Martin Souchier

Private Preferences for Jobs and Labor Market Dynamics, with Cedomir Malgieri.

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.

Insurance Inside and Outside the Firm

How much insurance do workers receive against labor market risk inside and outside firms? This paper builds and estimates a new equilibrium search model with optimal wage contracts and assets. In this model, workers use their assets to smooth their consumption, and firms take this into account when they design how wages change with tenure and after shocks. Workers receive significant insurance both inside and outside firms, and the insurance that workers receive outside firms, through financial markets, crowds out the insurance that they receive inside firms, through wage contracts. This has implications for inequality and policy. First, wealthy workers receive more insurance outside firms, but substantially less inside. Second, public insurance policies, such as expansions of household access to credit or unemployment insurance, influence how firms insure workers.

The Pass-through of Productivity Shocks to Wages and the Cyclical Competition for Workers

Using French matched employer-employee data, I document that after positive firm-level productivity shocks, the wages of stayers rise and job-to-job transitions fall. However, after positive sectoral productivity shocks, wages rise significantly more and job-to-job transitions rise. To explain these differences, I build a model with dynamic wage contracts subject to two-sided limited commitment and imperfect information and in which sectoral productivity shocks generate cyclical competition for workers. After a positive firm-level shock, a firm increases its wages to reduce the quit rate of its workers. This increase is limited because workers are risk-averse and value insurance against shocks and because there is no increase in the cyclical competition from other firms. In contrast, after positive sectoral shocks, the cyclical competition for workers heats up and workers become more likely to switch jobs. In response, all firms increase their wages more aggressively to retain them. I find that firing costs play a new role when contracts are endogenous: by enhancing the commitment power of firms, they allow workers to receive more insurance against negative shocks.

Environmentally Adjusted Multifactor Productivity: Methodology and Empirical Results for OECD and G20 Countries, with Miguel Cárdenas Rodríguez and Ivan Haščič, Ecological Economics, 153, 2018

Environmental Policy Design, Innovation and Efficiency Gains in Electricity Generation with Nick Johnstone, Shunsuke Managi, Miguel Cárdenas Rodríguez, Ivan Haščič and Hidemichi Fujii, Energy Economics, 63, 2017