Michele Fornino

PhD Candidate in Economics

About Me

I am an Economics PhD Candidate at the Massachusetts Institute of Technology (MIT) in Cambridge, MA, USA.

My research revolves around the long run effects of automation on the functioning of labor markets. Other topics of interest include the effect of fiscal policy, and modeling labor market frictions in the presence of heterogeneous firms. Methodologically, my papers are both theoretical and empirical, with a focus on quantitative numerical work.

I grew up in Saluzzo, Italy. My name can be tricky to pronounce.

  • Research interests: Macroeconomics, Economics of Automation, Labor Economics.

  • Things I love doing: Learning, Teaching, Coding

  • Skills: MATLAB Julia Python Stata R C/C++ LaTeX Linux Git/GitHub

Research

Automation and the Future of Work: Assessing the Role of Labor Flexibility

September 2020 | joint with Andrea Manera | R&R at Review of Economic Dynamics

Job Market Paper | Latest Version | Slides

We study the economic incentives for automation when labor and machines are perfect substitutes. Labor may still be employed in production, even when it is a costlier input than robots on a productivity-adjusted basis. This occurs if firms face uninsurable idiosyncratic risk, adjusting the stock of machines is costly, and workers can be hired and fired quickly enough. Even though labor survives, jobs become less stable, as workers are hired in short-lived bursts to cope with shocks. We calibrate a general equilibrium, multi-industry version of our model to match data on robot adoption in US manufacturing sectors, and use it to compute the employment and labor share consequences of progress in automation technology. A fall in the relative price of robots leads to relatively few jobs losses, while reductions in adjustment costs, or improvements in relative robot productivity, can be far more disruptive. The model-implied semi-elasticity of aggregate employment to robot penetration ranges between 0.01% and 0.1%, depending on the underlying source of increased robot adoption. Adding reduced-form hiring and firing costs to our benchmark model reveals that the scare of automation is justified when regulations impose substantial rigidity on employment relations.

Firm Heterogeneity, Wage Rigidity, and the Labor Market

May 2018 | joint with Elia Sartori

Latest Version | Slides

We present a wage posting model with search frictions where idiosyncratic shocks to optimal firm size generate different returns to adjusting the workforce. Our approach takes the firms as the only decision makers, and it assumes a simple employment contract: firms pay a wage and may only change an employment relationship by paying exogenously specified costs. Labor market outcomes are modeled as a mean field game equilibrium in which aggregate statistics impacting firms’ policies, which play the role of prices, are the hiring and poaching flow rates. Consistency of aggregate choices with prices builds on a reduced form matching function which subsumes the entire functioning of the labor market outside of firms. Leveraging and extending recently developed numerical methods, we can solve for the equilibrium. The model delivers nontrivial policy functions and aggregates, which can be used to quantify features of the endogenous reshuffling of workers both in the size ladder and in the wage ladder, including net poaching along these two margins, as presented in, e.g., Haltiwanger et al. (2017). A calibrated version of the model is able to generate an inverted net poaching schedule which is consistent with their finding that smaller firms poach workers from larger ones.

The Consumption Multiplier of Government Purchases: Evidence from U.S. States

February 2017

Latest Version | Slides

We analyze evidence from US states to compute the open economy relative multiplier along the lines of Nakamura and Steinsson (2014). Identification of exogenous government spending shocks is achieved by exploiting the secular tendency of some states to receive a disproportionate share of military spending relative to others. Our contribution is twofold. First, we gather additional procurement data to extend the previous series until 2013, thus including the Great Recession and its aftermath. Second, to our knowledge, this is the first attempt at analyzing the effects of military spending shocks on an aggregate consumption measure at state level. Estimated short run multipliers on output range between 1.3 and 1.6. There is some weak evidence that points to a positive effect on private consumption in the short run. Nonlinearities in the estimated multipliers seem to play a much more important role: both output and consumption respond sharply when unemployment is relatively high, or since the onset of the Great Recession. We use these estimates as a diagnostic tool to evaluate the performance of competing models of the economy. The strong evidence pointing to state-dependent multipliers, even after controlling for monetary policy, seems to be consistent with the predictions of a New-Keynesian model with credit-constrained consumers.

Work Experience

MIT

http://economics.mit.edu/

Teaching and Research Assistant

March 2016 - Present

This is my current position. In Spring 2021, I will be a teaching assistant in 14.02 - Principles of Macroeconomics, and 14.33 - Research and Communication in Economics: Topics, Methods, and Implementation.

From September 2017 through May 2020, I was teaching assistant for 14.02 - Principles of Macroeconomics. Assisted Professors Ricardo Caballero, Martin Beraja, and Jim Poterba. Performed as a Head TA for 4 consecutive semesters.

From March 2017 through August 2017, I was research assistant for Professor Daniel Greenwald at MIT Sloan School of Management. Tasks included writing model equations in a Python script, which was then passed to a toolbox designed and written by the professor.

From March 2016 through September 2016, I was research assistant for Visiting Professors Emi Nakamura and Jón Steinsson on the project ‘High Frequency Identification of Monetary Non-Neutrality: The Information Effect’. Tasks included the implementation of the SMM estimation of the model and design of the bootstrap procedure, both of which carried out in MATLAB.

Bocconi University

https://www.unibocconi.eu

Teaching and Research Assistant

September 2014 - June 2015

I worked as a research assistant for Professor Tommaso Monacelli on various projects including ‘Understanding the Gains from Wage Flexibility: The Exchange Rate Connection’. Tasks included writing MATLAB code of simulations, as well as econometric analyses in Stata.

During this period, I was also a teaching assistant for the undergraduate classes 30026 - Monetary Economics and 30029 - Intermediate Microeconomics.

IGIER

http://www.igier.unibocconi.it/

Intern

June 2014 - August 2014

Self-Confirming Equilibria in Macroeconomics

The curricular internship was a requirement of the Master of Science in Economics and Social Sciences at Bocconi University. I worked under the supervision of Professor Simone Cerreia-Vioglio. Tasks included performing a literature review on the topic of the application of the game-theoretic concept of Self-Confirming Equilibrium in Macroeconomics. I wrote a short paper summarizing my findings and proposing possible future avenues for research on the topic.

Paper

Bulgarian National Bank

http://www.bnb.bg/?toLang=_EN

Summer Intern

July 2013 - August 2013

Structuring and analyzing results from an external competitiveness study based on shift-shares analysis of export growth

My first work experience was a four-weeks-long internship in Sofia, Bulgaria, under the supervision of Georgi Momchilov. I was tasked to organize the results of the shift-shares decomposition of export growth that the research department had just performed. The work culminated in a short paper and a presentation that I had to give in front of the entire research department of the BNB.

Paper | Slides

Education

MIT

PhD in Economics

August 2015 - Present

Graduation expected in June 2021. GPA: 4.9/5.0

Advisors: Daron Acemoglu, Martin Beraja, Ricardo Caballero.

Majors: Macroeconomics, Public Economics.

Minors: International Economics, Time Series.

Bocconi University

MSc in Economics and Social Sciences

September 2012 - December 2014

Summa cum laude. GPA: 30.28/31

Advisors: Tommaso Monacelli, Francesco Giavazzi.

Thesis: Fiscal Policy in a Monetary Union: New Evidence from US States

Bocconi University

Bachelor in Economics and Social Sciences

September 2009 - November 2012

Summa cum laude. GPA: 30.43/31

Advisor: Tommaso Monacelli

Final Paper: Financial Frictions and the Labor Wedge: Evidence from U.S. Metropolitan Areas

A Little More About Me

Awards

Languages: Italian (Native), English (Proficient), French and Spanish (Reading Competence).

Hobbies and Charity

  • I manage a private, Linux-based server. I used it to provide access to course materials to Chinese students behind the Great Firewall during the COVID-19 pandemic in Spring 2020, using an SFTP server.
  • I donate computing time to BOINC projects Einstein, LHC, and SETI. Here are my stats!
  • Slowly, slowly learning Modern Standard Arabic on Duolingo, إن شاء الله.
  • I love soccer and I am a huge fan of F.C. Internazionale Milano. I played for the ‘MIT Economics’ intramural soccer team between 2016 and 2019. I was captain in 2019.
  • I try to exercise daily by either running or lifting weights.