Research
Publications
Crescioli, T. (2024). “Reinforcing Each Other: How the Combination of European and Domestic Reforms Increased Competition in Liberalized Industries” (link). The European Journal of Political Economy.
There is a consensus over Europe’s transformation into a highly competitive economy through a series of ambitious pro-competition reforms. However, both the European Commission and national actors have legislative authority over competition policies. Thus, who are the critical actors behind this legislative and economic transformation in this multi-level system? Focusing on the liberalization of state-owned industries and using a staggered difference-in-differences approach, the paper shows that the effectiveness of European directives in decreasing firm-level market power increased with the extent of preceding domestic pro-competition reforms. For every unit increase of the early domestic reform index, EU directives decrease market power in liberalized industries by an additional 7.8%. However, this effect is not significant in countries that did not reform their industries ex-ante. This finding contradicts the established view in the literature identifying the Commission as the dominant force driving this transformation, which implemented ambitious reforms by often overcoming the resistance of reluctant national governments. Instead, it is shown that the effectiveness of the Commission’s reforms depends on the support of domestic actors and compatible national institutions.
Crescioli, T. & Spataro, L. (2023). “How Much Capital Should Be Taxed? A Review Of The Quantitative And Empirical Literature”. Journal of Economic Surveys (link).
This paper reviews the literature providing quantitative and empirical results on capital taxation. In doing this, we differentiate between individual and corporate taxes, respectively. From existing literature, it emerges that capital income taxes for individuals increase with the degree of heterogeneity within the population, market competition, and the economy's maturity, being negative (i.e., subsidy) in the presence of monopolistic competition or developing countries, no higher than 15% in Mirrleesian economies and as high as 45% when coupled with incomplete insurance markets and labor income taxes in competitive-closed economies. Excessively high wealth tax rates for redistributive purposes, however, are prevented by the larger tax elasticity of rich (−1.15) with respect to poor (−0.09) individuals. Negative tax elasticities concerning employment (from −0.5 to −0.2), innovation (from −2.8 to −1.3), and investments (−4.7) suggest low corporate taxes, whose magnitude should be negatively related to the degree of the economy's openness, given also the possibility for firms to relocate abroad. Finally, although still inconclusive, the main conclusions concerning dividend taxes suggest that tax rates increase with the firm's size and, thus, be set at low levels for start-ups.
Working Papers
Boeri, T., Crescioli, T., Garnero, A., & Luisetto, L. “Collective Bargain and Monopsony: The Case of French Non-Competes Regulation”.
Can collective bargaining mitigate monopsony power? This paper addresses these questions by examining the impact of regulating non-competes in collective bargaining agreements on firm-level markdowns. Using a staggered difference-in-differences approach, we find that non-compete regulation leads to a 1.3%–2.2% reduction in markdowns on average. However, this effect grows over time and is more pronounced for smaller, less productive firms that pay lower wages. Our findings suggest that collective bargaining may be a more effective mechanism for reducing monopsony power than national legislation or individual negotiations.
How does market power affect rich democracies? As the growing market power of large multinational firms has fundamentally changed the opportunity structure for small businesses and their beneficiaries, we try to understand how those economic developments influence European democracies. We argue that growing market power lowers small business owners' trust in key democratic institutions and the functioning of markets, driving them to reject incumbents and shift their support to radical right parties. We employ firm-level, individual-level, and regional-level data on fourteen European countries to test this argument using a series of quasi-experimental methodologies. Our findings indicate that rising market power, measured by combining mergers and increases in market concentration, is associated with the declining economic performance of micro-firms. In turn, mergers and the declining economic share of these firms are robust predictors of anti-incumbent and increased radical right voting both at the individual and constituency levels. This paper provides the first analysis of the effect of market concentration on rich democracies and, in doing so, offers a novel explanation for the surprising radical right support among small business owners in Europe.
How does the interaction between supranational and domestic institutions affect competition? We answer this question by investigating how the Euro has radically changed the rules of the competition game between firms. Using a staggered difference-in-differences design, we find that the Euro, as a supranational institution, has increased firm-level market power between 23 and 30 percent after its adoption. Deepening economic integration creates a stronger competitive environment where superstar firms acquire a dominant position. Consistent with this explanation, the Euro effect on market power is between 8 and 9 percent larger for tradable industries and 10 and 17 percent larger for firms in the top percent of the Eurozone pre-Euro productivity distribution. This rise in market power is mainly driven by changes in labor market power (i.e., lower markdowns) that more than compensate for the increase in product market competition (i.e., lower markups). Counterintuitively, we also find that unions, under certain conditions, can increase the market power of superstar firms. This happens in the presence of domestic cooperation-enhancing institutions that favor agreements between labor and capital and raise firms’ competitiveness by diminishing markdowns. Successful labor-capital cooperation positively impacts workers' attitudes toward further European integration. Our findings contribute to the debate over the rise of global market power by embedding this phenomenon into an institutional framework, creating an inherently European version of the superstar hypothesis.
Crescioli, T. “Aligned Interests and Competition Policy: The Case of European Liberalization Reforms”.
This paper develops a game-theoretic model to study how the interaction between supranational authorities, national governments, and firms shape competition policy. The model is applied to liberalization reforms of the 1990s and early 2000s that transformed European state-owned industries. The main contribution of the paper is that more ambitious policies result from aligned interests between the European Commission and productive firms. This result thus departs from the view that considers the Commission as the agent promoting competition policy independently and in contrast with domestic political and economic interests. The model's predictions are tested using a reduced-form empirical strategy that relies on event-study difference-indifferences .
Crescioli, T., Martelli, A., & Vlandas, Tim. “Schumpeter meets Marx: The Depolarizing Political Economy of Jobless Recoveries”.
The economic determinants and political consequences of labour market changes in advanced capitalist democracies have received substantial attention. Yet, there is disconnect between recent economics literature and political sciences approaches. Indeed, whereas we know that in the US most structural change took place as a result of jobless recoveries, less is known in Europe where labour market institutions differ and most approaches continue to focus on unemployment exposure or levels, most often at the occupational level. It is also not clear whether and how technological adoption shapes the extent and consequences of these adjustment processes. By matching LFS and ESS data with recent information on AI exposure, we show that most structural labour market adjustment in Europe have also occured during jobless recoveries. In addition, surviving workers are paraxodically more satisfied with their income, the economy and the government. However, this hides important and surprising heterogeneity: high skill occupations that are most exposed to AI are the ones where compensation per hour is most negatively affected and therefore demand redistribution, whereas low skill occupations benefit most from theseadjustments. This technologically moderated depolarisation process of jobless recoveries help us make sense of the puzzling lack of relationship between labour market and political polarisation. Thus the process of technological destruction first documented by Schumpeter turns the Marxist expectations on their head: while ICT/Robots for workers substitution is happening in jobless recovery industries, those that are losing are paradoxically high skill workers
Work in Progress
Amengual, M., Crescioli, T., Guasti, A., & Raess, D. “Competition and Labor Standards in Global Supply Chains”.
Crescioli, T., & Parmigiani, A. “Monopsony and Political Behavior”.
Other Writings
Feel free to contact me for working papers not available online.