Research
Publications
J. Jerónimo, Assis Azevedo, P.C. Neves, M. Thompson (2023), Interactions between financial constraints and economic growth. The North American Journal of Economics and Finance, vol. 67, 101943.
Work in progress
- Rent sharing under dynamic monopsony and sectoral wage floors (2025)
- Abstract: This paper investigates how exogenous productivity shocks shape the division of rents between firms and workers in imperfect labor markets, with a particular focus on the interaction between monopsony power and binding wage floors. Extending the structural framework of Chan et al. (2024), we develop a dynamic model in which firms face upward-sloping labor supply and heterogeneous, industry-level wage floors – reflecting collective bargaining or minimum wage policies – that can bind asymmetrically across sectors. Work in progress.
- Abstract: This paper investigates how exogenous productivity shocks shape the division of rents between firms and workers in imperfect labor markets, with a particular focus on the interaction between monopsony power and binding wage floors. Extending the structural framework of Chan et al. (2024), we develop a dynamic model in which firms face upward-sloping labor supply and heterogeneous, industry-level wage floors – reflecting collective bargaining or minimum wage policies – that can bind asymmetrically across sectors. Work in progress.
- Industry Wage premiums, worker mobility and wage floors - evidence from a rigid labour market (2025)
- Abstract: This paper measures industry wage premiums in Portugal’s highly regulated labour market and documents a novel institutional moderator of limited mobility bias in matched employer-employee decompositions. Using administrative data spanning 3.8 million worker-year observations across 273,224 firms (2010-2019), we apply bias-corrected AKM methodology to estimate industry wage premiums net of worker and firm heterogeneity. We document substantial heterogeneity in bias correction magnitudes across industries, ranging from negligible adjustments to corrections exceeding 400 basis points. Critically, this variation is not idiosyncratic but systematically related to wage floor binding: industries where 40-50% of workers earn within 5% of statutory minimum wages exhibit bias gaps averaging 12 basis points, compared to 38 basis points in low-binding sectors. This relationship is robust to controls for industry employment, network connectivity, and corrected premium levels. We argue that wage floors mechanically compress residual wage variance at the lower tail of the wage distribution, which dominates potential mobility-reducing effects and attenuates limited mobility bias. The findings highlight how institutional wage-setting constraints should be treated as contextual factors affecting the reliability of AKM-based inequality decompositions across time periods and economies.
- Abstract: This paper measures industry wage premiums in Portugal’s highly regulated labour market and documents a novel institutional moderator of limited mobility bias in matched employer-employee decompositions. Using administrative data spanning 3.8 million worker-year observations across 273,224 firms (2010-2019), we apply bias-corrected AKM methodology to estimate industry wage premiums net of worker and firm heterogeneity. We document substantial heterogeneity in bias correction magnitudes across industries, ranging from negligible adjustments to corrections exceeding 400 basis points. Critically, this variation is not idiosyncratic but systematically related to wage floor binding: industries where 40-50% of workers earn within 5% of statutory minimum wages exhibit bias gaps averaging 12 basis points, compared to 38 basis points in low-binding sectors. This relationship is robust to controls for industry employment, network connectivity, and corrected premium levels. We argue that wage floors mechanically compress residual wage variance at the lower tail of the wage distribution, which dominates potential mobility-reducing effects and attenuates limited mobility bias. The findings highlight how institutional wage-setting constraints should be treated as contextual factors affecting the reliability of AKM-based inequality decompositions across time periods and economies.
- Labour market effects of Chinese competition: a worker-level analysis (2024)
- Abstract: This paper examines how Chinese export competition affects Portuguese manufacturing workers through both direct import penetration and indirect competition in export destinations. Using comprehensive matched employer-employee administrative data covering 461,483 workers over 1995–2006, we employ an instrumental variable design to estimate trade exposure effects on cumulative earnings, employment duration, hours worked, and job mobility. Our findings reveal that indirect export market competition dominates direct import competition as the primary channel of adjustment, with workers in high-exposure industries experiencing 2.4% lower cumulative earnings and 1.4 fewer years of employment. Adjustment occurs almost entirely on the extensive margin (job loss) rather than through wage or hours reductions, with minimal job-to-job reallocation suggesting that displaced workers exit formal manufacturing rather than reallocate within the sector. These results demonstrate that standard trade impact analyses focusing exclusively on direct imports provide incomplete assessments of distributional consequences, particularly for small, export-dependent economies where competitive displacement in foreign markets may dwarf domestic import effects.
- Abstract: This paper examines how Chinese export competition affects Portuguese manufacturing workers through both direct import penetration and indirect competition in export destinations. Using comprehensive matched employer-employee administrative data covering 461,483 workers over 1995–2006, we employ an instrumental variable design to estimate trade exposure effects on cumulative earnings, employment duration, hours worked, and job mobility. Our findings reveal that indirect export market competition dominates direct import competition as the primary channel of adjustment, with workers in high-exposure industries experiencing 2.4% lower cumulative earnings and 1.4 fewer years of employment. Adjustment occurs almost entirely on the extensive margin (job loss) rather than through wage or hours reductions, with minimal job-to-job reallocation suggesting that displaced workers exit formal manufacturing rather than reallocate within the sector. These results demonstrate that standard trade impact analyses focusing exclusively on direct imports provide incomplete assessments of distributional consequences, particularly for small, export-dependent economies where competitive displacement in foreign markets may dwarf domestic import effects.
- Cyclicality of Wage elasticity of labour supply (2022)
- Abstract: Employer wage-setting power – measured by the wage elasticity of labour supply to the firm – plays a central role in determining wage inequality and worker welfare. Yet recent theory predicts this power should vary systematically over the business cycle, with firms exerting greater monopsony control during economic downturns when workers face weaker outside options. We test this prediction using matched employer-employee data covering the universe of Portuguese private-sector firms and workers (2002–2019), applying the dynamic monopsony framework of Manning (2003) to estimate firm-level labour supply elasticities and their cyclical sensitivity. Our key finding is stark: labour supply elasticity exhibits pronounced procyclicality, collapsing from approximately 2.5 during labour market expansions to as low as 0.6 during the 2011–2014 sovereign debt crisis. This implies firms compress wage markdowns from near-competitive benchmarks to only 37.5% of marginal product during severe downturns, creating a “double penalty” for workers: lower demand combined with reduced bargaining power. Decomposing this cyclicality, we show that approximately 78% stems from dampened wage-sensitivity of job-to-job transitions during slack labour markets, a mechanism consistent with search theory predictions of worker “attachment” in weak conditions. Substantial heterogeneity exists across demographic groups and regions: younger workers and urban centres like Lisbon experience higher elasticities and muted cyclicality, while peripheral regions and older workers face steeper cyclical fluctuations in monopsony power. These findings suggest that cyclical variation in firm wage-setting power represents a critical transmission channel through which macroeconomic shocks amplify labour income inequality. We conclude that policies sustaining worker mobility and bargaining power during downturns – such as job search support, portable benefits, and sectoral wage floors – deserve priority alongside traditional recession-mitigation strategies.
- Abstract: Employer wage-setting power – measured by the wage elasticity of labour supply to the firm – plays a central role in determining wage inequality and worker welfare. Yet recent theory predicts this power should vary systematically over the business cycle, with firms exerting greater monopsony control during economic downturns when workers face weaker outside options. We test this prediction using matched employer-employee data covering the universe of Portuguese private-sector firms and workers (2002–2019), applying the dynamic monopsony framework of Manning (2003) to estimate firm-level labour supply elasticities and their cyclical sensitivity. Our key finding is stark: labour supply elasticity exhibits pronounced procyclicality, collapsing from approximately 2.5 during labour market expansions to as low as 0.6 during the 2011–2014 sovereign debt crisis. This implies firms compress wage markdowns from near-competitive benchmarks to only 37.5% of marginal product during severe downturns, creating a “double penalty” for workers: lower demand combined with reduced bargaining power. Decomposing this cyclicality, we show that approximately 78% stems from dampened wage-sensitivity of job-to-job transitions during slack labour markets, a mechanism consistent with search theory predictions of worker “attachment” in weak conditions. Substantial heterogeneity exists across demographic groups and regions: younger workers and urban centres like Lisbon experience higher elasticities and muted cyclicality, while peripheral regions and older workers face steeper cyclical fluctuations in monopsony power. These findings suggest that cyclical variation in firm wage-setting power represents a critical transmission channel through which macroeconomic shocks amplify labour income inequality. We conclude that policies sustaining worker mobility and bargaining power during downturns – such as job search support, portable benefits, and sectoral wage floors – deserve priority alongside traditional recession-mitigation strategies.