Working Papers

"Disappearing Schumpeterian Growth: From Superstar Scaling to Arrested Dynamism"

Abstract: This paper studies the rise in the sales share of the largest 0.01% of U.S. firms between 1985 and 2023 and its implications for productivity growth. I show that top-share growth became increasingly reliant on M&A consolidation as non-mechanical expansion weakened. Within the top 0.01%, productivity growth shifted from within-firm improvement toward reallocation, while selection dynamics deteriorated. CS-DiD event studies show that acquisitions during the transition period are associated with weaker productivity growth without meaningful markup increases. I develop a structural model showing how rising organizational frictions and incumbent rents jointly underlie the transition from superstar scaling to arrested dynamism.

"The Macroeconomic Implications of the Market for Ideas" [Draft coming soon]

"The Dynamics of Firm Size Inequality: The Role of Acquisition and Innovation"

Abstract: I study how the interaction between large acquirers and small targets shapes upper tail firm size inequality via acquisition and innovation. Empirically, I compile a new dataset, tracking dynamic ownership of public and private firms, along with their patents from in-house development or acquisitions. I identify three innovation channels through which acquisitions drive firm growth: (i) acquirers develop more innovations using target firms' patents; (ii) acquirers use acquisitions to expand into new areas; (iii) acquisitions shield acquirers’ innovations from becoming technologically obsolete. Using firm random growth theories, I derive the dynamics of firm size distribution based on the dynamics of individual firms, modeling the growth of acquiring firms as a jump-diffusion process consistent with the empirically uncovered innovation channels. I find that acquisitions increase stationary firm size inequality and lead to a faster rise in inequality at the upper tail of firm size distributions.

"Firm Dynamics and Innovation: Evidence from Decomposing Top Sales Shares" 

Abstract: What do changes in top sales shares signal about changes in firm dynamics? I use an accounting decomposition to identify two sources of top sales share growth: (i) incumbent top firms grow bigger; (ii) new top firms replace old top firms. Over the 1950-2019 period, incumbent top firms contribute about four times as much as new top firms to the growth of sales share accrued to the top 0.01% firms in the US economy. I then build an analytical framework to estimate a firm dynamics process in which firms grow in response to an own innovation shock and shrink at the impact of a creative destruction shock using the empirical decomposition terms of top share growth. I find that own innovation is the major force that drives top sales share growth. The decline in the top sales shares in the 1980s is associated with a higher aggregate productivity growth, while the rise in the top sales shares since the late 1990s implies a slightly lower productivity growth.

"Employment during the COVID-19 Pandemic: Collapse and Early Recovery" 

with Tam Mai

Abstract: We use monthly Current Population Survey data to document employment changes during the COVID-19 pandemic at the occupation, industry, and metropolitan statistical area (MSA) levels. Over March-April 2020, jobs losses are larger for occupations with higher physical proximity or lower work-from-home feasibility, especially for lower-paying occupations. Nonessential industries also see greater declines in employment. Such occupational and industrial susceptibility to COVID-19 contributes to the variation in employment changes across MSAs: Employment shrinks more for MSAs with larger pre-crisis fractions of workers employed in occupations with higher infection risk. Over April-June 2020, occupations and industries that are hit harder recoup more jobs, but the recovery is only partial. Moreover, the gains are concentrated in lower-paying occupations and a few industries. Taken together, these abrupt changes in employment following the COVID-19 outbreak are unprecedented and potentially have longterm implications for occupational inequality and regional disparity.

"Income Inequality and Mortgage Credit Allocation"

Abstract: This paper studies how income inequality at the Metropolitan Statistical Area (MSA) level affect mortgage credit allocation along the income distribution of households within MSAs. I find that MSAlevel income inequality has heterogeneous effect on household-level mortgage debt accumulation. Two measures of inequality, the ratio of 95th-to-80th percentile (p95/p80) and the ratio of 80th-to-50th percentile (p80/p50) of household income, exhibit significant impact. With respect to credit approval along the income distribution, high p95/p80 inequality works more in favor of low-income households while high p80/p50 inequality benefits high-income households more.

Work in Progress 

"Frontier Creation or Adaptive Imitation? Identifying Innovation Dynamics among Shanghai R&D Firms" 

with Jinyue Tang (SJTU) and Qinshu Xue (SJTU)

This project develops a framework to distinguish genuine technological innovators from imitators among R&D-active firms in Shanghai by linking patent-based knowledge flows to an endogenous model of innovation and imitation. Using rich patent text, citation, and firm-level data, the study measures how firms’ inventive activities relate to the technological frontier and identifies a productivity threshold that governs whether firms engage in frontier-creating or adaptive innovation. The framework provides new insights into the micro-foundations of industrial growth and the dynamics of technological catch-up in emerging economies. 

"M&A and the Reorganization of Inventive Human Capital"

with Ke Shi (SJTU)

This project examines how mergers and acquisitions affect the organization of innovation and the allocation of innovative talent across firms. By studying the interaction between corporate restructuring and technological change, we investigate how acquisitions influence firms’ innovative capacity, knowledge accumulation, and long-run economic growth. The project contributes to a broader understanding of how market structure shapes innovation and the distribution of productive capabilities in the economy. 

"Enforcement, Product Quality, and Firm Dynamics"

with Mai Li (Peking U)

This project examines how regulatory institutions shape firm dynamics and market outcomes. By studying the interaction between firm incentives, product quality, and competition, it investigates how policy design influences innovation, resource allocation, and the evolution of market structure. The project contributes to a broader understanding of how institutional environments affect productivity growth and economic performance.

"Spatial Consumption Inequality, Firm Dynamics and Economic Growth"

with Tuo Chen (Tsinghua U)

This project examines the relationship between innovation, technology diffusion, and economic growth. It studies how firms’ strategic responses to technological opportunities shape the evolution of product markets, productivity growth, and competitive dynamics. The project contributes to a broader understanding of the forces governing the creation, diffusion, and economic impact of new technologies.

"The Geography of Firm Growth in China"

with Yanren Zhang (Fudan)

This project explores how organizational networks influence firm dynamics, the diffusion of knowledge, and long-run economic development. It studies how connections among firms shape the allocation of resources, the spread of productive capabilities, and the evolution of economic activity across regions. More broadly, the project seeks to understand how networks, market structure, and spatial frictions interact to generate differences in productivity, growth, and regional inequality.

Publications (in Biomedical Science, from previous PhD study)

• Shi, A., Liu, O., Koenig, S., Banerjee, R., Chen, C. C. H., Eimer, S., & Grant, B. D. (2012). RAB-10-GTPase–mediated regulation of endosomal phosphatidylinositol-4, 5-bisphosphate. Proceedings of the National Academy of Sciences, 109(35), E2306-E2315. 

• Sun, L., Liu, O., Desai, J., Karbassi, F., Sylvain, M. A., Shi, A., & Grant, B. D. (2012). CED-10/Rac1 regulates endocytic recycling through the RAB-5 GAP TBC-2. PLoS genetics, 8(7), e1002785.

• Liu, O., & Grant, B. D. (2015). Basolateral endocytic recycling requires RAB-10 and AMPH-1 mediated recruitment of RAB-5 GAP TBC-2 to endosomes. PLoS genetics, 11(9), e1005514.

• Wang, P., Liu, H., Wang, Y., Liu, O., Zhang, J., Gleason, A., & Grant, B. D. (2016). RAB-10 promotes EHBP-1 bridging of filamentous actin and tubular recycling endosomes. PLoS genetics, 12(6), e1006093.

• (In Chinese) Li XT, Yuan YL, Xia YY, Yu BZ, Zhang TJ, Liu O., Lv XZ, Zhan SY. (2009). Genetic polymorphism of glutathione-S-transferase M1 and T1: a systematic review in Chinese population and a pilot study in smear-positive pulmonary tuberculosis cases of Jilin province. Chinese Journal of Epidemiology, 30(5):502-6.