how demographics affect aggregate labor market power, the urban wage premium and the spatial concentration of population. I develop a quantitative spatial model in which labor market competitiveness depends on the demographic composition of the local workforce. Using highly disaggregated administrative data from Germany, I find that firms have more labor market power over older workers: The labor supply elasticity decreases from more than 2 to 1 from age 20 to 64. Calibrating the model with the reduced-form elasticity estimates, I find that differences in labor supply elasticities across age groups can explain 4% of the urban wage premium and 2% of the spatial concentration of population. Demographics and skill together account for 10% of the urban wage premium and 2% of agglomeration.
ECB Working Paper, current version
Housing expenditure shares decline with income. High-income households are less sensitive to increases in housing costs, which is why they are sorting into large cities. Spatial sorting, in turn, drives up housing demand and housing costs in large cities as compared to rural areas. This paper shows that differences in housing expenditure shares are crucial in explaining the spatial sorting of university and high-school graduates, the increase in average house prices and the regional dispersion of house price increases in Germany, which are all connected. I arrive at this conclusion by augmenting a standard quantitative spatial model with flexible non-homothetic preferences. Solving the social planner problem of the model, I characterize optimal transfers between locations and skill types. With non-homothetic preferences, the social planner implements significantly larger place-based policies, implying lower agglomeration and spatial skill sorting.
joint with Iván Ordoñez Martínez
joint with Camilla Altieri, Virginia Di Nino, Michael Fidora, Vanessa Gunnella, Marta Salazar Rodríguez and Tobias Schuler
joint with Roberto De Santis, Virginia Di Nino, Ulla Neumann and Pedro Neves
ECB Economic Bulletin, Issue 4, 2024