Working Papers

The Capacity Pressure Channel of the Phillips Curve

-with Tobias Renkin - (Newest Version - March 2026)

Previously circulated under the title “Demand Shocks and Prices: Micro Evidence and Macro Implications”

Abstract: We estimate the response of domestic prices and total output of Danish manufacturing firms to persistent firm-level demand shocks that result from heterogeneity in firms’ exposure to different export destinations. Our results suggest that supply curves at the firm level are steep—a demand shock that increases output by 1% raises prices by about 0.5% after three years. We use a New Keynesian model with firm-level demand shocks to show that the estimated response maps to the ‘capacity pressure’ channel of the Phillips curve slope, which results from upward-sloping firm-level supply curves due to fixed factors of production. In the estimated model that fits firm-level responses, the capacity pressure channel contributes about 0.039 to the slope of the Phillips curve. This is larger than recent cross-sectional estimates of the total Phillips curve slope. Under an upper-bound assumption about the wage response to aggregate shocks, our estimated model suggests the capacity pressure channel accounts for two thirds of the overall Phillips curve slope.

Firms' Beliefs About Wage Setting

-with Antoine Bertheau - (Newest Version - March 2026)

Abstract: We provide new direct evidence on how firms perceive their pay relative to that of their competitors by linking administrative data to a large-scale survey of Danish firms. We show that firms’ beliefs are informative about observed wage differences: Firms that think they pay higher wages than their competitors are substantially more likely to be higher in the objective wage distribution constructed from administrative data than firms that believe they pay lower wages. However, a majority of firms report that they pay about the same as their competitors, and these firms are widely dispersed across the objective wage distribution, suggesting that many firms hold relatively coarse or imprecise beliefs about their relative position. Firms’ beliefs are more informative in labor markets where wage-setting decisions are more likely to be important, specifically markets with high turnover rates, low profit margins, and low capital intensity. Finally, survey responses reveal that the primary motive for setting high wages is to retain and attract employees.

Firms, Productivity, and Returns to Tenure

Job Market Paper - (Newest Version)

Abstract: I study how the returns to tenure vary across firms with different levels of productivity and how this affects wage dispersion and the cost of job loss. Using an extension of Abowd et al. (1999) and Danish administrative data, I find that workers at more productive firms tend to see larger increases in wages over time. In contrast, starting wages are only weakly related to firm productivity. I show that these differences across firms are not due to composition effects or “quick learner” workers sorting into productive firms, but are a causal effect of being employed at a productive firm. A third of these gains from tenure are portable when switching employers even when separating involuntarily, indicating that these differences in returns partly reflect heterogeneity across firms in the rate at which employees acquire general human capital. Worker mobility patterns suggest that non-portable gains are primarily driven by differences in the rate of learning about worker-firm match quality. Finally, I show that firm-specific returns significantly influence the cost of job loss, with a real earnings loss nearly twice as large for workers displaced from firms in the top quartile of the returns distribution compared to those from the bottom quartile.

Work in progress

Wage effects of labor market tightness

-(Newest Version)

Abstract: I study the impact of labor market tightness on wages. Using Danish data on vacancies and unemployment at the occupational level and firm-level data on the occupational composition of employees, I construct novel firm-specific measures of labor market tightness. Using these measures, I estimate the causal impact of labor market tightness on wages at the firm level. I find a positive effect on wages in response to changes in tightness. The results are in line with the qualitative implications of the canonical search and matching model of the labor market.