Simon Fuchs, Research Economist

How do large export-demand shocks propagate across connected labor markets? This paper studies the regional incidence of the WWI trade boom in Spain using newly assembled data on product-destination exports, province-sector wages and employment, and province-product consumer prices (1910-1920). Exploiting plausibly exogenous shifts in foreign demand from belligerent nations, I use a reduced-form design that decomposes exposure into direct (local) effects and spillovers across connected markets. Exposed markets experienced large increases in nominal wages and employment; within-province wage spillovers are roughly half the size of the direct effect. These nominal gains were partially offset by rising local consumer prices. To interpret these patterns, I develop a quantitative spatial equilibrium model with nested labor mobility across regions and sectors. The model implies that limited interprovincial mobility dampened worker reallocation and amplified wage and price pressures, shaping the spatial distribution of real-income gains. Counterfactuals show that spatial labor-market segmentation is an important amplifier of incidence: removing spatial migration frictions reduces cross-province dispersion in nominal wages and real income, while shifting adjustment toward reallocation rather than local wage/price pressure. Moreover, making the export-demand impulse spatially even sharply compresses inflation dispersion, implying that both the geography of the shock and domestic segmentation are first-order for the distribution of gains.

How do we evaluate the welfare gains from transport infrastructure investment? We present a quantitative spatial framework that integrates both traffic and economic responses to infrastructure investment and derive the elasticity of aggregate welfare to improvements in the transportation network. This approach extends the traditional “social savings” method to incorporate agglomeration and dispersion externalities and endogenous traffic congestion. We calibrate the model to the U.S. freight transport network and assess the welfare impact of upgrading segments of the U.S. Interstate Highway System, quantifying the marginal gains from improvements in specific corridors and highlighting where the returns to investment are highest.

We study the trade-off firms face when exporting to countries with different tastes and volatile demand. In our model, firms face a portfolio problem where they trade off supplying the largest consumer groups against higher exposure to group-specific risk. We develop an empirical strategy to estimate consumer taste from observed market shares, as well as the key parameters that pin down the firm’s portfolio choice problem. We apply our framework to estimate the impact of the rise of China on the global movie market and characterize the heterogeneous welfare effects across countries. A calibrated version of our model suggests a modest average consumer welfare loss as firms prioritize products that provide insurance value.

We study how supply chain disruptions shape consumer prices. We develop a simple model showing how disruptions that cause delivery delays affect pricing through product availability, beyond standard cost pass-through, and extend it to a setting with strategic interactions across firms. Empirically, we construct a novel micro-level dataset linking shipment-level U.S. import records from Bills of Lading to granular consumer prices from the Numerator panel. Using delivery shortfalls, port congestion, and import costs in a shift-share identification strategy, we estimate the pass-through of supply chain shocks to retail prices. We find sizable but incomplete pass-through: both imported-input cost shocks and delivery delays raise prices, with stronger responses when disruptions persist. Firms also raise prices when competitors face disruptions—including those that do not import directly—indicating strategic pricing spillovers. Combining these estimates with back-of-the-envelope calculations from the model, we show that such interactions substantially amplify the aggregate price effects of supply chain shocks, particularly those operating through product availability, during the pandemic.

We develop a framework to assess how economic shocks affect local labor markets and worker welfare, with a focus on city-level economic diversity. Using detailed worker flow data across cities, sectors, and occupations, we construct theory-consistent welfare measures. Our approach combines a dynamic discrete choice model with a dual representation that captures both direct effects and the insurance value of local economic diversity. Applied to French labor markets, we find that diversification dampens the effect of negative shocks: both job-to-job moves and net inflows decline less in diverse cities than in concentrated ones. Overall, we document sizable welfare insurance gains from local economic diversity.