Personal Page for John Morrow

Abstract. Recent literature claims that skill mix within firms, in contrast to average human capital, influences the entire economy. This paper provides theoretical and empirical evidence of the linkage from skill mix to output, inequality, productivity and exports. I develop a multisector model of firms who employ teams of workers in production. In this setting I derive two main results. First, I consider what impact changes in the skill distribution from migration, education or outsourcing have on output. I find an increase in industry specific workers boosts output, but in contrast to classical models, worker spillovers to other industries may attenuate output. Second, I consider the impact of price changes caused by tariff reductions or subsidies. I show a rise in output prices raises the total wages of a worker team but changes relative wages within teams. The new relative wages depend on the supply of team members to the industry. Inequality will increase if the supply of high skilled workers is tight. This possibility of a sector boom coincident with higher inequality provides a new explantion of inequality trends beyond skill biased technical change. Empirically, my model motivates a novel specification that characterizes industries as "intensive in skill diversity" or "intensive in skill similarity." Productivity differences explained by skill mix intensity are comparable to the magnitude of training and imported inputs combined. I also find skill mix differences explain intrasector export variation better than physical or human capital.

	Working Papers
		Is Skill Dispersion a Source of Productivity and Exports in Developing Countries?
		Abstract. Recent literature claims that skill mix within firms, in contrast to average human capital, influences the entire economy. This paper provides theoretical and empirical evidence of the linkage from skill mix to output, inequality, productivity and exports. I develop a multisector model of firms who employ teams of workers in production. In this setting I derive two main results. First, I consider what impact changes in the skill distribution from migration, education or outsourcing have on output. I find an increase in industry specific workers boosts output, but in contrast to classical models, worker spillovers to other industries may attenuate output. Second, I consider the impact of price changes caused by tariff reductions or subsidies. I show a rise in output prices raises the total wages of a worker team but changes relative wages within teams. The new relative wages depend on the supply of team members to the industry. Inequality will increase if the supply of high skilled workers is tight. This possibility of a sector boom coincident with higher inequality provides a new explantion of inequality trends beyond skill biased technical change. Empirically, my model motivates a novel specification that characterizes industries as "intensive in skill diversity" or "intensive in skill similarity." Productivity differences explained by skill mix intensity are comparable to the magnitude of training and imported inputs combined. I also find skill mix differences explain intrasector export variation better than physical or human capital.
		Citation: (Bibtex)

		Left, Right, Left: Income Dynamics, Learning and the Evolution of Political Preferences by Bayesian Voters
		(with Michael Carter) Abstract. The political left turn, which lagged Latin America's transition to liberalized market economies by a decade, challenges conventional economic explanations of voting behavior. This paper provides a theoretical framework to help understand these complex political-economic dynamics. To do this, we first build on forward-looking voter models and analyze political preferences under general families of income transition functions. We show that non-concave functions, which offer no prospect of upward mobility for segments of the population, may result in stronger support for redistributive policies than might otherwise be anticipated. Interestingly, numerical analysis of the model based on estimated transition functions, suggests much stronger support for redistribution than actually materialized over the first decade of economic liberalization. We thus eschew the assumption that voters had full information on their new economic reality, and model voters as Bayesians learners. We show that starting from a prior that was consistent with the so-called Washington Consensus vision of liberalization, voters would be expected to exhibit the sort of political dynamics observed in most of Latin America over the last two decades.
		Citation: (Bibtex)

		Benford's Law, Families of Distributions and a Test Basis (Appendix)
		Abstract. This paper presents improved, asymptotically valid test values for Benford's Law, a particular distribution of First Significant Digits. Also derived are new test values for heuristic tests used in the literature and small sample properties of the tests are investigated. Since not all data should be expected to satisfy Benford's Law, a simple method is presented by which all continuous distributions may be transformed to satisfy Benford with arbitrary precision and induce scale invariance, one of the properties underlying Benford's Law in the literature. This allows application of Benford tests to arbitrary samples, a hurdle to current empirical work. The results yield improved tests for Benford's law applicable to a broader class of data.
		Citation: (Bibtex)

		Is Selection on Firm Productivity a Third Gain from Trade?
		(with Swati Dhingra) Abstract. Empirical studies provide strong evidence that trade liberalization reallocates resources towards high productivity firms. Theoretical models of international trade have incorporated firm heterogeneity to explain such selection. This paper addresses two questions: Do Selection Effects yield new Gains from Trade distinct from Comparative Advantage and Scale Effects? How does Selection caused by trade compare with domestic policy options? Examining heterogeneous firm models, we find the answers depend not on the production structure rather the demand structure. Linear demand as in Melitz and Ottaviano (2008) generates returns to scale which favor the most productive firms, making Selection in this model a Scale Effect. In contrast, the original model of Melitz (2003) exhibits Selection Effects as a genuinely new Gain from Trade. Selection in a Melitz economy reflects the optimal internalization of trade frictions. We show the Melitz model is efficient, independent of the productivity distribution of firms. The CES demand of Melitz (2003) is necessary for efficiency as is the taste for variety imposed in the model. The results highlight the role of demand in determining when Selection Effects are distinct, optimal and anti-variety.
		Citation: (Bibtex)

		Strategic Interaction in the Sex Market (Interactive Example w/Chicago Data)
		(with Yoav Sivan) Abstract. There have been few attempts to empirically explain the pursuit of short term relationships and sex in a formal context. Previous work has lamented the paucity of empirical studies which utilize incentive driven behavior to draw conclusions and recommend policy. We provide an empirical approach derived from a game theoretic model of social interaction and apply it to a population of high interest. Specifically, we apply the approach to a population of sexually active men who have sex with men (MSM) in a large metropolitan area and derive qualitative conclusions regarding how individuals behave in the marketplace for sex.
		Citation: (Bibtex)

	Other Projects
		First Significant Digit Laws
		This is a small platform independent tool which may be used to quickly apply tests related to Benford's Law. The software allows the user to collect test statistics, make graphs of first significant digits, and perform complex data manipulation which is often required to, say, test data enumerator quality in large surveys.