WORK IN PROGRESS
What Does It Take to Be a Business Owner? Evidence from Transitions from Job Loss
solo-authored [JOB MARKET PAPER] [WORKING PAPER] [PRESENTATION]
Abstract: The pathways leading to business ownership are varied, posing an empirical challenge in identifying the role of owners' skills. This paper focuses on a specific pathway: transitions to business ownership following job loss, leveraging mass layoff events for identification. I combine two comprehensive data sets from Brazil: the firm registry (which includes self-employed workers and small business owners) and matched employer-employee records. Comparing laid-off workers to a matched sample of non-laid-off workers, I find a four-fold increase in the quarterly business formation probability following job loss, a result driven by skilled individuals. In particular, managers are 5 percentage points more likely to start longer-lasting businesses (relative to an average of 60 percent), as they start ventures in industries where they worked before while also identifying industries with higher growth potential. To benchmark these results, I compare businesses started after job loss to those founded by workers who quit. While survival rates are similar, the skills driving survival are different: managerial experience is not associated with business survival among owners who quit. These findings highlight the importance of identifying post-job-loss business owners as a distinct group when evaluating the relationship between owners' skills and business outcomes. My results also suggest a path for more effective business support policies by both public and private actors, which should account for owners' career trajectories and skill sets.
Presentations and Conferences: American Economic Association Annual Meeting [San Francisco], Empirical Management Conference [Harvard], Applied Economics and Policy Seminar [Cornell], Labor Seminar [Cornell], Innovation, Entrepreneurship, and Technology Seminar [Cornell], Development Seminar [Cornell], Collaboration for International Development Economics Research Seminar [Cornell], European Association of Labor Economists Conference [Bergen], European Society of Population Economics Conference [Rotterdam], German Development Economics Conference [Hannover], Comparative Analysis of Enterprise Data Conference [Penn State], Emerging Markets Institute PhD Conference [Cornell], Development Micro Seminar [Cornell], Labor Work in Progress Seminar [Cornell], Latin American and Caribbean Economic Association Annual Meeting [Bogotá], The Work in Progress Seminar [Cornell], Applied Micro Seminar [Insper]
Media: AEA Interview
Poaching, Raids, and Managerial Compensation
with Yi Chen, Thomas Jungbauer, and Daniela Scur [CEPR WORKING PAPER] [PRESENTATION]
Abstract: This paper presents a model of employee poaching with asymmetric employer learning. Firms poach managers not only due to their track record but also for their personnel-specific information about workers. In equilibrium, more productive firms poach managers, whose compensation increases in the quality of their information about workers. While poaching reassigns more able workers to more productive firms, efficiency does not obtain due to information frictions. Drawing on the universe of contracts in Brazil's formal labor market, we test implications of our model and show they are consistent with manager and worker movements and their compensation histories.
Presentations and Conferences (co-authors): Empirical Management Conference [Harvard], University of Vienna, University of Illinois Urbana-Champaign, Indiana University, Organization@Cornell [Cornell], Southern Economic Association [Washington, DC]
Displacement Events and Job-Driven Scarring
with Ian Schmutte and Daniela Scur
Abstract: We study how job loss affects the earnings, employment, and wage of managers. Using event studies around mass layoff events for Brazilian firms we find that, on average, displaced workers lose around 60 percent of their earnings in the year after job loss, and after three years have earnings 25 log points below comparable non-displaced workers. The earnings effect comes from a sharp, but temporary drop in the number of months worked per year, combined with a sharp but persistent drop in wages of around 20 log points. For managers, the wage penalty is over twice as large relative to non-managers. Less than 15 percent of the wage losses for managers can be explained by movements to employers that pay all workers less. Taken together, these results are consistent with a model in which managers either accumulate significant job-specific rents that are destroyed on separation, or they face worse market conditions and scarring after displacement, perhaps because they held responsible for the mass displacement event that precipitated their termination.
Presentations and Conferences: Economics of Workplace Environment [Copenhagen]
Presentations and Conferences (co-authors): Mini-Conference on Productivity [McMaster], Junior Micro/Macro Labor Conference [Columbia], CESifo Summer Institute [Veneza], Society of Labor Economists Meeting [Philadelphia], Development Seminar [Cornell], Empirical Management Conference [World Bank]
Management Practices in Health Facilities in Kenya
with Kathryn Andrews, Roberta Gatti, Renata Lemos, Mario Macis, and Lydia Nakhone
Internal Labor Markets in an Emerging Economy
with Benjamin Leyden, Heloísa de Paula, Daniela Scur, and Lars Vilhuber