Tommaso Porzio

Home Address: Office Address: 42 Mansfield Street Department of Economics New Haven, CT 06511 Yale University New Haven, CT 06520-8268

Telephone: +1 203 491 9433 E-mail: [email protected]

Personal web page: https://sites.google.com/a/yale.edu/tommaso-porzio/

Citizenship: Italian, J-1 Visa (not subject to two-year rule)

Fields of Concentration: Macroeconomics Development Economics

Desired Teaching: Macroeconomics Development Economics

Comprehensive Examinations Completed: 2012 (Oral): Macroeconomics and Development Economics (with distinction) 2011 (Written): Macroeconomics and Microeconomics

Dissertation Title: Allocation of Talent, Labor Markets, and Economic Development

Committee: Professor Mikhail Golosov Professor Giuseppe Moscarini Professor Nancy Qian Professor Aleh Tsyvinski Professor Christopher Udry

Expected Completion Date: May 2016

Degrees: Ph.D., Economics, Yale University, 2016 (expected) M.Phil., Economics, Yale University, 2013 M.A., Economics, Yale University, 2012 M.Sc., Economics (cum laude), Bocconi University, 2012 B.Sc., Economics (cum laude), Bocconi University, 2009

Fellowships, Honors and Awards: Carl Arvid Anderson Prize Fellowship, 2014-2015 Royichi Sasakawa Young Leaders Fund Fellowship, 2014-2015 Dissertation Prize Fondazione Achille e Giulia Boroli, 2012 Royichi Sasakawa Young Leaders Fund Fellowship, 2012-2013 Falk Fund Fellowship, 2011-2012 Yale University Graduate Fellowship, 2011-2016 Yale University Economic Growth Center Fellowship, 2011-2015 Bocconi University Graduate Merit Awards, 2009-2011

Teaching Experience: Graduate Macroeconomics (instructor: G. Moscarini), Spring 2014 Intermediate Macroeconomics (instructor: W. Nordhaus), Fall 2014 Graduate Macroeconomics (instructors: E. Engel and G. Moscarini), Spring 2013

Research and Work Experience: Research Assistant to Professor A. Tsyvinski, Yale University, 2014 Research Assistant to Professor N. Qian, Yale University, 2012 Research Assistant to Professor G. Ordonez, Yale University, 2012

Field Researcher at Oikos East Africa, Tanzania, July-August 2009 and 2010

Working Papers: “Distance to the Technology Frontier and the Allocation of Talent: Theory, Evidence and Implications for Economic Growth”, (November 2015), Job Market Paper

“Life-Cycle Wage Growth Across Countries” with David Lagakos, Benjamin Moll, Nancy Qian, and Todd Schoellman, (August 2015)

“Life-Cycle Human Capital Accumulation Across Countries: Lessons from U.S. Immigrants” with David Lagakos, Benjamin Moll, Nancy Qian, and Todd Schoellman, (October 2015), solicited from the Journal of Human Capital’s special edition honoring Gary Becker.

“Unemployment Risk and Flat Job Ladders: Evidence from the German Reunification” with Sebastian Heise, (October 2015) “Aggregate Fertility and Households Savings: A General Equilibrium Analysis using Micro Data” with Abhijit Banerjee, Xin Meng, and Nancy Qian (April 2014), NBER Working Paper 20050

Seminar and Conference Presentations: NEUDC (Boston University), 2014 SED (Toronto), 2014 CEPR Annual Symposium on Development Economics (Stockholm University), 2014 Ente Einaudi Institute (EIEF), 2013 NBER SI (Income Distribution and Macroeconomics), 2013 Conference on Economic Growth and Development (Un. of Washington, St.Louis), 2013 NEUDC (Harvard University), 2013 NEUDC (Dartmouth University), 2012

Referee Service: International Economic Review, Journal of Development Economics, Journal of Human Resources, Review of Economic Studies

Languages: Italian (native), English (fluent), French (beginner)

References: Prof. Mikhail Golosov (co-chair) Prof. Giuseppe Moscarini Prof. Nancy Qian Princeton University Yale University Yale University Department of Economics Department of Economics Department of Economics 111 Fisher Hall New Haven, CT 06520 New Haven, CT 06520 Princeton, NJ 08544 PO Box 208268 PO Box 208268 Phone: +1 (609) 258-4003 Phone: +1 (203) 432-3596 Phone: +1 (203) 432-3639 [email protected] [email protected] [email protected]

Prof. Aleh Tsyvinski Prof. Christopher Udry (co-chair) Yale University Yale University Department of Economics Department of Economics New Haven, CT 06520 New Haven, CT 06520 PO Box 208268 PO Box 208268 Phone: +1 (203) 432-9163 Phone: +1 (203) 432-3637 [email protected] [email protected] Dissertation Abstract

My dissertation theoretically and empirically examines cross-country differences in the creation, allocation, and labor market compensation of individual skills.

Chapter 1: Distance to the Technology Frontier and the Allocation of Talent: Theory, Evidence and Implications for Economic Growth [Job Market Paper]

Individuals and firms in a developing country can adopt technologies that are much more advanced than the average level of technology already in use there. They have this unique opportunity because they are far from the world technology frontier. In this paper I build a new theoretical framework to show that this option changes how individual skills are used within countries. In the model, heterogeneous agents team up to produce output. Production requires them to perform tasks that are differentially sensitive to skill and to choose a costly technology that is complementary with skills. Cross-country differences are captured by this cost of technology adoption. In countries far from the frontier, only high-skilled individuals find it worthwhile to adopt the world frontier, while low-skilled individuals use a backward technology. As a consequence, there is large cross-sectional heterogeneity of technology, and talented workers cluster in the few teams that use the frontier technology, thus enjoying its higher returns. In countries close to the frontier, everyone uses the advanced technology. Talented workers therefore are spread out more evenly across firms, to exploit the gains from the specialization of skilled workers in managerial tasks. The main theoretical result is that the assignment of individuals to production teams is more assortative in countries far from the frontier.

Micro data from labor force and firm surveys in over 100 countries produce systematic evidence in favor of the model prediction. I construct, for each country-year survey, a measure of the sorting of talent to sectors and firms that captures the likelihood of similarly skilled individuals working together. Poor countries today have more sorting than rich countries. I isolate the effect of distance to the frontier and show that poor countries have also more sorting than the U.S. had in the past.

The theory provides two takeaways for explaining cross-country income differences. First, together with their larger concentrations of talent, the model also predicts more cross-sectional dispersion of economic activity and productivity in poor countries, which is a phenomenon that has been widely documented and investigated. This additional dispersion is commonly attributed to frictions and misallocation, which cause underdevelopment. In my model the additional dispersion instead simply reflects more assortative matching of talented individuals and the possibility of adopting advanced technology. Second, I explore the implications of the theory in a dynamic environment. I show that the interaction between talent allocation and technology choice can generate a permanent disadvantage for countries that takeoff later. Consider two countries with identical fundamentals except for an exogenous time of takeoff. The country that starts to grow late, and thus is far from the technology frontier, converges to a different long run balanced growth path, with large technological dispersion and depressed output. Chapter 2: Cross-Country Differences in Life-Cycle Human Capital Accumulation; with David Lagakos, Benjamin Moll, Nancy Qian, and Todd Schoellman

In two papers, we document cross-country differences in life-cycle human capital accumulation.

In the first paper, “Life-Cycle Wage Growth Across Countries”, we harmonize repeated cross- sectional surveys from a set of countries with very different per capita income levels and use them to measure how wages rise with potential experience. Our main finding is that experience- wage profiles are on average twice as steep in rich countries as in poor ones. This is consistent with two distinct hypotheses: slower human capital accumulation over the life cycle and more severe frictions that hamper worker reallocation.

In the second paper, “Life-Cycle Human Capital Accumulation Across Countries: Lessons from U.S. Immigrants” we provide empirical support in favor of the human capital hypothesis. Among U.S. immigrants, returns to potential experience in the common U.S. labor market are higher for workers coming from rich countries than for those coming from poor ones. This fact could be driven by differences in selection, skill-loss upon migration, or human capital accumulation. We measure selection and skill-loss using respectively the difference in average education and in the probability of being in a high skill occupation between immigrants and non- migrants. Immigrants from poor countries neither are more negatively selected nor lose a higher amount of skills. Therefore, they most likely accumulate less human capital before migrating.

Chapter 3: Unemployment Risk and Flat Job Ladders: Lessons from the German Reunification; with Sebastian Heise

Can a change in labor market regulations improve the allocative efficiency of worker-firm matches? We study this question using the German reunification as a natural experiment that exposed East Germany to Western-style institutions. We interpret a firm’s average wage as a measure of its inherent productivity. Using matched employer-employee data, we examine the evolution of allocative efficiency, defined as the correlation between a firm’s average wage and its number of workers. East German allocative efficiency is significantly lower than in the West even 20 years after the reunification. This difference accounts for 25 percent of the large wage gap between the two regions. The efficiency gap is due to two forces. First, East German workers face a flatter job ladder: when moving job-to-job, the difference between their previous firm’s average wage and the new firm’s average wage is smaller than in the West. Second, East German workers more frequently fall off the job ladder into unemployment. We rationalize our findings in a job ladder model with low and high productivity firms in which East Germany has a higher risk of job termination than the West. This higher termination risk lowers the incentive for high productivity firms to post vacancies, which flattens the job ladder. Our work suggests that policies that seek to improve labor market institutions, if accompanied by a higher risk of job termination, may have the unintended consequence of decreasing allocative efficiency.