Selected for the 2023 EALE job market Tour
Abstract: Do college expansion policies promote local economic development? This paper exploits a construction policy of hundreds of new colleges in France over the 1990s and rich administrative data to assess the effects of higher education establishments. First, I study the impact on education, firm creation, employment and wages at the city level. Exploiting geographic variations and the staggered implementation of the policy in an event-study design, I find a persistent rise in the level of education of the local workforce and in firm entry. The creation of firms in (i) tradable industries and (ii) industries intensive in high-skill labor indicates that the effect is driven by the supply of newly educated workers. Yet, incumbent firms experienced lower growth and a higher exit rate following the opening of new colleges indicating displacement effects. Employment stays constant in the medium-run but is subject to large composition effects: employment increases for young high-skilled workers but decreases for older workers. Overall, the positive effects dominate resulting in more economic activity in treated cities. Second, I complement city-level results with findings at the individual level, shedding light on long-run positive effects. Combining differences in dates of birth with the timing of the policy, I find that cohorts directly exposed to the new colleges became more educated, more likely to be employed and hold more skilled positions.
With Francis Kramarz and Thomas Delemotte
Forthcoming Quantitative Economics -- Part of the Global Income Dynamics Project
Abstract: This paper provides new stylized facts about labor earnings inequality and dynamics in France for the period 1991-2016. Using Linked Employer-Employee Data, we show that (i) Labor inequality in France is low compared to other developed countries and has been decreasing until the financial crisis of 2009 and increasing since then. (ii) Women experienced high earnings growth, in particular at the bottom of the distribution, in contrast to the stability observed for men. Both result from a decrease in labor costs at the minimum wage and an increase in the hourly minimum in the aftermath of the 35h workweek policy. (iii) Top earnings (top 5 and 1\%) grew moderately while very top earnings (top 0.1 and 0.01\%) experienced a much higher growth. (iv) Inequality between and within cohorts follow the same U-shaped pattern as global inequality: it decreased before 2009 and then increased until 2016. (v) Individual earnings mobility is stable between 1991 and 2016, and very low at the top of the distribution. (vi) The distribution of earnings growth is negatively skewed, leptokurtic, and varies with age. Then, studying earnings dispersion both within and between territories, we document strong differences across cities as well as between urban and rural areas, even after controlling for observable characteristics. We also observe a continuous decrease in earnings inequality between territories. However, a larger inflation in rural territories mitigates this convergence. Finally, we document a strong reduction in inequality within rural and remote territories, again driven by changes at the bottom of the wage distribution.
Work in Progress
Abstract: Since 1967, French firms with more than 100 employees have been mandated to distribute a share of their profits to workers. In 1991, the threshold was reduced from 100 to 50 employees. We exploit this regulatory change to evaluate the effects of mandated profit-sharing on workers' and firms’ outcomes. We first show significant pre-reform bunching at the 100 employee threshold, which quickly disappears in the years following the reform. We use a bunching estimator to quantify the reduction in labor demand induced by the policy. Exploiting an intent-to-treat, difference-in-differences strategy, we show that mandatory profit-sharing leads to a significant increase in workers' total compensation that matches a decrease in shareholders' profits. Leveraging employer-employee data, we estimate a precise zero incidence on base wage for all employees but managers and engineers. At the firm-level, we find little evidence of avoidance strategies (e.g. increased leverage or substitution between capital and labor) after the reform. Finally, we find a small, non-significant impact of mandated profit-sharing on labor productivity.
With Marco Tabellini and Clémence Tricaud
With Pauline Carry, Claire Montialoux, Alexandra Roulet and Nina Roussille