Working Papers

"Skill Biased Entrepreneurial Decline" with Helu Jiang - Aug 2017

The U.S. is undergoing a long-term decline in the rate of firm startups. We find that this slowdown in entrepreneurship is more pronounced for skilled individuals. In particular, between 1983 and 2006 the entry rate into entrepreneurship declined by 11% for those with at least a college degree and increased by 18% for those with at most a high school degree. We posit that this skill biased entrepreneurial decline is a response to the changing income structure of workers and entrepreneurs that occurred over the same period. We show that entrepreneurial income grew more slowly than worker's income for skilled individuals while for unskilled individuals both incomes grew at relatively similar rates. To quantify the impact of income structure on entrepreneurial entry we present a simple, heterogeneous agent occupational choice model and take as given a rising worker skill premium; driven by skill biased technical change. In the model, the rising skill premium can account for around two-thirds of the changes in entry among skilled and unskilled individuals between 1983 and 2006. This paper contributes to understanding the forces behind the broader decline in business dynamism in the U.S. and suggests an integral role of the rising income inequality in driving this phenomenon.

Works in Progress

"Employer Size and Spinout Dynamics" [JMP] - draft coming soon

Financial Frictions and Inequality with Alexander Monge-Naranjo, Alexander Ludwig and Ctirad Slavik

Federal Reserve Bank Publications

"Many Countries Sink or Swim on Commodity Prices—and on Orders from China"with Alexander Monge-Naranjo. The Regional Economist, April 2016.
"The Unemployment and Participation Rates for Aggregate Human Capital", with Alexander Monge-Naranjo. Economic Synopses, December 2015, No. 27.
"Age and Gender Differences in Long-Term Unemployment: Before and After the Great Recession", with Alexander Monge-Naranjo. Economic Synopses, November 2015, No. 26. Coverage:[NYT]
"The Composition of Long-Term Unemployment Is Changing toward Older Workers", with Alexander Monge-Naranjo. The Regional Economist, October 2015.