UCLA

This dissertation focuses on the macroeconomic implications of firms’ behavior. How do capital and labor substitute for each other? How large are the inefficiencies created by anti- competitive behavior? How does the distribution of the size of firms interact with merger regulations?

In the first chapter, I investigate the question of the substitutability of labor and capital at the firm-level and then in the whole economy. Using a novel empirical strategy and comprehensive administrative data. I find that the amount of substitution between capital and labor is actually fairly limited.

In the second chapter, I study the distortions created by anti-competitive behavior in an oligopolistic setting. I find that the direct negative welfare impact of cartels is amplified by an umbrella pricing effect, whereby firms outside of the cartel also raise their prices.

In the third chapter, I trace the implications of antitrust policies on the firm size distri- bution. I find that under threshold-based rules, all mergers above a certain size might need to be blocked in order for the size distribution to stabilize.

Finally, the techniques used to study the dynamics of firms can fruitfully be applied to other areas. In particular, in the last chapter, jointly written with Adriana Lleras-Muney, we use a dynamic model to explore the evolution of mortality rates.