Welcome to my research website! My research interests are in macroeconomics, labor economics, and household finance. Here’s my CV .
Research
Edoardo Acabbi, Andrea Alati, and Luca Mazzone (2023).
Human Capital Ladders, Cyclical Sorting, and Hysteresis
R & R at the American Economic Review, also available at SSRN
Previously circulated as: “A Labor Market Sorting Model of Scarring and Hysteresis”. Presentations: Visitinps, EIEF, CEMFI, HEC Lausanne, IMF, UC3M, University of Milan, Bank of England, University of Wisconsin Madison, University of Colorado Boulder, Northwestern University, University of Illinois in Urbana-Champaign, University of Tokyo, Federal Reserve Board, Bonn CRC workshop, SMYE 2021, Search and Matching Conference (Copenhagen), Lisbon Macro 2022, T2M 2022, Midwest Macro (Dallas), the M3M (Frankfurt), SED annual meeting (Cartagena), Brucchi-Luchino workshop (Napoli), University of Maryland (College Park), Université de Quebec à Montreal, Virginia Commonwealth University
Abstract.
Evaluating the allocative effects of recessions is challenging due to the dynamic and jointly evolving distributions of workers and firms. Workers constantly gain or lose human capital, while the landscape of firms shifts with cyclical vacancy posting, entry and exit. We build a search model with aggregate risk and worker-firm heterogeneity, in which human capital accumulation depends on the sorting of workers to firms. The framework allows us to account for how workers' skills and firms' distributions jointly vary and impact business cycles. We estimate the model on administrative data and show that persistent negative effects on the productivity of worker-firm matches dominate cleansing effects, with distortions in sorting and human capital accumulation accounting for approximately 60% of cumulative output losses. Our model offers a rationale for the increased length of recessions and their heterogeneous welfare effects across age, income, and human capital distributions.
Marc Folch and Luca Mazzone (2022).
Go Big or Buy a Home: The Impact of Student Debt on Career and Housing Choices
R & R at the Review of Economic Dynamics, also available at SSRN
Featured: EEA Congress and LSE Business Review
Presentations: SED Meeting (Minneapolis), Center for the Economics of Human Development at the U of Chicago, European Meeting of the Econometric Society (Milan), Computation in Economics and Finance Conference (Dallas), European Economic Association Congress, Bank of Italy Human Capital Workshop, U of Pennsylvania, Wharton Finance, UZH, U of Copenhagen, SFI Workshop in Lausanne, ICEF at the Higher School of Economics, New Economic School (Moscow)
Abstract.
Student debt decreases post-bachelor school enrollment and earnings growth but does not delay first-time home ownership. We introduce a life-cycle human capital model with heterogeneous wealth and financial frictions and show that high debt balances distort career choices because returns to further education depend on current income. Student debt impacts home ownership in two ways. First, it deters ownership via the traditional wealth channel. Second, it increases ownership by discouraging further education in favor of early labor market entry. Finally, we show that the impact of student borrowing is partly due to the design of US student loans.
Luca Mazzone (2021).
On the Solution of High-Dimensional Macro Models with Distributional Channels
R & R at Computational Economics, also available at SSRN
Presentations: Computation in Economics and Finance Conference (Milan), Sparse Grids and Applications Conference (Munich), UZH Finance, SFI Research Days
Abstract.
I propose a global solution method for the computation of infinite-horizon, heterogeneous agent macroeconomic models with aggregate uncertainty. Details of the algorithm are illustrated by presenting its application to a an example model of firm dynamics. In the model, aggregate dynamics depends explicitly on firm entry and exit, and individual choices are often constrained by a form of market incompleteness. Existing computational strategies are either unfeasible or provide inaccurate solutions to this class of models. Moreover, global solutions are computationally expensive because the minimal representation of the aggregate state space - and thus the aggregate law of motion - faces the curse of dimensionality. The proposed strategy combines adaptive sparse grids with a cross-sectional density approximation, and introduces a framework for solving the more general class of dynamic models with firm or household heterogeneity accurately.
Sara Casella and Luca Mazzone (2023).
Parental Health, Aging, and the Labor Supply of Young Workers
In Progress (New Draft Soon), also available at SSRN
Presentations: Midwest Macro (Dallas), SEHo (Copenhagen), SOLE (Philadelphia), Barcelona Summer Forum 2023, Hitotsubashi University, EEA Meeting (Barcelona)
Abstract.
To what extent are young workers affected by health shocks that happen to their parents? This paper studies the short and long-term spillover effects of parents' adverse health events on their adult children. We use the unique structure of the Panel Survey on Income Dynamics (PSID) to build family networks and construct a measure of sudden health changes. Exploiting news on parents' health status, we provide evidence of the existence of family insurance in the form of time and monetary transfers, and of the importance of family ties in shaping labor market outcomes. Following the deterioration of parents' health, time spent helping them goes up, while income and hours worked by children significantly decline.
Edoardo Acabbi, Andrea Alati, Luca Mazzone, and Marta Morazzoni (2025)
Sorting into Entrepreneurial Teams
In Progress
Presentations: UCL, Queen Mary University London, CREI, Goethe University Frankfurt, the Inter-American Development Bank, Northwestern University, Bank of England, the Chicago FED, the LSE Junior Macro Conference, and the NYU Abu Dhabi Conference on New Frontiers for Policy Evaluation
Abstract.
This paper studies how entrepreneurs sort into teams and how team entrepreneurship affects the equilibrium distribution of firms. Leveraging employer-employee administrative records matched with privately-held firms’ balance sheet data for Portugal, we show that firms of entrepreneurial teams have higher sales, productivity and survival rates than those owned by single entrepreneurs. We then exploit information on individuals’ careers before opening a firm to establish that there is a strong degree of sorting in entrepreneurial teams along observed and unobserved heterogeneity. A novel theory of career choices and team formation rationalizes why similarity in entrepreneurs’ overall talent and dissimilarity in their specialization lead to better firm outcomes, providing insights into the micro-foundations of firm growth.
Work in Progress
Tatyana Deryugina , Luca Mazzone, and Florian Oswald
Invisible Ties, Internal Flights: the Influence of Non-cohabiting Family on Migration Decisions
Presentations: Midwest Economic Association (Chicago)
Edoardo Acabbi, Andrea Alati, Ben Griffy, Luca Mazzone , and Stanislav Rabinovich
The Optimal Design of Job Retention Schemes
Dormant
Luca Mazzone and Jason Sockin
The Labor Economics of Political Polarization
IMF and Policy Work
Fiscal Consolidation: Taking Stock of Success Factors, Impact, and Design
R & R at the Journal of Economic Surveys, also available at IMF
Regional Economic Outlook (Europe): Europe’s Declining Productivity Growth: Diagnoses and Remedies
Note (2024)
Stand-by Arrangement and Arrangement under the Standby Credit Facility - Honduras
Third Review (2020) and Fourth Review (2021)
Article IV Consultation - Israel
Staff Report (2023)
Article IV Consultation - Malta
Staff Report (2024)
