"The Skill Premium Puzzle in Portugal" examines how the skill premium in Portugal has evolved over the past three decades, shedding light on a key driver of wage inequality. Using a rich longitudinal matched employer-employee dataset from Portugal, it documents a striking decline in the skill premium in this country, a trend that stands in stark contrast to the rising skill premium observed in countries like the United States. Then, using a quantitative macroeconomic framework calibrated to Portugal, the author shows that this decline is mostly driven by the fast increase in the supply of skilled workers, which outweighed the positive impact of capital-skill complementarity. Moreover, the paper estimates that labor substitutability and capital-skill complementarity differ significantly in Portugal compared to larger economies like the United States.

 

"Automation and Aggregate Shocks" explores how aggregate shocks, such as demand and technology shocks, influence firms’ automation decisions and the economy’s overall automation level. The paper reveals that the persistence and magnitude of shocks, whether permanent or temporary, determine whether economies shift towards higher or lower automation equilibria. Additionally, labor market characteristics, such as elastic versus inelastic labor supply, play a critical role in amplifying or dampening these effects.

 

"Firms and Productivity Dispersion: Anatomy of a Fall" documents a significant reduction in productivity dispersion across Portuguese firms between 2007 and 2019 and explores its underlying causes. The authors show that this convergence in productivity occurred both between and within sectors, and then extend a methodology that decomposes this convergence into productivity growth among surviving firms, employment reallocation, and firm net entry. Furthermore, the paper shows that the fall of productivity dispersion can mechanically account for a significant share of the wage inequality decline.