Martin Souchier

I am a Postdoctoral Associate at the Cowles Foundation at Yale University and I will start as an Assistant Professor of Finance at the Wharton School of the University of Pennsylvania in July 2024. I graduated from Stanford University in June 2023.

My research focuses on Macroeconomics.

Research

Insurance Inside and Outside the Firm

This paper builds a new model with search frictions, optimal wage contracts, and assets. Contracts are subject to hidden search and limited worker commitment, and workers can trade risk-free bonds subject to borrowing constraints. Assets play two roles in wage contracts. First, they allow firms to backload wages more and thus to retain workers more easily. Second, they are used to insure workers against unemployment risk, which is easier when wages are frontloaded. The optimal contract balances these forces and features tenure profiles for wages and worker mobility across jobs that are consistent with evidence from matched employer-employee data from France. Relative to a model without assets, the pass-through of firm-level productivity shocks to wages is three times larger with assets but the pass-through to consumption is two times smaller. Thus, when workers have access to insurance outside the firm in the form of risk-free bonds, firms provide less insurance to workers against productivity shocks but workers receive more insurance overall.

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.

Exchange Rates and Monetary Policy with Heterogeneous Agents: Sizing up the Real Income Channel, with Adrien Auclert, Matthew Rognlie and Ludwig Straub

Under revision for the American Economic Review

Introducing heterogeneous households to a New Keynesian small open economy model amplifies the real income channel of exchange rates: the rise in import prices from a depreciation lowers households’ real incomes, and leads them to cut back on spending. When the sum of import and export elasticities is one, this channel is offset by a larger Keynesian multiplier, heterogeneity is irrelevant, and expenditure switching drives the output response. With plausibly lower short-term elasticities, however, the real income channel dominates, and depreciation can be contractionary for output. This weakens monetary transmission and creates a dilemma for policymakers facing capital outflows. Delayed import price pass-through weakens the real income channel, while heterogeneous consumption baskets can strengthen it.

Publications

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

Réglementation, normalisation : leviers de la compétitivité industrielle with Emilie Bourdu Szwedek, Presses des Mines, 2015