About
I am a Lecturer (Assistant Professor) at the University of Edinburgh, an Associate in the Centre for Economic Performance's at LSE and Affiliated to CESifo. I've completed my PhD in Economics at the London School of Economics in 2018.
My research interests lie in the areas of Labor Economics, Organisational Economics and Development Economics. I am also interested in Data Science and Machine Learning applications.
Contact
diego.battiston@ed.ac.uk
School of Economics
University of Edinburgh
30 Buccleuch Place
Edinburgh
EH8 9JT
Research Papers
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"Face-to-Face Communication in Organisations" (with J. Blanes i Vidal and T. Kirchmaier) , download
Review of Economic Studies Volume 88, Issue 2, March 2021.
Awarded the CEPR Prize for Outstanding Research in Organisation and Management.
Communication is integral to organisations and yet field evidence on the relation between communication and worker productivity remains scarce. We argue that a core role of communication is to transmit information that helps co-workers do their job better. We build a simple model in which workers choose the amount of communication by trading off this benefit against the time cost incurred by the sender, and use it to derive a set of empirical predictions. We then exploit a natural experiment in an organisation where problems arrive and must be sequentially dealt with by two workers. For exogenous reasons, the first worker can sometimes communicate face-to-face with their colleague. Consistently with the predictions of our model we find that: (a) the second worker works faster (at the cost of the first worker having less time to deal with incoming problems) when face-to-face communication is possible, (b) this effect is stronger when the second worker is busier and for homogenous and closely-located teams, and (c) the (career) incentives of workers determine how much they communicate with their colleagues. We also find that workers partially internalise social outcomes in their communication decisions. Our findings illustrate how workers in teams adjust the amount of mutual communication to its costs and benefits.
"Talent Poaching and Job Rotation" (with M. Espinosa and S. Liu) , download , appendix
Accepted at Management Science
The value of a firm's service lies both in its workers and its relationship with clients. In this paper, we study the interaction between client-specific experience accumulated by workers, poaching behaviour from clients and strategic rotation of workers by firms. Using detailed personnel data from a security-service firm, we show that an increase in client-specific experience increases both the productivity of workers and their probability of being poached. The firm reacts to this risk by rotating workers across multiple clients, and more frequently so to those workers more likely to be poached. We show that after a policy change that prohibited poaching, the firm sharply decreased the frequency of rotation which in turn increased workers' productivity. We propose a theoretical model that guides the empirical patterns and allows us to argue their external validity beyond our specific empirical setting.
“The Persistent Effects of Brief Interactions: Evidence from Immigrant Ships” , download
Awarded the CESifo Distinguished Affiliated Award 2021
This paper shows that brief social interactions can have a large impact on economic outcomes when they occur in high-stakes decision contexts. I study this question using a high frequency and detailed geolocalized dataset of matched immigrants-ships from the age of mass migration. Individuals exogenously travelling with (previously unrelated) higher quality shipmates end up being employed in higher quality jobs at destination. Several findings suggest that shipmates provide access and/or information about employment opportunities. Firstly, immigrants' sector of employment and place of residence are affected by those of their shipmates' contacts. Secondly, the baseline effects are stronger for individuals travelling alone and with fewer connections at destination. Thirdly, immigrants are affected more strongly by shipmates who share their language. These findings underline the sizeable effects of even brief social connections, provided that they occur during critical life junctures.
Data Matching Appendix: Python example for Levenshtein Automata Search with Radix Tries.
"The Effect of Advisors’ Incentives on Clients’ Investments" (with J. Blanes i Vidal, R. Hortala-Vallve and D. Lou) , download Revise and Resubmit at The Journal of Finance
We use granular information from a Spanish investment firm to estimate the causal effect of financial advisors’ compensation contracts on their clients’ investments. Our identification exploits: (a) the fact that, for historical reasons, compensation contracts at our firm differed across mutual funds for the same advisor and across advisors for the same fund, and (b) the overhaul to the firm’s compensation policy triggered by MiFIDII, which resulted in within-advisor-fund plausibly exogenous variation in incentives. We find that clients’ investments react markedly and swiftly to changes in their advisors’ incentives. The effect is larger for new clients, for clients who trust their advisors more, and for clients with lower financial knowledge. We identify a dual mechanism underlying this effect: clients whose advisors experience a change in incentives bring more money into the fund portfolio and then direct this money into their advisors’ preferred funds. We introduce our reduced-form estimates into a portfolio-choice model to quantify investors’ utility loss due to the distortion in advice. We estimate losses ranging between 6% and 9%. The change in compensation policy triggered by MiFIDII reduced these losses significantly..
New: "Peer Pressure and Manager Pressure in Organisations" (with J. Blanes i Vidal, T. Kirchmaier and K. Szemeredi) , download
We study the interaction between horizontal (peer) and vertical (manager) social factors in workers' motivation. In our setting, individuals work using open-plan desks. Using a natural experiment, we identify a sharp increase in workers' productivity following the occupation of adjacent desks. We link this peer pressure effect to two key aspects of the worker-manager relation. First, we find stronger peer pressure when managers monitor workers less. Second, we find stronger peer pressure among workers performance-evaluated by the same manager. In a set of counterfactual exercises, we illustrate how organisations could take advantage of these interdependencies to increase worker productivity.
New: "The Dynamics of the Great Gatsby Curve, and a look at the curve during the Great Gatsby Era" (with S. Maurer, S. Rodriguez Mora and A. Potlogea) , download, appendix
We use linked historical US censuses to study the empirical relationship between inequality and intergenerational mobility. We first confirm that the "Great Gatsby Curve" already existed in the early 20th century. We then study a "dynamic" version of the curve that relates changes in equality to changes in intergenerational mobility. Surprisingly, we find that this relationship is unstable over horizons of two decades for income, but not for education. Finally, we propose novel unitless measures of intergenerational mobility and inequality to show that the “Great Gatsby Curve” result re-emerges over the long run, for the period 1920 to 2011.
"The Local Effect of Executions" (with J. Blanes i Vidal) , download
The death penalty is arguably the most controversial criminal justice policy in the US. Despite an extensive body of work, there is no credible causal evidence that it affects crime. In this paper, we show that executions cause a local reduction in serious violent crime (homicides, rapes and assaults with weapon). A simple behavioural model predicts that highly publicised executions reduce crime, albeit only temporarily and as long as capital punishment remains relatively rare. We test these predictions using a panel dataset disaggregated at the county-date level. Controlling for date and county-month fixed effects, we find that serious crime is lower in the days surrounding an execution, in the county where the capital offense was originally committed. An event study analysis and a set of robustness tests reinforce this conclusion. The effect is decreasing in the number of recent executions in the county, and it is higher for executions associated with a lot of media attention. Counties neighbouring the original-crime county also experience a significant, albeit smaller, decrease in crime.
Research in Progress
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"Workplace Heterogeneity in Wage Growth" (with I. Helm and M. Friedrich) -
TWe study differential wage growth across firms. To this end, we propose a statistical model that extends the workhorse model of wage determination by Abowd et al. (1999) to allow for firm-type-specific wage growth. We estimate the model using linked employer-employee data from Germany for the years 1996 to 2016. We show that wage growth differs across firms and that these differences can at least partially be explained by differential human capital accumulation. Workers keep the additional accumulated pay when switching firms. This has important considerations for our understanding of the sources of wage inequality. We show that the presence of firm-type specific wage growth biases the variance and sorting components of the AKM model. The dispersion of worker quality and sorting is less important in explaining wage inequality than previously thought.
"Can Productivity Shocks Boost Chain Migration?"This paper studies to what extent local productivity shocks can trigger immigration of relatives and friends of settled immigrants. I first estimate the geographical distribution of surnames-nationalities in the US in the beginning of 20th Century. Then, using data on local productivity shocks (oil discoveries and weather), I estimate the subsequent change in the inflow of passengers with surnames-nationalities more prevalent in the county which experienced the shock. The high frequency of data allows to observe the leads and lags responses for short intervals of time, which overcomes the difficulties of identifying the effects of local shocks with decennial census data.
"Congestion in Labor Markets: An Empirical Investigation Based on Daily Arrivals During the Age of Mass Migration"Using daily variation in passenger arrivals to Ellis Island in the period 1900-1924, this paper shows that individuals arrived in days of high congestion, are employed in worse jobs. The identification strategy follows from the fact that conditional on a one-month time window, the total number of ships arrived (from any port) in a given day are exogenous to individual characteristics. I interpret the results using a search model with high entry costs and asymmetric information.
"Trade Diversion Effects of the Panama Canal" (with F. Valencia and F. Rossi)Improvements in communication infrastructure and transportation technologies have been promoted as significant drivers of economic development. However, the negative externalities they create have received less empirical attention, partly because of the challenges involved in their identification. Following the opening of the Panama Canal, the number of ships stopping at intermediate South-American ports suddenly declined. We study how this even affected the decline and structural transformation of west-coastal cities in Chile. Our identification strategy exploits the interaction between the relative geographical position of cities and the post-opening period.
"The Teacher Labor Market: Allocation Rules, Sorting and Incentives" (with S. Giardili)Many countries assign teachers to public schools using a centralized matching algorithm based on teachers’ preferences and schools’ priorities. In this paper, we study how the design of the teacher labor market affects teachers’ performance and student achievement. Making use of novel data from Argentina, we first perform a critical assessment of teachers’ preferences in relation to school characteristics and locations. Second, we exploit the discontinuities induced by the clearinghouse mechanism to assess the effect of contract/matching types on teachers’ performance.