Working Papers

Big Data and Bigger Firms: A Labor Market Channel

(with Naman Nishesh and Elena Simintzi)

This paper studies the impact of employee output information disclosure through GitHub on labor reallocation towards large firms. GitHub, which is the world's largest software management platform, tracks and publicly displays real-time individual contributions. In 2016, a policy change enabled GitHub users to display their contributions more accurately on their profiles. Following this update, employees with 1 standard deviation higher GitHub contributions witnessed a 5.7% increase in job transitions to large firms, predominantly at the expense of smaller companies. While productive individuals left small firms for senior roles in larger companies, the latter retained them through internal promotions. The departure of productive workers led to an overall reduction in employment growth and productivity for small firms with more productive employees prior to the shock. Our findings highlight the role of labor-related big data in amplifying the dominance of large firms in recent years. 

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.