Shinnosuke Kikuchi

Shin Kikuchi

Job Market Candidate

Research Fields

Macroeconomics, International Economics, Labor Economics, Political Economy

I am a macroeconomist with a particular focus on trade and labor. I am on the 2024-2025 job market.

Job Market Paper

“Evolution of Comparative Advantage: Why Skill Abundance No Longer Matters” 

This paper documents new facts about the evolution of comparative advantage and explores the causes and implications of this evolution. The new key finding is that skill abundance once implied a comparative advantage in skill-intensive sectors, but this relationship weakened in the 1990s and disappeared by the 2000s. I observe larger declines in the importance of skill abundance in countries and sectors with higher levels of automation, with no significant—or even opposite—variation observed with offshoring. Based on a multi-sector quantitative trade model incorporating both automation and offshoring, I find that automation, rather than offshoring, is the primary driver behind the change in comparative advantage. Without automation, skill abundance would have remained as important as it was in the 1990s. As a result, automation shifts tasks from low-skilled labor in both skill-scarce and skill-abundant countries to high-skilled labor in skill-abundant countries, leading to an increase in skill premia globally. In contrast, offshoring relocates tasks from low-skilled labor in skill-abundant countries to low-skilled labor in skill-scarce countries, increasing skill premia in skill-abundant countries while decreasing them in skill-scarce countries.


Working Papers

“The Granular Origins of Agglomeration” (with Daniel G O’Connor)

A few large firms dominate many local labor markets. How does that granularity affect the geography of economic activity? And what does it mean for the efficiency of firm entry? To answer these questions, we propose a new economic geography model featuring granular firms subject to idiosyncratic shocks. We show that average wages increase in the size of the local labor market due to that granularity and provide sufficient statistics for the contribution of our mechanism. We further prove that too few firms enter in equilibrium. Using Japanese administrative data on manufacturing, we provide evidence that is consistent with our mechanism and quantify it. Our mechanism implies that markets with around 2 firms per sector have an elasticity of wages to population of 0.05 and firms capture only 85% of their contribution to production in profits. In large markets like Tokyo, the elasticity is around 0.001, and firm entry is approximately efficient. Enacting optimal place-based industrial policy would increase the number of firms in modest-sized cities by more than 30% and actually decrease the number of firms and people in Tokyo.

 

“Decomposing the Rise of the Populist Radical Right” (with Oren Danieli, Noam Gidron, and Ro’ee Levy)

Reject & Resubmit at Journal of Political Economy

Support for populist radical right parties in Europe has dramatically increased in recent years. We decompose the rise of these parties from 2005 to 2020 into four components: shifts in party positions, changes in voter attributes (opinions and demographics), changes in voter priorities, and a residual. We merge two wide datasets on party positions and voter attributes and estimate voter priorities using a probabilistic voting model. We find that shifts in party positions and changes in voter attributes do not play a major role in the recent success of populist radical right parties. Instead, the primary driver behind their electoral success lies in voters’ changing priorities. Particularly, voters are less likely to decide which party to support based on parties’ economic positions. Rather, voters—mainly older, non-unionized, low-educated men—increasingly prioritize nativist cultural positions. This allows populist radical right parties to tap into a preexisting reservoir of culturally conservative voters. Using the same datasets, we provide a set of reduced-form evidence supporting our results. First, while parties’ positions have changed, these changes are not consistent with the main supply-side hypothesis for populist support. Second, on aggregate, voters have not adopted populist right-wing opinions. Third, voters are more likely to self-identify ideologically based on their cultural rather than their economic opinions.

VOXEU

 

“Welfare Effects of Polarization: Occupational Mobility over the Life-cycle” (with Sagiri Kitao)

What are the welfare effects of polarization: wage and employment losses of middle-class workers relative to low- and high-skill groups? We build a model of overlapping generations who choose consumption, savings, labor supply, and occupations over their life cycles, and accumulate human capital. We simulate a wage shift observed since the early 1980s and investigate individuals’ responses. Polarization improves welfare of young individuals that are high-skilled, while it hurts low-skilled individuals across all ages and especially younger ones. The gain of the high-skilled is larger for generations entering in later periods, who can fully exploit the rising skill premium.

 

“Automation and the Disappearance of Routine Work in Japan” (with Ippei Fujiwara and Toyoichiro Shirota)

Revise & Resubmit at Journal of the Japanese and International Economies

We examine the implications of automation technology in Japan since 1980, comparing different local labor markets with different degrees of automation exposure. First, we do not find that automation reduces the employment rate within demographic groups and that automation encourages workers to move from regular to non-regular employment. Second, we show that automation shifts employment from routine occupations in the manufacturing sector to service sectors, while increasing the share of establishments and sales in the manufacturing sector. Finally, we show that this shift in labor demand is attributed to younger generations and non-college-educated workers.


Work in Progress

“Geography of Business Interactions: Evidence from Business Card Exchange Data” (with Shota Komatsu, Juan Nelson Martínez Dahbura, Kentaro Nakajima, Takanori Nishida, Kensuke Teshima, and Junichi Yamasaki)

In-person business meetings are a critical driver of agglomeration benefits, yet the scarcity of data has hindered exploration into their nature. This study leverages a novel dataset obtained from a business card exchange application, used by 0.4 million workers in Tokyo, to examine the impact of geographical distance on business card exchanges and other types of business networks. By analyzing the moving of firms, we find a distinct pattern in how the frequency of business card exchanges decreases with distance, particularly noting a significant drop beyond a 500-meter radius. Additionally, we observe that the rate of decline in these exchanges due to distance closely correlates with the level of industry agglomeration, and we find similar drops in other types of business networks such as patent collaborations. These findings highlight the pivotal role of very local interaction in fostering agglomeration benefits.

 

“Optimal Industry Mix with Granular Shocks” (with Daniel G O’Connor)

When firms are subject to granular and industry-wide shocks, regions overspecialize, leaving workers overexposed. Using German employer-employee matched data, we study the optimal industrial policy incorporating heterogeneity in occupation, industry, and region.

 

“Trade, Deindustrialization, and Service-led Growth” (with Tishara Garg and Edward Wiles)

We examine the impact of trade liberalization on structural change patterns in India. Leveraging district-level variations in sectoral composition, we find that districts with greater tariff reductions experienced larger declines in manufacturing employment shares. By extending Matsuyama’s 1992 model of deindustrialization to include a non-tradable service sector, we demonstrate analytically and through simulations that India's observed deindustrialization and service-led growth can be qualitatively attributed to trade liberalization. We aim to structurally estimate the model parameters to quantify the role of trade liberalization in driving these structural changes.

 

“Long-run Implications of Labor Market Power in the United States” (approved US Census Project)

 

Awards & Honors

2024
Gordon B. Pye Dissertation Fellow
2023
Best Teaching Assistant (Department Award)