Research

Abstract: This paper studies the labor market for managers by examining both between and within firm reallocation channels. I document that around 40% of the inflows into managerial positions come from internal promotions, a flow comparable in size to the job-to-job transitions into the same roles. I develop a labor search model with internal reallocation and on-the-job learning. External flows depend on how firms are currently internally organized. Internal flows depend on the extent of skill accumulation of workers under managers and on external hiring and separation events. Using administrative data from Germany, I document that managers receive a substantial wage premium and play a key role in the skill development of workers within the establishment. The model matches observed external and internal flows into managerial positions and provides insights into how these channels operate across the talent distribution. Lastly, I evaluate policy implications of targeted Non-Compete Agreements, finding that restrictions on managers lead to fast-tracked promotions and reduced output, whereas non-competes on workers enhance skill accumulation and increase productivity.

Abstract: The allocation of workers across occupations is a key aspect of the labor market, and it is shaped by firms’ internal organization. We document a novel empirical pattern of sorting between workers and multi-worker firms using administrative data from Germany. Looking at job switchers, we find that workers that switch to higher paying firms, on average, find themselves with more subordinates on the firm wage distribution, but at a lower relative rank within the firm. These patterns imply negative assortative matching across layers but positive assortative matching across ranks. We build a tractable many-to-one assignment model with endogenous firm structure choice that allow us to tackle to question of how structure choice shapes sorting. Firms choose how many layers they want to organize their production in, so each job is indexed by a pair of firm productivity and its position in the firm hierarchy. The model rationalizes the evidence by generating negative assortative matching across layers but positive assortative matching across ranks and delivers a parsimonious way to compare jobs across firms. We provide a sufficient condition for positive sorting, namely that task importance at higher layers cannot rise too steeply relative to lower layers. The framework nests extensions with peer effects and search frictions while matching additional moments on wage dispersion.

Abstract: We develop a model of search in OTC markets with asymmetric information and trade occurring under double-sided uncertainty over asset quality, where holding the asset does not necessarily translate into knowing its quality. This leads to deterioration of market information conditions over subsequent trades, causing both sellers and buyers to become more pessimistic even though aggregate asset quality remains unchanged. If re-trade opportunities are frequent, information in the economy becomes coarser, hindering market liquidity and volume of trade.

Abstract: We develop a model in which firms need liquidity to meet their wage bill before production occurs and face a limit on how much they can borrow. Both frictions operate within a standard search-and-matching labor market. Their interaction generates an endogenous wedge on the effective cost of hiring: when credit conditions tighten, the shadow cost of financing wages rises, making each new hire more expensive than the wage alone would suggest. Firms respond by cutting vacancy posting sharply, amplifying the labor market response to aggregate shocks beyond what a frictionless benchmark would predict. We apply the framework to two unresolved puzzles in the labor macro literature. First, the model aims at replicating the unemployment volatility documented by Shimer (2005): binding financial constraints amplify the response of vacancies and unemployment to productivity shocks, bringing the model closer to the data. Second, when a shock simultaneously depresses productivity and tightens credit, the model aims at replicating the slow employment recovery observed after GFC — producing a debt overhang in which balance-sheet repair keeps hiring suppressed long after output recovers.

Abstract: Managerial talent influences firm growth and expansion, yet larger firms may have an advantage in mitigating managerial turnover by sourcing replacements internally. This paper examines the relationship between manager allocation and firm size. Using German administrative data, I document that internal promotions account for 40% of managerial inflows, disproportionately concentrated in larger firms. Event study regressions show that external managerial hires are associated with firm growth, while internal promotions have a more muted effect on size. To rationalize these findings, I develop a firm dynamics model with frictional search for managerial positions, where firms optimally choose their size while accounting for manager turnover. The model shows that reliance on internal or external hires depends critically on firm size, influencing both talent distribution and firm productivity.