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Department of Finance and Business Economics
Assistant Professor Research Interests: Macro, Labor
Email: daruich (at) usc (dot) edu |
Publications
Universal basic income (UBI) is an increasingly popular policy proposal but there is no evidence regarding its longer-term consequences. We find that UBI generates large welfare losses in a general equilibrium model with imperfect capital markets, labor market shocks, and intergenerational linkages via skill formation and transfers. This conclusion is robust to various alternative ways of financing UBI. By using observationally-equivalent models that eliminate different sources of endogenous dynamic linkages (equilibrium capital market and parental investment in child skills) we show that the latter are largely responsible for the negative welfare consequences.
In the media: NPR.
In the media: NPR.
We combine matched employer-employee data with firms' financial records to study a 2001 Italian reform that lifted constraints on the employment of temporary contract workers while maintaining rigid employment protection regulations for employees hired under permanent contracts. Exploiting the staggered implementation of the reform across different collective bargaining agreements, we find that this policy change led to an increase in the share of temporary contracts but failed to raise employment. The reform had both winners and losers. Firms are the main winners as the reform was successful in decreasing labor costs, leading to higher profits. By contrast, young workers are the main losers since their earnings were substantially depressed following the policy change. Rent-sharing estimates show that temporary workers receive only two-thirds of the rents shared by firms with permanent workers, helping explain most of the labor costs and earnings reductions caused by the reform.
We compile a new database of grocery prices in Argentina. We find uniform pricing both within and across regions—i.e., prices almost do not vary within stores of a chain. In line with uniform pricing, prices in stores of chains operating in one region react to changes in regional employment, while prices in multi-region chains do not. Using a quantitative regional model with multi-region firms and uniform pricing, we find a one-half smaller elasticity of prices to a regional than an aggregate shock. This result highlights that some caution may be necessary when using regional shocks to estimate aggregate elasticities.
Poor families have more children and transfer less resources to them. This suggests that family decisions about fertility and transfers dampen intergenerational mobility. To evaluate the quantitative importance of this mechanism, we extend the standard heterogeneous-agent life-cycle model with earnings risk and credit constraints to allow for endogenous fertility, family transfers, and education. The model, estimated to the US in the 2000s, implies that a counterfactual flat income-fertility profile would—through the equalization of initial conditions—increase intergenerational mobility by 7%. The impact of a counterfactual constant transfer per child is twice as large.
We study the instability of hyper-specialization of exports. We have two main findings. (1) Specializations are surprisingly un-stable: Export ranks are not persistent, and new top products and destinations replace old ones. Measurement error is unlikely to be the main or only determinant of this pattern. (2) Source-country factors are not the main explanation of this instability: Only 20% of the variation in export growth can be explained by variation in comparative advantage (source-by-product factors), while another 20% of the variation in export growth can be explained by variation in bilateral (source-by-destination) factors. The high share of product, destination, and product-by-destination factors, diminishes the emphasis on the nations where the exports originate. The high share of idiosyncratic variance (residual at the source-product-destination level of variation) of about 30%, also indicates the difficulty to predict export success using source country characteristics. These findings suggest that export performance depends, to a greater extent than previously appreciated, on forces that are outside the realm of national export promotion and industrial policies.
In the media: VOX.
In the media: VOX.
Working Papers
To study long-run large-scale early childhood policies, this paper incorporates early childhood investments into a standard general-equilibrium (GE) heterogeneous-agent overlapping-generations model. After estimating it using US data, we show that an RCT evaluation of a short-run small-scale early childhood program in the model predicts effects on children's education and income that are similar to the empirical evidence. A long-run large-scale program, however, yields twice as large welfare gains, even after considering GE and taxation effects. Key to this difference is that investing in a child not only improves her skills but also creates a better parent for the next generation.
In the media: New York Times.
In the media: New York Times.
This paper studies housing vouchers and urban redevelopment programs by incorporating neighborhood effects into a general equilibrium overlapping-generations model with endogenous location choice and child development. We calibrate the model using U.S. data and show that simulated predictions match reduced form evidence from the literature. Our analysis finds that large-scale implementations of vouchers and place-based subsidies both result in long-run welfare gains by reducing inequality and generating skill improvements that offset higher taxation and other GE effects. Although vouchers lead to larger welfare gains on average, we find that place-based subsidies may be preferable in cities with constrained housing supply.
Older research
Productivity Losses from Attention to Aggregate Uncertainty
Revised and extended version of the master thesis presented at CEMFI.
Tato Bores, an Argentinean comedian, explains the idea in 1964 (in Spanish).
Revised and extended version of the master thesis presented at CEMFI.
Tato Bores, an Argentinean comedian, explains the idea in 1964 (in Spanish).