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Ömer Faruk Koru
I’m an Assistant Professor of Economics at Wesleyan University.
I received my Ph.D. in Economics from the University of Pennsylvania in 2021.
My research focuses on macroeconomics, labor economics, and public economics.
Contact: okoru@wesleyan.edu
Working Papers
Changing Jobs to Fight Inflation: Labor Market Reactions to Inflationary Shocks
Reject and Resubmit, American Economic Journal: Macroeconomics
Inflationary shocks affect allocative efficiency by changing the rate and the characteristics of workers’ job-to-job transitions. Empirically, we show that (1) inflationary shocks lead to higher job-to-job transition rates and lower real wage growth among switchers, and (2) workers with higher inflation expectations search more. Then, we build an equilibrium model of directed search in which higher-than-expected inflation reduces real wages, prompting workers to search more actively on the job and target lower wages than they otherwise would. The output response becomes ambiguous: while job-to-job transitions increase, the efficiency gains per transition decrease. The calibrated model resolves this ambiguity in the U.S. economy: small deflationary shocks (e.g., 2%) increase output in the short run, while inflationary shocks and large deflationary shocks decrease it.
Automation and Top Wealth Inequality
This paper studies the impact of automation on wealth concentration in the United States using a dynamic model with a task-based framework and collateral-constrained entrepreneurs. Automation is shown to increase wealth inequality by boosting income concentration and widening capital return dispersion. The calibrated model explains about one-third of the observed rise in the top 1% wealth share. Welfare analysis shows automation raised worker welfare by 5% and entrepreneur welfare by 8%, underscoring its role in expanding wealth inequality through increased capital and entrepreneurial returns.
Technology Adoption by Firms and Distribution of Factor Income
This paper examines how a decrease in capital costs affects factor income distribution through its varied impact across firms. Using a directed search model with convex vacancy posting costs, I explore how firms manage vacancy expenses by either raising wages to improve hiring rates or increasing automation to reduce labor needs. The model shows that more productive firms tend to automate more, and as capital prices fall, automation rises, leading to a lower labor share, a higher wage premium for non-routine workers, and increased residual wage dispersion. Quantitatively, the model suggests that the aggregate decrease in labor share is balanced by an increase in capital share, resulting in a net seven percentage point decline. Additionally, unemployment risk creates inefficiencies, which can be mitigated through progressive taxation and capital subsidies, enhancing the welfare of the new generation.
Published
Automation and Top Entrepreneurial Income Inequality
Journal of Economic Theory (2026)
This paper develops a theoretical framework linking automation to the thickness of the top entrepreneurial income distribution, which is approximated by a Pareto distribution. In the model, entrepreneurs face convex labor costs, creating diseconomies of scale. Automation enables them to substitute capital for labor, mitigating the diseconomies and increasing returns to entrepreneurial skill, resulting in a decline in the Pareto parameter and a rise in top entrepreneurial inequality. I test the model’s predictions using U.S. industry-level data on entrepreneurial income and CEO compensation, as well as firm-level data on employment and capital intensity. Consistent with the model’s predictions, greater automation is associated with lower Pareto parameters of the top entrepreneurial income and employment distributions, as well as wider capital-intensity gap among top firms.
Work in Progress
Optimal City Level Progressive Taxation
Impact of Export Intensity on Productivity Dispersion and Welfare (with Yaming Chang)