Working Papers

1. “Urban Business Cycles through a DMP Lens: The Steady State Case.” February 2012 (under revision)

Abstract.The paper presents a model of the urban economy where in each city two types of tradeable intermediate varieties are used to produce a non-tradeable consumption good. Each city has a spatial structure, individuals commute to the CBD in order to work, when employed, and to seek jobs, when unemployed. The paper uses a Mortensen–Pissarides model of frictions in the labor market with a matching mechanism that may require travel to the CBD for face to face contacts. The urban structure consists of specialized, where only one type of intermediate varieties is produced, and diversified cities, where both types are produced, and there is intercity trade in intermediate varieties. The paper examines the impact of productivity shocks, of shocks to the matching process and of differences in the rate of job destruction, in particular, on  unemployment, output and welfare across the economy along a steady state. The impacts of shocks may be direct as well as indirect through the  relative prices of the two varieties. A natural dependence of unemployment on city size may be generated. The paper lays the ground work  for empirical investigations with data on unemployment rates, vacancy rates, and GDP for US metro areas, but empirical results will await a more advanced version of the paper. The paper is extended to the case of non-centralized methods of search, like via referrals from friends and co-workers.

2. “Searching for the Best Neighborhood: Mobility and Social Interactions,” with Giulio Zanella, April 2008. pdf

Abstract.  The paper seeks to contribute to the social interactions literature by exploiting data on individuals’ self-selection into neighborhoods. We study a model in which households search for the best location in the presence of neighborhood effects in the formation of children’s human capital and in the process of cultural transmission. We use micro data from the PSID which we have merged, using geocodes, with contextual information at the levels of census tracts and of counties from the 2000 US Census. We control for numerous individual characteristics and neighborhood attributes and find, consistently with neighborhood effects models, that households with children, but not those without, are more likely to move out of neighborhoods whose attributes are not favorable to the production of human capital and the transmission of parents’ cultural traits, and to move into neighborhoods which instead exhibit desirable such attributes.

3. “Random Graphs and Social Networks: An Economics Perspective,” June 2004 pdf

Abstract. This review of current research on networks emphasizes three strands of the literature on social networks. The first strand is composed of models of endogenous network formation from both the economics and the computer science literature. The review highlights the sensitive dependence of the topology of endogenous networks on parameters of the behavioral models employed. The second strand draws from the recent econophysics literature in order to review the recent revival of interest in the random graph theory. This mathematical tool allows one to study social networks that result from uncoordinated random action of individuals in setting up connections with others. The review explores a number of examples to assess the potential of recent research on random graphs with arbitrary degree distributions in accommodating more general behavioral motivations for social network formation. The third strand focuses on a specific model of social networks, Markov random graphs,  that is quite central in the mathematical sociology and spatial statistics literatures but little known outside those literatures. These are random graphs where the events that different edges are present are dependent, if edges are incident to the same node, and   independent, otherwise. The paper assesses the potential for economic applications with this particular tool. The paper concludes with an assessment  of observable consequences of optimizing behavior in networks for the purpose of estimation.