Raul Santaeulalia-Llopis

Coming Soon

• Profits, Labor Share and the Rise of Acquired Intangibles
  with Jacob Hess, Luis Rojas and Carolina Villegas
  Abstract PDF Slides

  We study how incorporated firms strategically choose to recognize (or not) acquired intangibles from mergers and acquisitions (M&As) in their business accounts and its implications for the measurement of economic profits and labor share. Our analysis is informed by a business accounting change in the early 2000s that forced the acquirer firms to report the acquired intangibles from M&As. Before the accounting change, acquirer firms that had the incentive to frontload accounting profits (e.g., through CEO compensation affected by these profits) preferred to record the M&A with an accounting method (pooling) that did not recognize the acquired intangibles. This left acquired intangibles out of both the income statement and the balance sheet, which raises not only accounting profits (as the acquired intangibles are not amortized in the income statement) but also potentially economic profits that use, at face value, only assets recognized in the balance sheet. Further, by implementing accounting obstacles to pooling, target firms leveraged the acquiror's incentive to frontload profits in order to raise the price of the acquisition, extracting a larger share of the total surplus and, hence, reflecting more accurately the marginal benefit of the acquisition. However, after the accounting change, this leverage ceases to exist, increasing the proportion of the surplus captured by the acquirers as the price paid for the acquisition lowers relative to marginal benefit of the acquisition. Correcting for the omitted acquired intangibles at the firm level before and after the accounting change, we find measures of economic profits and labor share that are relatively trendless.

  

  Corrected Labor Share Trend
• Excess of Transfer Progressivity in the Village
  with Francesco Carli, Leandro de Magalhaes and Albert Rodriguez-Sala
  Abstract PDF Slides

  With primary data from a complete village in Malawi we find that the level of transfer progressivity is large. The solution to a village-calibrated OLG model with limited commitment and private information implies an optimal level of transfer progressivity that is one third that of the village data. Interestingly, the current transfer progressivity turns out to be close to optimal in a "pre-fertilizer era". We rationalize our findings with social norms (a wedge on participation constraints) that are sluggish to economic change.

Working Papers

• A Quantitative Theory of the HIV Epidemic: Education, Risky Sex and Heterogeneous Learning
  with Christian Aleman and Daniela Iorio
  Abstract PDF Slides

  We explore learning about HIV infection odds from risky sex as a new mechanism explaining the Sub-Saharan Africa HIV epidemic. Our novel empirical evidence reveals a U-shaped relationship between education and being HIV positive across epidemic stages, which prompts the idea of asymmetric learning: more educated individuals potentially learn faster and update their beliefs about infection odds more accurately than less educated individuals.

  

  Corrected Labor Share Trend
• Liberating Preferences from Balanced Growth: A Case for Birth-Level Normalization New
  with Jose-Victor Rios-Rull
  Abstract PDF Slides

  This paper establishes a unified class of growth-consistent preferences. Under the standard assumption of time-invariance, balanced growth paths (BGPs) require strict functional form restrictions, such as CRRA. We show that these restrictions are not inherent to balanced growth but are a mathematical consequence of time-invariance. Within a broader class of preferences that depend on individual choices and aggregate benchmarks, we prove that a property we call pairwise homogeneity (PH) is both necessary and sufficient for a BGP. Crucially, this property imposes no restrictions on the functional form of the utility function; any regular felicity function is BGP-consistent under PH. The standard paradigm is revealed as a knife-edge sub-manifold where the degree of homogeneity is forced to equal the curvature. We generalize our characterization to accommodate trending hours via independent pairwise homogeneity (IPH), nesting existing time-variant models as special cases. This theoretical decoupling allows fundamental parameters—including risk aversion and the Frisch elasticity of labor supply—to be identified from microeconomic, cross-sectional, business cycle, or asset-pricing evidence without being constrained by long-run macroeconomic trends.
• Countercyclical Elasticity of Substitution In Revision
  with Dongya Koh
  Revise & Resubmit, Review of Economic Studies
  Abstract PDF Slides

  We empirically show that the short-run elasticity of substitution between capital and labor (σ_t) is countercyclical. In recessions, capital and labor are more substitutable than in expansions. This countercyclicality of σt introduces an asymmetry in an otherwise standard competitive-markets business cycle model that contributes to resolve several labormarket puzzles: the labor productivity puzzle, the Dunlop-Tarshis phenomenon, the hoursproductivity puzzle, and the labor share puzzle.
• How Much are SVARs with Long-Run Restrictions Missing without Cyclically Moving Factor Shares? In Revision
  Sole Author
  Revise & Resubmit, Journal of Econometrics
  Abstract PDF Slides

  [Abstract text for 'How Much are SVARs...' goes here]

What I'm Working on Now (by topic):

Labor Share, Intangibles and Capital-Labor Substitution

"Fall and Rise of Labor during the Technological Revolution: Substitutability and Scalability since 1850s," with Kevin O'Rourke and Tancredi Rapone
[Abstract] [Slides: Atlanta, May 2026]
How does the diffusion of technology reshape the long-run future of labor? While prominent contemporary views argue that labor displacement dominates task reinstatement (Acemolgu and Restrepo, 2020), historical debates during major technological transformations alternate between pessimistic substitution anxieties and optimistic scaling narratives. This paper evaluates these competing mechanisms by examining the (so far) largest technological disruption in human history, the Second Industrial Revolution in the United States. We construct a novel spatial-temporal database tracking the arrival and diffusion of critical (120+) innovations across 150 regions between 1820 and 1960, leveraging over 21 million digitized historical newspaper pages from the Library of Congress alongside decennial Population and Manufacturing Censuses. Using a staggered difference-in-differences empirical framework, we document highly heterogeneous occupational reallocations: while specific legacy occupations decline sharply (e.g., coachmen), new occupations emerge (e.g., electrical engineer). In the aggregate, employment, output, productivity, real wages, and capital investment significantly increase. Crucially, the aggregate manufacturing labor share remains stable in response to innovatoins. To interpret these findings, we build and estimate a nested constant elasticity of substitution (CES) production model. The structural decomposition reveals that scalability effects structurally dominate short-run substitutability; new technologies fundamentally scale labor capacity rather than fully displacing it. Finally, we show that cross-sectional regional adaptability to historic technology diffusion is a strong predictor of superior local economic outcomes after 100 years.
"Resilient Kaldor: Capital Aggregation and Growth Facts with Intangibles" with Dongya Koh and Sangmin Aum
[Abstract]
We propose a simple aggregation method that resolves three interrelated, major issues in the measurement of real aggregate capital (a Fisher quantity index) in national accounts. Specifically: (1) sub-aggregates of real capital are not additive, meaning real tangible and intangible capital do not add up to real aggregate capital; (2) real aggregate capital growth is driven by the nominal shares of capital sub-items, which prevents the price of aggregate capital from matching the price of aggregate investment; and (3) at the aggregate level, real capital, real investment, and real depreciation violate the perpetual inventory method (PIM) used to construct real capital at the sub-item level. Our methodology uses a common deflator across the highest level of capital disaggregation, placing all capital items into identical units. This approach ensures capital is additive across all levels of aggregation, eliminates the use of nominal shares for aggregation, and prevents PIM violations at the aggregate level. Furthermore, our methodology preserves the ideal feature of the Fisher index, where the aggregate price multiplied by the real aggregate quantity equals the nominal aggregate quantity. Using this new methodology, we construct new series for aggregate capital—as well as tangible and intangible sub-aggregates—to reassess the Kaldor facts.

Growth and Structural Transformation

"Transfer Progressivity and Development: A Cross-Country Analysis," with Leandro de Magalhaes and Enric Martorell
[Abstract]
Adding formal and informal transfers, we show that transfer progressivity in poor countries is four times larger than in rich countries. We quantitatively assess the implications of transfer progressivity for cross-country income per capita differences and dicuss its optimality across stages of development
"Accounting for Bilateral Gross Transfers in the Village: Warm Glow, Status and Insurance Beyond Kinship," with Leandro de Magalhaes, Liyuan Dong, Ying Feng, Pau Milan and Albert Rodriguez Sala
[Abstract]
Using primary bilateral network transfer data from an entire village in Malawi, we document that while the probability of receiving a transfer from kin is higher than from non-kin, this relationship reverses conditional on a negative income shock. We build a model with warm glow and status to rationalize these findings
"The Dynamics of Agricultural Production: Technological Constraints, Misallocation, and Crop-Specific Price Shocks," with Andre Groger, Luis Rojas and Yanos Zylberberg
[Abstract] [Slides: IFPRI, April 2026]
Exploiting exogenous international crop-specific price shocks linked to granular farm-level panel data from Vietnam, we identify the dynamic response and adjustment paths of factor reallocations following price innovations. Our core contribution is a novel methodology that leverages these shock responses to separately identify factor market frictions from crop-specific technological constraints, specifically time-to-yield delays and land suitability requirements. We embed these channels into a dynamic general equilibrium model of multi-crop production. Structural calibration indicates that market frictions are the main direct source of the dispersion in marginal products, while technological constraints mainly amplify their effects.

Labor and Tax Policy

"Employment and Skill Investment Responses to Payroll Tax Reductions: Studying Incentives of 30 Years of French Reforms," with Christian Aleman, Pranav Mimani and Etienne Wasmer
[Abstract] [Slides: ESSIM, May 2026]
Employers' payroll taxes have steadily increased in Western European countries. Combined with minimum wages or welfare transfers, this structure implies high labor costs, leading to a labor tax wedge of 50\% or above. To mitigate the impact on low skill employment, France introduced labor tax cuts for low wage workers. It substantially reduced average labor costs but further raised \textit{implicit marginal} tax rates along the wage profile, creating an implicit tax on wage growth and a perceived phenomenon of a low-wage trap. This paper proposes a methodology to quantify the disincentive effects on firms' demand for medium-wage labor and on workers' skill accumulation, and to measure the impact on wage compression and labor market polarization. We measure how the secular wage compression may originate from both the employee/household side of the tax and transfer policy, and the employers' tax cut.
"Optimal Tax Progressivity in a Union," with Sarah Zoi
[Abstract]
This paper studies the optimal design of progressive income taxation within an economic union. While the literature typically analyzes tax progressivity in closed economies, or fiscal coordination with homogeneous national agents, we develop an open-economy framework featuring both within-country individual inequality and cross-border capital mobility. We use this environment to analyze two distinct policy regimes: national fiscal authorities engaging in non-cooperative Nash competition, and a supranational union-level authority that internalizes fiscal spillovers. Our mechanism bridges global asset market dynamics and public finance: capital flows from financially developed, equal countries toward unequal ones, directly altering the national trade-offs between equity and efficiency. We show that uncoordinated tax competition leads to suboptimal progressivity due to capital flight and fiscal externalities. Supranational coordination restores efficiency by accounting for these cross-border capital dynamics. We characterize the optimal coordinated tax schedule and evaluate the welfare trade-offs between tax harmonization and national fiscal sovereignty.

Health and Family

"The Unequal Battle Against Infertility: Theory and Evidence from IVF Success," with Liyuan Dong, Daniela Iorio, Fane Groes, Anna Houstecka [.pdf] [Online Appendix] (This work is being heavily revised with an equilibrium model to incorporate macroeconomic implications.)
"The Ozempic Economy: Sugar Addiction, Labor Market and Optimal Subsidies," with Christian Aleman, Fane Groes, Veda Naramsihan, Siyu Shi and Tetyana Surovtseva
[Abstract] [Slides: SED Copenhagen, 2025]
Using linked Danish administrative data on medical prescriptions and firm records, we examine the effects of weight-loss pharmacotherapy — such as Ozempic and Mounjaro — on employment, hours, and labor earnings. Our contribution is twofold. First, we document empirically the significant and robust effects of weight loss drugs on labor market outcomes using a battery of alternative identification strategies in diabetic and non-diabetic population. Second, we build a quantitative macroeconomic model with endogenous sugar consumption and pharmacotherapy uptake to assess optimal public subsidies and alternative regulations.
"Misreading the Biological Clock: Beliefs, Career and Fertility Decisions," with Lidia Cruces, Saverio Lenzi, Alex Luwig, and Virginia Sanchez-Marcos
[Abstract] [Slides: SED Athens, 2026]
Fertility rates in developed economies remain below replacement levels despite widespread intentions to increase the number of children. We study how biased beliefs about biological fecundity affect women’s career and childbearing decisions. We build and calibrate a quantitative life-cycle model of college-educated married women that features endogenous fertility and labor supply choices, with heterogeneous biological fecundity and subjective beliefs. The model reproduces key fertility and employment moments in U.S. data and allows us to quantify the impact of correcting fertility misperceptions. Counterfactual experiments show that providing women with accurate information about either average or individual fecundity increases the total fertility rate by 7-8\% and shifts births to earlier ages, with little effect on labor supply. Our findings highlight the potential of information-based fertility policies to complement traditional family policies such as childcare subsidies or parental leave.
"Compensation, Talent Allocation, and Firm Dynamics: Theory and Evidence from Egg Freezing Packages," with Christian Aleman, Fane Groes and Mariya Il'ina
[Abstract]
We study how compensation packages shape firm dynamics by attracting and retaining high talent workers. We use egg freezing (EF) benefits as a key compensation innovation adopted heterogeneously across firms. EF alters internal wage distributions, labor force attachment, the composition of talent within firms, and other key demographic margins such as age at first birth (AFB). We develop a model in which firms optimally choose the degree of EF cost subsidization to compete for high human capital women whose career family trade off is relaxed by this technology. The model predicts that firms with high capital-skill complementarity gain disproportionately from EF adoption, attracting talent at the top of the human capital distribution while crowding out lower skill workers. We match employer employee data to document how EF adoption reshapes within firm wage distributions, worker selection and fertility outcomes. Our findings speak to a broader question in corporate finance: how non-standard compensation packages function as strategic instruments for talent allocation, with measurable consequences for firm value and workforce composition.

Econometrics, Identification and Policy Evaluation

'A Stage-Based Identification of Policy Effects', with Christian Aleman, Chris Busch and Alex Ludwig [.pdf] [Online Appendix] (This work is being heavily revised using potential outcome language to develop a proof of exact identification of policy effects, establish conditions for uniqueness, and incorporate time-fixed effects. It is becoming a new paper)
'Double Selection in Causal Inference', with Christian Aleman, Chris Busch and Tetyana Surovtseva
[Abstract] [Slides: LMU, December 2025]
A long-standing question in research using natural experiments for causal inference is the appropriate functional form of the outcome variable, often involving a choice between level or logarithmic formulations. This choice is crucial because the assumption of a single constant selection bias (CSB)—or, equivalently, a parallel time trend—for identifying the policy effect cannot hold simultaneously in both formulations. To address this issue, we propose a double-selection (DS) approach, in which units face two types of selection: a level shifter (single CSB in levels) and a proportional shifter (single CSB in logs). We show unique identification of the DS and, consequently, the causal effects. We propose a DS estimator in levels and conduct inference.

Published Papers

1. 'Land Misallocation and Productivity' (2023) [.pdf] [Online Appendix]
with Chaoran Chen and Diego Restuccia
AEJ: Macroeconomics
In the Media The IGC Blog
2. 'The Effects of Covid-19 on Couples’ Job Tenures: Mothers Have it Worse' (2023) [.pdf]
   with Cristina Lafuente, Astrid Ruland and Ludo Visschers
   Labour Economics

3. 'The Effects of Land Markets on Resource Allocation and Agricultural Productivity' (2022) [.pdf]
with Chaoran Chen and Diego Restuccia
Review of Economic Dynamics
4. 'Temping Fates in Spain: Hours and Employment in a Dual Labor Market during the Great Recession and Covid-19' (2022) [.pdf]
   with Cristina Lafuente and Ludo Visschers
   SERIES

5. 'Contagion at Work: Occupations, Industries and Human Contact' (2021) [.pdf] [Other versions: BGSE 1225]
with Anna Houstecka and Dongya Koh
Journal of Public Economics
6. 'Labor Share Decline and Intellectual Property Products Capital' (2020) [.pdf] [Online Appendix]
with Dongya Koh and Yu Zheng
Econometrica
In the Media BGSE Focus World Economic Forum Center for Equitable Growth Jeannee Emard (French) MOVE [video]
7. 'The Costs of Consumption Smoothing: Less Schooling and Less Nutrition' (2019) [.pdf] [Online Appendix]
with Dongya Koh and Leandro de Magalhaes
Journal of Demographic Economics (Leading Article)
8. 'Natural Resources and Global Misallocation' (2019) [.pdf]
with Alex Monge-Naranjo and Juan Sanchez
AEJ: Macroeconomics
9. 'The Price of Growth: Consumption Insurance in China 1989-2009' (2018) [.pdf] [Online Appendix]
with Yu Zheng
AEJ: Macroeconomics (Leading Article)
10. 'The Consumption, Income and Wealth of the Poorest: Cross-Sectional Facts of Rural and Urban Sub-Saharan Africa for Macroeconomists' (2018) [.pdf] [Online Appendix]
with Leandro de Magalhaes
Journal of Development Economics
In the Media PolitiFact
11. 'The Relationship between Age at First Birth and Mother's Lifetime Earnings: Evidence from Danish Register Data', with Mallory Leung and Fane Groes [.pdf]
PLoS ONE (2016), 11(1), DOI:10.1371/journal.pone.0146989
In the Media: Forbes STL Public Radio MIC Vocativ videnskab.dk La Vanguardia Billfold psmag Psychology Today globalnewsca U.S. News & World Report
12. 'Methods versus Substance: the Effects of Technology Shocks on Hours' [.pdf] [Other versions NBER 15373, Minn. FED Staff Report 433 ]
with Jose-Victor Rios-Rull, Frank Schorfheide, Cristina Fuentes-Albero and Maxym Khrysko
Journal of Monetary Economics (2012), 59(8), pp. 826-846.
13. 'Redistributive Shocks and Productivity Shocks' [.pdf] [code]
with Jose-Victor Rios-Rull
Journal of Monetary Economics (2010), 57(8), pp. 931-948.

1. "Economic activity and public health policy: A note on the COVID-19 pandemic" (2021) [.pdf] [pdf [in Catalan]]
   Notes d'Economia
2. "Contrasting U.S. and European Job Markets during COVID-19" (2021) [.pdf] with Jean-Benoît Eyméoud, Nicolas Petrosky-Nadeau and Etienne Wasmer
FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2021(05), pages 01-05, February.
3. "Increasing and Decreasing Labor Shares: Cross-Country Differences in the XXI Century" (2019) [.pdf] with Sangmin Aum and Dongya Koh
ICE: Revista de Economia, 2019 (911)
4. "Should Capital Flow from Rich to Poor Countries?" (2019) [.pdf] with Alex Monge-Naranjo and Juan Sanchez
St. Louis FED Review, 2019

1. A Discussion on "Trade-Induced Urbanization and the Making of Modern Agriculture" by Yuan Tian, Junjie Xia, and Rudai Yang (2024) [.pdf]
   Annual STEG-CEPR Conference, Abu Dhabi, January 2024
2. A Discussion on "(Most) global and country shocks are in fact sector shocks" by Lukas Boeckelmann, Jean Imbs, Laurent Pauwels (2023) [.pdf]
   Annual CEBRA Conference, Abu Dhabi, November 2023
3. A Discussion on "The Macroeconomics of Intensive Agriculture" by Timo Boppart, Patrick Kiernan, Per Krusell and Hannes Malmberg (2022) [.pdf]
   Annual Meeting of the CEPR Macroeconomics and Growth Programme, Dublin, November 2022

Research Interests