WORKING PAPERS  

Risk Markups with Sebastian Di Tella and Christopher Tonetti (UPDATED 2025/11)
Revise and Resubmit, Journal of Political Economy

Abstract: Optimal policy in an economy with misallocation depends on the origin of markups. We develop a model of heterogeneous markups generated by uninsurable persistent idiosyncratic risk. Entrepreneurs hire labor trading off expected profits against risk. Markups arise as compensation for risk and create misallocation. We study the constrained-efficient allocation of a planner who can use a uniform labor tax and time-zero lump- sum transfers. The optimal keep rate equals the product of (1) the aggregate markup and (2) workers’ consumption share divided by their Pareto weight. The markup component reflects inefficient risk premia that could be improved with a labor subsidy. The consumption-share component reflects inefficient precautionary saving that could be improved with a labor tax. In the long-run, the precautionary-saving component dominates and the optimal policy is a tax with a keep rate equal to workers’ consumption divided by labor income.

Fiscal Multipliers and Phillips Curves with a Consumption Network  with Francesco Beraldi (UPDATED 2026/01)
Revise and Resubmit, American Economic Journal: Macroeconomics

Abstract: We show that households spend their marginal and their average dollar differently across sectors. Crucially, marginal expenditure is biased toward sectors employing high-MPC workers, revealing a new redistribution channel that benefits high-MPC households during expansions. We build a Multi-Sector, Two-Agent, New Keynesian model with non-homothetic preferences consistent with these findings. The new redistribution channel increases the fiscal multiplier by 10pp compared to an equivalent homothetic economy. The model also predicts steeper Phillips curves in sectors with high-MPC workers, a result we validate empirically with a novel identification strategy. The implied sectoral wage dynamics strengthen the redistribution towards high-MPC households and raise the inflationary impact of the shock by over 70 percent.

Private Preferences for Jobs and Labor Market Dynamics with Martin Souchier (FIRST DRAFT 2026/06)

Abstract: We build a new dynamic search model in which workers have heterogeneous preferences for jobs that are not observed by employers, giving rise to monopsony. Employers make wage offers based on beliefs about workers' preferences. These beliefs evolve endogenously over time because workers' mobility decisions reveal information about how much they like their jobs. We estimate the model using matched employer-employee data from France and quantify how preferences for jobs shape wage dynamics, markdowns, and worker mobility. Markdowns are heterogeneous both across and within firms, generating inefficient labor market flows. Quantitatively, at least one third of job-to-job transitions are inefficient: workers sometimes move to lower-surplus jobs because those jobs let workers enjoy higher rents. Policies that limit the information available to prospective employers, such as salary history bans, increase wages and reduce inequality, but they also reduce allocative efficiency.

Wage Contracts and Financial Frictions  with Luca Citino

Abstract: Financial crises often lead to drastic reductions in firms' access to credit, impairing  their ability to finance operations. This paper shows that firms can partly offset the effects of these shocks by optimally adjusting their wage bills. We augment a standard financial frictions model by allowing wages to be set at the firm level within long-term employment relationships. In this environment, wages solve a dynamic contracting problem that trades off insuring risk-averse workers against preserving resources for investment. We validate the model predictions on wage dynamics using matched employer-employee data from Italy. We find that more constrained firms adjust wages more in response to shocks. In addition, firms that suffer the most during recessions backload wages by paying workers relatively more in the future than today. When matching these statistics with our general equilibrium model, we find that these wage adjustments reduce the sensitivity of output to financial shocks by 20%. We conclude by studying the effects of investment subsidies.

WORK IN PROGRESS

Bank Market Power with Luigi Bocola, Gideon Bornstein, Federico Puglisi