Max Brès

Working papers

Aging Consumers, Competition and Growth 

with Daniele Angelini

As people age, their preferences become less elastic and the opportunity cost of time drops after retirement, influencing purchasing behaviour. Hence, demographic changes affect competition by altering the age composition of consumers, carrying substantial macroeconomic implications. We identify this demand-side channel of demographic changes using unexpected shifts in the age composition of foreign consumers. We find that middle-aged consumers reduce competition with respect to younger and older consumers, resulting in lower production and higher prices. In a multi-sector general equilibrium search model we show that young consumers enhance between-varieties competition and old consumers enhance within-varieties competition. Conversely, middle-aged consumers reduce competition on both margins, shifting demand to less productive firms, thus raising average prices and slowing economic growth. In the United States, changes in the age composition of consumers led to an 8.7% reduction GDP growth from 1995-2004 and a 10.3% increase from 2005-2019 as baby-boomers aged.

Future versus Today's Improvements: The Trade-off of Place-Based Policies 

with Philipp Kircher and David Koll

This paper provides causal evidence on the impact of subsidy re-allocation between high-technology sectors and low-skill sectors on local labor markets. We exploit a policy targeting under-performing employment areas, France’s Aides à Finalité Régionale, which relaxes rules governing the allocation of firm subsidies while keeping their level constant. In response, policy makers re-allocate subsidies away from research and development to mainly low-skilled manufacturing and service sectors. It triggers a persistent improvement of employment, mainly through increased low-skilled manufacturing employment and at the expense of R&D related occupations. In the long term, though, labor income and productivity decrease. Finally, at the individual level, workers employed in manufacturing at the time of the treatment benefit on average of 2% higher hourly wage even 10 years after the policy was lifted.