Edoardo Maria Acabbi


Academic positions

Assistant Professor, Universidad Carlos III de Madrid (Sep. 2020 - )
Visiting Scholar, Northwestern University (Fall 2022, Fall 2023)


Ph.D. in Business Economics, Harvard University (Sep. 2014 - May 2020)
M.Sc. in Economics and Social Sciences, Bocconi University (Sep. 2010 - April 2013)
B.A. in International Economics and Management, Bocconi University (Sep. 2007 - Oct. 2010)


Bertheau, Antoine, Acabbi, Edoardo M., Barcelo, Cristina , Gulyas, Andreas , Lombardi, Stefano , and Saggio, Raffaele
The Unequal Consequences of Job Loss across Countries.
2023, American Economic Review: Insights, Vol. 5, No. 3, pages 393-408
NBER working paper version
Media Coverage: VoxEu.org, World Economic Forum and The Conversation Global in English, LaVoce.info in Italian, The Conversation España in Spanish, Portuguese Economy Research Report in English.

Abstract. We document the consequences of losing a job across countries using a harmonized research design applied to seven matched employer-employee datasets. Workers in Denmark and Sweden experience the lowest earnings declines following job displacement, while workers in Italy, Spain, and Portugal experience losses three times as high. French and Austrian workers face earnings losses somewhere in between. Key to these differences is that southern European workers are less likely to find employment following displacement. Loss of employer-specific wage premiums explains a substantial portion of wage losses in all countries.

Working Papers

Acabbi, Edoardo M., Panetti, Ettore and Sforza, Alessandro (2023).
The Financial Channels of Labor Rigidities: Evidence from Portugal. Online appendix Additional material
Best paper on “Savings and Financing of the Portuguese Economy”, Office of Strategy and Studies (GEE) of the Portuguese Ministry of Economy and the Portuguese Association of Insurers (APS)
Blog post about the paper (courtesy of Thorsten Beck)
Media coverage: Portuguese Economy Research Report in English.
NEW VERSION! (September 2023)

Abstract. We study how labor rigidities affect firms' responses to credit shocks. Using administrative data on workers, firms and banks in Portugal, we establish three results. First, a short-term credit supply shock leads to a decrease in firms' employment and a greater probability of exit, but effects are concentrated in firms deriving greater value added from labor. Second, the shock disproportionately affects productive firms with a highly-skilled labor force, requiring greater investment in on-the-job training. Third, high firm productivity does not attenuate the effects of credit shocks. Our findings indicate that labor rigidities hinder productivity-enhancing reallocation throughout financial crises.

Acabbi, Edoardo M., Alati, Andrea and Mazzone, Luca (2023).
A Labor Market Sorting Model of Scarring and Hysteresis. Additional material
Part of the VisitInps project.
NEW VERSION! (August 2023)

Abstract. Evaluating the allocative effects of recessions is challenging due to the dynamic and jointly evolving distributions of workers and firms. Workers constantly gain or lose human capital, while the landscape of firms shifts with cyclical vacancy posting, entry and exit. We build a search model with aggregate risk and worker-firm heterogeneity, in which human capital accumulation depends on the sorting of workers to firms. The framework allows us to account for how workers' skills and firms' distributions jointly vary with and in turn impact business cycles. We estimate the model on administrative data and show that persistent negative effects on the productivity of worker-firm matches dominate cleansing effects, with distortions in sorting and human capital accumulation accounting for approximately 60% of cumulative output losses. Our model offers a rationale for the increased length of recessions and their heterogeneous welfare effects across age, income, and human capital distributions.

Sforza, Alessandro and Acabbi, Edoardo M. (2023).
Credit and Firms’ Organization

Abstract. We study the nexus between the organization of firm’s labor and firm credit. We use employer-employee data, firm loans and bank balance sheets to construct an instrument for firm’s credit supply based on firm-bank credit linkages. We conduct an event study and evaluate the importance of credit for the organization of firm’s labor. We show that firms reduce employment of skilled workers and we provide evidence of one possible channel. The re-organization of the firms’ labor structure is connected to the financing of machines and equipments: firms that invested in machines and equipments are more exposed to credit shortages and re-organize by reducing employment of both production workers and specialized workers that are complementary with machines.

Acabbi, Edoardo M. and Alati, Andrea (2021).
Defusing Leverage: Liquidity Management and Labor Contracts.
Part of the VistInps project. Old draft, new version coming soon!

Abstract. Rigidities in firms' payroll adjustment amplify the impact of aggregate fluctuations on fundamentals. We analyze how firms use flexible contracts to decrease this pass-through. Leveraging unique Italian administrative data, we show that firms’ adoption of temporary contracts contributes to a reduction in their variability of cash flows and profits, particularly when their initial labor share is high. We then provide a causal identification of the effect for firms fundamental of a reform liberalizing the use of temporary contracts in 2001. We find that the liberalization of temporary contracts increased their adoption and led to a decline in average labor compensation. The reform translates into a substantial rise in profit margins and a reduction in the cross-sectional standard deviation of profits, but only among firms characterized by initially more rigid labor costs.

Other writings

Molti elogi, ma la riforma del lavoro spagnola ha tanti limiti , with Silvia Vannutelli, June 3rd 2023, article for Il Foglio

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