Working Papers

Generative AI and Entrepreneurship

(with Franklin Qian, Elena Simintzi,  and Yifan Sun)

This paper studies how Generative AI (Gen AI) is reshaping the U.S. startup ecosystem. Exploiting the release of ChatGPT in November 2022, we show that startups with greater pre-release Gen AI task exposure reduced employment within two quarters, primarily among junior and implementation roles. Displaced workers experienced longer unemployment spells and moved to lower-paying but less exposed jobs. Conversely, exposed startups increased productivity, scaled faster, and accelerated through financing rounds. Venture capital shifted toward frequent, smaller investments, boosting new firm formation. Overall, Gen AI catalyzed a reallocation of resources, shrinking incumbent startup employment while raising new firm entry, leaving aggregate startup employment unchanged.

Who Benefits from Remote Work?

(with Arpit Gupta and Elena Simintzi)

We examine how remote work affects firm productivity and employment outcomes. Using an instrumental variables design based on pre-pandemic occupational remote work suitability, we find that remote work increases the productivity of startups while reducing productivity for established firms. This effect operates partially through labor market scaling: remote startups experience substantially higher hiring rates, overcoming geographical hiring constraints for talent acquisition. Our findings suggest that remote work alleviates a key disadvantage that young firms face in hiring and expanding, while established firms experience challenges in adopting remote working practices.

When Diversity Rules

(with Joseph Kalmenovitz, Ravi Ranjan, and Kairong Xiao)

Can gender diversity influence regulatory outcomes? We explore this question in the context of U.S. federal rulemaking, leveraging a novel dataset that tracks 15,000 rulemakers responsible for drafting and advancing 38,000 regulatory projects. We find that teams including women deliberate longer and extensively revise their initial drafts, yet are ultimately less likely to see their projects approved by the agency leadership and issued as final rules. To explain these patterns, we develop a simple model of rulemaking in which output gaps arise from four sources: selection (women are assigned lower-quality projects), cost (differences in the cost of exerting effort), incentive (differences in the return to effort), and evaluation (differential treatment by agency leadership). Reduced-form estimates, aided by a machine-learning C-BERT model, reveal that women are assigned to lower-quality projects and face harsher evaluations, but receive stronger incentives tied to project completion. Structural estimates confirm that disadvantages in selection, cost, and evaluation each contribute meaningfully to the observed gender gap, partially offset by females receiving stronger incentives. Our findings shed light on how female representation shapes regulatory performance and contribute to the broader debate over whether diversity enhances or hinders the effectiveness of public institutions.

Big Data and Bigger Firms: A Labor Market Channel

(with Naman Nishesh and Elena Simintzi)

This paper studies the impact of employee productivity information disclosure on labor reallocation across firms. GitHub, the world’s largest software management platform, publicly tracks individual contributions. A 2016 policy change enhanced user GitHub contribution visibility, leading employees with 1 standard deviation higher contributions to experience a 5.2% increase in mobility to large firms, often at the expense of smaller firms. While top talent from small firms secured senior roles at larger firms, the latter retained them through internal promotions. This shift reduced employment growth and productivity in affected small firms, highlighting how labor-related big data reinforces large firms’ dominance.

Does Fund Size Affect Private Equity Performance? Evidence from Donation Inflows to Private Universities

(with Abhishek Bhardwaj, Sabrina Howell, and Kyle Zimmerschied)

Do returns in private equity (PE) rise or fall with fund scale? This question is increasingly urgent amid larger funds and new focus on the retail market. Since better managers can raise larger funds, the causal effect is difficult to identify. We develop an instrument based on gifts to universities, which lead to more capital for managers with preexisting relationships. We show decreasing returns; for example, a 1% size increase reduces net IRR by 0.1 percentage points. Larger funds do larger deals, which perform worse. We find no change in risk, in part because additional deals are more levered.

Entrepreneur Experience and Success: Causal Evidence from Immigration Wait Lines

(with Franklin Qian, and Yifan Sun)

Best Paper at ISB Summer Research Conference, 2024

This study investigates how prior work experience influences startup success. Using variations in Green Card waiting periods as an instrument for the experience of immigrant first-time entrepreneurs, we find that startups led by more experienced founders are more successful in securing funding, generating patents, and expanding their workforce. The primary driver of this success is a larger initial team, enabled by founders’ ability to recruit former colleagues. Our findings suggest that each additional year of experience adds approximately $200,000 in value, offering key insights for policymakers and investors.

Capital Structure & Firm Outcomes: Evidence from Dividend Recapitalizations in Private Equity

(with Abhishek Bhardwaj, and Sabrina Howell)

We study the causal effect of a large increase in firm leverage. Our setting is dividend recapitalizations in private equity (PE), where portfolio companies take on new debt to pay investor returns. After accounting for positive selection into more debt, we show that dramatically increasing leverage makes firms much riskier. The debt-bankruptcy relationship is in line with Altman-Z model predictions. Dividend recapitalizations increase deal returns but reduce: (a) wages among surviving firms; (b) pre-existing loan prices; and (c) fund returns, which seems to reflect moral hazard via new fundraising. These results suggest negative implications for employees, preexisting creditors, and investors.

Labor Mobility, Entrepreneurship, and Firm Monopsony: Evidence from Immigration Wait-Lines

Revise & Resubmit at the American Economic Review

Doctoral Symposium & Travel Grant at Midwest Finance Association, 2022; Runner-Up for Best Doctoral Paper at Eastern Finance Association, 2022

This paper investigates the causal effects of immigrant labor mobility frictions on entrepreneurship and firm monopsony. An unexpected information-technology change to the Green Card process reduced inter-firm mobility for Indian and Chinese immigrants in October 2005. Startups were disproportionately impacted, experiencing twice the decline in worker mobility compared to incumbents, constraining new firm formation. Meanwhile, incumbents leveraged increased monopsony power to reduce internal promotions for Indian and Chinese employees and boost profitability. These findings highlight how labor mobility frictions can shape firm dynamics, disproportionately benefiting established firms while hindering new firm formation.

Publications

Owner Incentives and Performance in Healthcare: Private Equity Investment in Nursing Homes
(with Atul Gupta, Sabrina Howell, and Constantine Yannelis)

The Review of Financial Studies,  0893-9454, November 2023
Editor's Choice, Awarded Best Paper in Health and Finance by Midwest Finance Association, 2021

Amid an aging population and a growing role for private equity (PE) in the care of older adults, this paper studies how PE ownership affects U.S. nursing homes using patient-level Medicare data. We show that PE ownership leads to a patient cohort with lower health risk. However, after instrumenting for the patient-nursing home match, we find that PE ownership increases mortality by 11%. Declines in measures of patient well-being, nurse staffing, and compliance with care standards help to explain the mortality effect. Overall, we conclude that PE has nuanced effects with adverse outcomes for a subset of patients. 

International Trade and Social Connectedness
(With Mike Bailey, Sebastian Hillenbrand, Theresa Kuchler, Rob Richmond, and Johannes Stroebel)

Journal of International Economics, 129(103418), March 2021

We use de-identified data from Facebook to construct a new and publicly available measure of the pairwise social connectedness between 170 countries and 32 European regions. We find that two countries trade more when they are more socially connected, especially for goods where information frictions may be large. The social connections that predict trade in specific products are those between the regions where the product is produced in the exporting country and the regions where it is used in the importing country. Once we control for social connectedness, the estimated effects of geographic distance and country borders on trade decline substantially.