Research

"Sudden Stops and Reallocation: Evidence from Labor Market Flows in Latin America" [Paper]
This version: January 27, 2008. Under revision.
Joint with Francisco Gallego (PUC-Chile)

Abstract: Sudden stops and international financial crises have been a main feature of developing countries in the last 25 years. While their aggregate effects are well known, the microeconomic channels through which they work have yet to be explored. In this paper we study their effects on microeconomic variables related to job flows using sectoral panel data for four Latin American countries. We find that sudden stops are associated with lower job creation and increased job destruction. Furthermore, these effects are heterogeneous across sectors and across countries. Sectors with higher dependence on external financing experience lower creation. A similar result is observed in sectors with higher indicators of liquidity needs, which experience significantly larger negative job flows, an effect particularly robust among continuing firms. Finally, we find a negative correlation between a country's firing and dismissal costs and labor destruction during sudden stops, mostly affecting the decisions of continuing firms. Our results provide evidence of financial conditions being an important transmission channel of sudden stops within a country. Moreover, they also highlight the relevance of financial factors in the restructuring process in general.

"Cheap Maids and Nannies: How Low-skilled Immigration is Changing the Labor Supply of High-skilled American Women" [Paper]
Under revision.
Joint with Patricia Cortes (Chicago GSB)

Abstract: Low-skilled immigrants represent a significant fraction of the labor employed in service sectors that are close substitutes of household work like housekeeping, gardening, and babysitting services. This paper studies whether the increased supply of low skilled immigrants has led high-skilled women, who have the highest opportunity cost of their time, to change their time use decisions. We find evidence that low-skilled immigration has increased hours worked by women with a professional degree or a PhD. The estimated magnitudes suggest that the low-skilled immigration flow of the 1990s increased between 20 and 30 minutes a week the average time of market work of women with a professional degree or a Ph.D. Consistently, we find a decrease in the time highly skilled women spend in household work and an increase in their reported expenditures on housekeeping services. We also find that the fraction of women in this group working more than 50 (and 60) hours a week increases with low-skilled immigration, and that the effect is stronger and particularly large for those with young children. Except for smaller but significant effects on the probability of women with a college education or master’s degree working long hours, there is no evidence of similar effects for any other education group of the female population.