Andrii Parkhomenko
Assistant Professor | University of Southern California - Marshall School of Business

Research Interests

Macroeconomics, Labor Economics, Economic Geography, Housing

Working Papers

Housing Supply Regulation: Local Causes and Aggregate Implications
Kraks Fond prize for the Best Student Paper at the 7th European Meeting of the Urban Economics Association, Copenhagen 2017
I study why some cities have strict housing supply regulation, how regulation affects the economy, and what policymakers can do to mitigate its effects. I develop and calibrate a spatial equilibrium model with heterogeneous workers, where local regulation is endogenously determined by voting.  Cities with high productivity and scarce land vote for strict regulation.  In a quantitative exercise, I find that regulation leads to spatial misallocation of labor and therefore reduces aggregate productivity.  It also contributes to skill sorting, and wage and house price dispersion across cities.  A federal policy that weakens incentives to regulate could raise productivity by 2.5%.

Key Words: housing supply regulation, productivity, spatial misallocation, wage inequality, house prices
JEL Classification: D72, E24, J31, R13, R31, R38, R52

Opportunity to Move: Macroeconomic Effects of Relocation Subsidies
(updated draft coming soon)
he unemployment insurance system in the U.S. does not provide incentives to look for jobs outside local labor markets. In this paper I introduce relocation subsidies as a supplement to unemployment benefits, and study their effects on unemployment, productivity and welfare. I build a job search model with heterogeneous workers and multiple locations, in which migration is impeded by moving expenses, cross-location search frictions, borrowing constraints, and utility costs. I calibrate the model to the U.S. economy, and then introduce a subsidy that reimburses a part of the moving expenses to the unemployed and is financed by labor income taxes. During the Great Recession, a relocation subsidy that pays half of the moving expenses would lower unemployment rate by 0.36 percentage points (or 4.8%) and increase productivity by 1%. Importantly, the subsidies cost nothing to the taxpayer: the additional spending on the subsidies is offset by the reduction in spending on unemployment benefits. Unemployment insurance which combines unemployment benefits with relocation subsidies appears to be more effective than the insurance based on the benefits only.

Key Words: unemployment insurance, relocation subsidies and vouchers, local labor markets, moving costs, geographic mobility, internal migration
JEL Classification: E24, J61, J64, J65, R23

Media: NEP-DGE Blog


Managers and Productivity Differences, with Nezih Guner and Gustavo Ventura, Review of Economic Dynamics  (29), 2018, pp. 256-282
We document that for a group of high-income countries the life-cycle earnings growth of managers relative to non managers is positively correlated with output per worker. We interpret this evidence through the lens of an equilibrium life-cycle, span-of-control model where managers invest in their skills. We use the model to quantify the importance of exogenous productivity differences and the size-dependent distortions emphasized in the misallocation literature. Our findings indicate that such distortions are critical to generate the observed differences in the growth of relative managerial earnings across countries. Distortions that halve the growth of relative managerial earnings, a move from the U.S. to Italy in our data, lead to a reduction in managerial quality of 27% and to a reduction in output of about nearly 7% -- more than half of the observed gap between the U.S. and Italy. Cross-country variation in distortions accounts for about 42% of the cross-country variation in output per worker gap with the U.S.

Key Words: cross-country income differences, managers, distortions, management practices, size distribution, skill investment
JEL Classification:
E23, E24, J24, M11, O43, O47

Media: VOX