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Junior Economist Spotlights

Katarína Borovičková

Katarina Borovickova

Katarína Borovičková is an economist in the Research Department of the Federal Reserve Bank of Richmond. She earned her doctorate from the University of Chicago in August 2012 and, until 2022, held an assistant professorship at New York University.

Dr. Borovičková’s research interests are centered in labor markets and macroeconomics, with a special interest in understanding the role of heterogeneity. In one line of research, she studies the role of worker heterogeneity in determining duration dependence in job finding probability as well as in price changes of products. Another line of research studies fluctuations in the labor market, specifically the role of discount rates fluctuations in explaining cyclicality of the unemployment rate. She is also interested in understanding pre-labor market determinants of career choices.

It is a well-documented fact that the average job-finding probability of workers who have just become unemployed is higher than of those who have been unemployed for several months. In her paper with Fernando Alvarez and Robert Shimer “Decomposing Duration Dependence in a Stopping Time Model,” they develop and estimate an economic model which features two different mechanisms for generating this pattern: structural duration dependence where the job-finding probability of every worker decreases with duration, and heterogeneity across workers which leads to dynamic selection of workers, which changes the composition of unemployed workers over unemployment duration towards those with low job-finding probability. They find support for both mechanisms, but heterogeneity is the dominant force behind decreasing average job-finding probability, especially during the first six months of unemployment. The paper is accepted for publication in the Review of Economic Studies.

In a recent NBER working paper “Consistent Evidence on Duration Dependence of Price Changes”, Dr. Borovičková works jointly with Fernando Alvarez and Robert Shimer to develop a new consistent estimator of the baseline hazard in a mixed proportional hazard (MPH) model using duration data with repeated observations. They apply the new estimator to weekly store price data to improve our understanding of macroeconomic models with sticky prices. They find that even when controlling for unobserved heterogeneity in firm’s pricing frequencies, the hazard for price changes is decreasing. Nevertheless, they recover substantial unobserved heterogeneity across products. Using a sticky price model where firms follow heterogeneous time-dependent pricing rules they show that the micro-structure of heterogeneity affects the response of output to a monetary policy shock. This paper is currently in a revise and resubmit status at the AER.

In her NBER working paper “High Wage Workers Work for High Wage Firms”, she collaborates with Robert Shimer to create a new method of measuring the correlation between the types of matched workers and firms. Using guidance from theoretical models of sorting, they define the worker and firm types to be expected wages that they receive (workers) and expected wages they pay (firms), and show that in theoretical models, the correlation between these types reflects the extent of sorting. They apply this estimator to matched employer-employee data from Austria and find this correlation to be positive and high, between 0.4 and 0.6. This is contrary to the previous literature which finds that the correlation between worker and firm types, as measured by worker and firm fixed effects, is zero. Hence, this paper finds evidence for sorting in the labor market.

Dr. Borovičková is currently working on several other projects:

  • Understanding heterogeneous career dynamics behind differences in life-time labor income ("Heterogeneous Job Ladders" with Claudia Macaluso)
  • Studying the role of fluctuations in risk premia in explaining employment dynamics (“Risk Premia and Unemployment Fluctuations” with Jaroslav Borovička)
  • Estimating how the decision where to apply to college is affected by friends (“Peer Effects in College Applications” with Angela Crema and Anusha Nath)
  • Understanding determinants of gender and racial gaps in initial wages of individuals just entering the labor market (“Pre-Labor Market Determinants of Labor Market Outcomes” with Anusha Nath)
  • Studying job and worker flows in response to labor market policies and productivity shocks (“Job Flows, Worker Flows and Labor Market Policies”)

When she’s not thinking about economics, she enjoys family trips, art projects with her kids (home-made piñata is a big hit), biking and hiking.