Email: R dot Malhotra at warwick dot ac dot uk
Office Hours: 2-4pm Tuesday
- EC9A1: Advanced Microeconomic Theory
- EC9A3: Advanced Econometric Theory
- EC335: Managerial Economics
- EC202: MIcroeconomics 2
- EC334: Topics in Financial Economics
I am a final year Economics PhD student. I will be on the 2022-2023 economics job market and will be available for interviews in the fall.
- Microeconomic Theory
- Public Finance
- Labour Economics
- Professor Herakles Polemarchakis
- Professor Robert Akerlof
- Professor Costas Cavounidis
Price Changes and Welfare Analysis: Measurement under Individual Heterogeneity (with Sebastiaan Maes) [Job Market Paper]
Measuring the welfare impact of price changes on consumers is pivotal in economic analyses. Researchers often measure these impacts with cross-sectional data, where every consumer is observed only once. The representative agent (RA) approach, which aggregates all observations in one demand, may lead to biased estimates when preferences are heterogeneous. This paper shows how to use the higher moments of demand to improve these estimates. Indeed, the variance in itself captures much of the bias in the RA approach. Our approach also enables inference on the distribution of welfare changes. Using the UK Household Budget Survey, we apply our methodology to estimate the welfare impact of a 10% food price increase and find that the RA approach understates the welfare impact by 28.3%. We leverage our approach to obtain conditions for stochastic rationalizability in terms of moments and deliver a characterization for the two-good case.
Exact Inference from Finite Market Data (With Felix Kubler and Herakles Polemarchakis)
(Revise and Resubmit, American Economic Review)
We give conditions under which an individual’s preferences can be identified with finite data. First, we derive conditions that guarantee that a finite number of observations of an individual’s binary choices identify preferences over an arbitrarily large subset of the choice space and allow one to predict how the individual shall decide when faced with choices not previously encountered. Second, we extend the argument to observations of individual demand. Finally, we show that finitely many observations of Walrasian equilibrium prices and profiles of individual endowments suffice to identify individual preferences and, as a consequence, equilibrium comparative statics.
Rethinking Distribution: Introducing Market Segmentation as a Policy Instrument Link opens in a new window(with Yatish Arya)
Inequality and skewed distribution of ‘essential’ goods are pertinent problems in the 21st-century world. We consider a general equilibrium framework with a division between "essentials" and "non-essentials", Only essentials are relevant for distributional concerns. We then compare the effects of four policies on social welfare: subsidies, direct transfers, quantity rationing, and a fourth policy that we introduce and call Market Segmentation (MS). In MS, the market for essentials is segmented from non-essentials, i.e., they are not freely tradeable with each other. We find that if the relative number of low-income individuals in the economy is large and “essentials” are consumed inelastically, MS outperforms direct transfers and subsidies. MS also weakly dominates quantity rationing. We discuss how market segmentation can help policymakers deal with issues such as automation and the superstar phenomenon (Scheuer and Werning, 2017).
Estimating the Nature of Technological Change: Exploiting Shifts in Skill Use Within and Between OccupationsLink opens in a new window [Recording @ NBER SI Personnel] (With Costas Cavounidis, Vittoria Dicandia, and Kevin Lang )
We exploit employment trends to uncover changes in skills’ productivities. Whereas Autor, Levy, and Murnane (2003) study the degree to which routine-intensity can rationalize employment trends, our reverse approach characterizes the kind of technological change that best explains shifts. We combine a tractable GE model with three DOT editions, the 1960, 1970, and 1980 Censuses, and the March CPS, to estimate changes in the relative productivities of skills. We find ‘skill bias’ - finger-dexterity productivity grew rapidly, while abstract-skill productivity lagged. With substitutability between abstract and routine inputs, these results also explain changing skill use within occupations.
(Functional)Characterizations vs (Finite)Tests: Partially Unifying Functional and Inequality Based Approaches to Testing
Historically, testing if decision-makers (DM) obey certain axioms from choice data has taken two distinct approaches. The first ”functional” approach involves observing the entire ”demand function” and putting restrictions on it. The second ”revealed preference” approach involves constructing algebraic inequalities and using them to test finite data. Using restrictions derived in Kubler et al. (2020), we construct an algorithm to construct RP-type tests from functional restrictions. By this, we mean that any functional restriction which characterizes a class of preferences can be used to construct a well-behaved finite data test. Further, our method is computationally efficient, solving the intractability problem of tests for properties like weak separability.
Work in Progress
Skill Traps and Regional Divergence (with Ivan Yotzov)[More details available on Request]We consider the effect of the initial distribution of skills on commuting zones’ responses to the China Shock (Autor, Dorn, and Hanson (2013)) which leads to a fairly uniform decline in manufacturing employment across CZs in the US. However, their subsequent evolution depended heavily on regional specialization. Regions with a more diverse set of industries rapidly see an uptick in non-manufacturing employment. In contrast, highly specialized regions saw no such uptick but rather experienced a large increase in the share of people outside the labor force. Next, we consider the effects of the China import shock on net job creation and net establishment entry rates. For both, we see a positive and significant effect in low specialization CZ and a negative effect in regions with high specialization, giving more evidence for differential adjustment. This suggests what we call a “skill trap“
Obsolescence Rents: Teamsters, Truckers, and Impending Innovations. (with Costas Cavounidis, Qingyuan Chai, and Kevin Lang)[Extended abstract available on request]The aftermath of negative labor demand shocks is well-studied in seminal work such as Dorn et al. (2009) and Autor, Dorn, and Hanson (2016). We focus our attention on a related but understudied topic: the behavior of labor markets when a shock is anticipated but hasn’t arrived. We consider permanent shocks uncertain arrival dates to individual occupations. We develop an overlapping generations (OLG) model where labor market is in steady-state before the announcement of a future technological change. The change will greatly reduce the demand for some occupation - say, widgeters. In the post-shock aftermath stage, the sudden decline in demand reduces widgeters’ wages, and many take other jobs. More importantly, in the anticipatory dread stage, when the shock has been announced but has not arrived, young workers expect that the wage may decline dramatically in their lifetime. With imperfect mobility, they must be compensated-receiving what we dub obsolescence rents. We then analyse the effect of the arrival of trucks on teamsters, workers who drove vehicles drawn by teams of horses.
The Content of Education, or Who Does What and Why (with Costas Cavounidis, Vittoria Dicandia, César Garro-Marin, and Kevin Lang)
Diagnosis in Organizations (with Robert Akerlof and Hongyi Li)