Selected research

A Competitive Theory of Mismatch

This paper studies the coexistence of unemployment and vacancies in a general equilibrium model of business cycles. Jobs and workers are assigned to competitive and segmented markets. Markets, however, are incomplete because assignments are made before the observation of trade opportunities and they cannot be altered after. Vacancies represent job assignments to markets where trade is uncertain. Unemployment is based on worker search and on a new notion of waiting unemployment which describes workers who waited in markets where transactions were expected but not realized. Welfare and existence theorems are established. A quantitative analysis shows that the model replicates key aspects of the labor market: vacancies and unemployment covary negatively and both are several times more volatile than wages. A new but counterfactual result is the absence of persistence in search unemployment.

Quantitative Aspects of Africa's Past Economic Development

This paper provides a comparative analysis of pre-modern economic conditions in sub-Saharan Africa. We find that large- and medium-sized cities, our proxy for pre-modern economic development, were less prevalent in Africa than in South and Central America, a comparable region. Empirical analyses of the Standard Cross-Cultural Sample (SCCS), which includes 186 pre-industrial societies around the world, confirm and generalize the results. Ethnic diversity and pathogenic loads sometimes help explain pre-colonial disparities within the tropics whereas demographic, geographic, and technological differences play a minor role. We also find that modern influences (broadly defined) do not fully account for Africa's current poverty.

Chance and Irrationality in Demand Theory

This paper examines and characterizes the economic behavior of individuals whose choices are not based on a preference order and maximizing behavior. The paper shows that average demand curves for individuals whose decisions are left to random chance are homogeneous in prices and income, add up to total income, satisfy the Slustky equation, and have a negative semi-definite matrix of substitution effects. These properties hold for any well-behaved distribution function and, excluding adding up, for allocations that are in the interior of the budget set. The paper also discusses the implications of irrational behavior for the assumption of rationality, the role of preferences in economic behavior, aggregation and individual irrationality, and irrationality and welfare.

Population and Long-term Economic Development: A Re-examination and Some New Evidence

The relationship between population and long-term economic development is of obvious importance. Past studies of this relationship have typically emphasized the favorable aspects of population. This paper re-examines the existing evidence and introduces new evidence derived from a multiplicity of demographic, archeological, and anthropological sources. The findings suggest important biases and confounding influences in current assessments, and point toward new mechanisms by which past population adversely influences economic development. A central aspect of the analysis is the role of population as a factor in generating `diversity' (in a general sense). Potential influences are formalized in a model of technological leapfrogging.

Selected publications

Altruism, Fertility, and the Value of Children: Health Policy Evaluation and Intergenerational Welfare

(with Rodrigo Soares)

This paper accounts for the value of children and future generations in the evaluation of health policies. This is achieved through the incorporation of altruism and fertility in a "value of life" type of framework. We are able to express adults' willingness to pay for changes in child mortality and also to incorporate the welfare of future generations in the evaluation of current policies. Our model clarifies a series of puzzles from the literature on the "value of life" and on intergenerational welfare comparisons. We show that, by incorporating altruism and fertility into the analysis, the estimated welfare gain from recent reductions in mortality in the U.S. easily doubles.

Journal of Public Economics, 2009, Vol. 93(1-2), 280-295

Escaping High Mortality

This paper develops an economic analysis of mortality to account for the mortality decline during the demographic transition. We propose a unified growth model in which there is intra- and intergenerational health transmission: parental health affects child survival and investments in early life improve health over the entire life-cycle. Based on data from England and Wales between 1640 and 2000, we show that the role of economic changes in mortality is larger than previously estimated. As in current estimates, contemporary income has a minor impact on mortality change. Most of the economic influences, however, are unaccounted for by contemporary relationships.

Journal of Economic Growth, 2007, Vol. 12(4), 351-387

Economic Development and the Escape from High Mortality

This paper studies the characteristic features of the escape from high mortality as recorded from the historical experience of Northwestern Europe and from the current experience of less developed countries. The paper documents stylized facts of mortality change and measures the contribution of economic development, represented by income per capita, to the mortality decline during the second half of the twentieth century. The paper argues that improvements in economic conditions since the eighteenth century are an important factor behind the decline in death rates in developed countries and in the subsequent reduction of death rates in less developed countries. We show that economic development lowers mortality through differential effects in infectious disease mortality and that quantitatively, income growth is able to account for between one-third to one-half of the recent mortality decline.

World Development, 2007, Vol. 35(4), 543-568

Equilibrium, Convergence, and Capital Mobility in Neoclassical Models of Growth

We study convergence in economies integrated by capital trade. Equilibrium generates transitional dynamics even in the absence of internal adjustment costs or borrowing constraints. Trade lowers the speed of convergence of capital-importing economies but increases the convergence of capital-exporting economies.

Economics Letters, 2008, Vol. 99(1), 10-13

Capital Accumulation, Unemployment, and the Putty-Clay

This note studies the dynamics of labor markets in a putty-clay framework. It analyzes the evolution of job creation and job destruction in an economy without market frictions. Unemployment and labor market flows emerge under putty-clay technologies because low productive jobs become unused factors. As capital accumulates, firms destruct low productive jobs by obsolescence. Simultaneously, the use of capital intensive technologies creates new jobs by the low substitution between capital and labor.

Economics Bulletin, 2004, Vol 5(19), 1-8

Income Distribution, Human Capital, and Economic Growth in Colombia

Colombian income distribution has followed a clear path during the last two decades: in the second half of the 1970s, human capital accumulation reduced the dispersion of income distribution, and lead to a period of stagnation between 1983 and 1990, when mobility declined. After the structural reforms, a skill-bias technological change, the wage differential for skilled workers increased inequality by a polarization in the bi-modal distribution of income. These topics are discussed in the paper along some dynamic aspects of income and educational mobility in Colombia.

Journal of Development Economics, 2001, Vol. 66(1), 271-287

Income Distribution and Macroeconomics in Colombia

This paper studies the relation between macroeconomic variables and the distribution of income in Colombia. We relate the dynamics of aggregate economic variables with the cross-section of disaggregate income to determine the transmission and propagation mechanisms of aggregate shocks. The most important finding is a strong negative effect of inflation rates on the distribution of income by education groups and productive sectors.

Journal of Income Distribution, 2007, Vol. 16(2), 6-24