Luke Heath Milsom

P.h.D. candidate in Economics at the University of Oxford.

I work on questions in urban and spatial economics/ international trade, development economics, and public economics.

I am on the 2022/23 job market and will be available for interviews at the EJM, and AEA.


Job Market Paper


Spatial inequality within countries is a pervasive and persistent phenomenon. How does the connectivity of place determine underlying spatial inequality of opportunity? To answer this question, I derive a sufficient statistic result linking local opportunity to market access terms, developing a framework consistent with a broad class of spatial general equilibrium models. I empirically validate this result using a novel not-on-least-cost-path identification strategy and data from historical road maps in Benin, Cameroon, and Mali covering 1970 to 2020, that I digitize. Using these estimates to parameterize a structural case of the spatial model, I show that road building alters the spatial distribution of opportunity. By considering each possible road upgrade I show that although some roads decrease the standard deviation of opportunity by more than 2%, others increase inequality by a similar amount. By fixing the spatial distribution of opportunity I show that to achieve similar reductions in inequality by moving people, a prohibitively large number would need to migrate from low- to high-opportunity areas - between 13% and 44% of the low-opportunity areas' population. Policymakers also face an equity-efficiency trade-off: 4 out of the top 10 aggregate opportunity-increasing roads also increase spatial inequality of opportunity.


(2022) LEAP, Bocconi; EWMES, Berlin; NEUDC, Yale; CEP Junior trade workshop, LSE; OxDev, Oxford; American Urban Economics Association Summer Meeting, World Bank DC; Infra4Dev (World bank/ IGC), online; 7th Lindau Meeting on Economic Sciences, Lindau; Development Economics Workshop, ARE UC Berkeley; European Urban Economics Association Meeting, LSE; Royal Economic Society Young Economist Symposium, Online; African Meeting of the Econometric Society, Online; Warwick Ph.D. conference, Warwick; Applied Microeconomics Workshop, Oxford; (2021) CSAE Conference, Oxford; Development Economics Workshop, Oxford; Newcastle Ph.D. Economics Conference, Newcastle; (2020) American Urban Economics Association Workshop, Online; (2019) Applied Microeconomics Workshop, National University of Singapore; CSAE Conference, Oxford.

Working Papers

Spatial Inequality of Opportunity in West Africa.

R&R Journal of Public Economics

Working Paper

In this paper, I quantify and study the consequences of, spatial inequality of opportunity in Benin, Cameroon, and Mali. To do this, I first estimate the causal effect of growing up in each locality in each year on the probability a child completes primary education, using a movers design. On average, moving to a one standard deviation better location at birth increases a child’s probability of completing primary school by 15.0 percentage points, but the extent to which place matters varies over countries and spatial differences don’t attenuate over time. Place matters more for girls than boys and whereas urbanization and access to electricity are associated with greater gender inequality of opportunity, employment in agriculture has the opposite effect. Finally, I show that there is a negative relationship between regional inequality of opportunity and aggregate development, implying that there are potential welfare gains from equalizing opportunity.

The Butcher, the Brewer, or the Baker: The Role of Occupations in Explaining Wage Inequality.

Working Paper

Google does not pay its canteen chefs the same premium as it does its software engineers; there is heterogeneity in pay premia within a firm. To study the implications of this observation, we estimate a two-way, worker-job, fixed effect model that builds upon the canonical model by Abowd et al. (1999) by allowing for within-firm heterogeneity. Estimating our model on UK administrative data, we find that even if workers, and firms, were identical, 25% of current log-wage variance would remain, due solely to heterogeneity between occupations. We further document that worker heterogeneity accounts for a relatively small proportion of log-wage variance, and that between-firm pay heterogeneity is more important in higher-wage occupations and larger labour markets.

Minimum Wages and the China Syndrome: Causal Evidence from US Local Labour Markets.

Working Paper

Exposure to Chinese import competition led to significant manufacturing job losses in the United States. Local labor markets, however, differ significantly in how they fared with respect to manufacturing employment. An important question is whether labor market institutions have an impact on the dynamic response of manufacturing employment to rising import penetration. We contribute to this debate by showing that minimum wages amplified the negative effect of Chinese import penetration on manufacturing employment in US local labor markets between 2000 and 2007. We develop a rigorous double-edged identification strategy. First, we construct shift-share instrumental variables to address the endogeneity of import penetration. Second, we use a border identification strategy to distinguish the effects of minimum wage policies from the effects of other local labor market characteristics that are unrelated to policy. Specifically, we rely on comparing commuting zones that are contiguous to each other but located in different states with different minimum wage policies. The approach essentially considers what happens to the response of manufacturing employment to import penetration when one crosses a policy border.

Gravity in International Finance: Evidence from Fees on Equity Transactions.

Working Paper

We shed light on the role of cross-border bank linkages in international trade in equity underwriting services. Bank linkages are measured with three variables based on security underwriters' co-membership of underwriting syndicates. We estimate theory-consistent gravity equations on a novel panel data set on revenue earned from equity securities underwriting transactions. Our data set covers 91,511 deals across 122 countries of origin and 145 countries of destination for the period 2000-2015. Our gravity equations control for importer-time, exporter-time, and country-pair fixed effects. We find that increased connectivity between underwriters in a given country pair is associated with a statistically and economically significant increase in trade flows. In addition, the effects are shown to be persistent, i.e. new connections between underwriters in a given country-pair lead to an increase in trade flows between these two countries in subsequent years. We also find that new connections between banks in a given country-pair lead to trade diversions from countries competing for similar imports. We conjecture that the mechanism for this effect is the role that syndicates play in reducing information asymmetry and present evidence supporting this conjecture. We show that increases in syndication ties have a stronger effect on flows of equity underwriting services when information frictions between the trading partners are more severe.

Work in Progress

Moving to Possibility. Migration and Deviations from Expected Utility in Spatial Equilibrium.

Labour of Love: Search for Occupational Meaning and Worker Welfare. With Hannah Zillessen, and Shihang Hou.

Reference Dependent Social Planners and Fallible Welfare functions. With Hannah Zillessen.

Published Papers

The COVID-19 pandemic has seen the emergence of digital contact tracing to help to prevent the spread of the disease. A mobile phone app records proximity events between app users, and when a user tests positive for COVID-19, their recent contacts can be notified instantly. Theoretical evidence has supported this new public health intervention, but its epidemiological impact has remained uncertain. Here we investigate the impact of the National Health Service (NHS) COVID-19 app for England and Wales, from its launch on 24 September 2020 to the end of December 2020. It was used regularly by approximately 16.5 million users (28% of the total population), and sent approximately 1.7 million exposure notifications: 4.2 per index case consenting to contact tracing. We estimated that the fraction of individuals notified by the app who subsequently showed symptoms and tested positive (the secondary attack rate (SAR)) was 6%, similar to the SAR for manually traced close contacts. We estimated the number of cases averted by the app using two complementary approaches: modelling based on the notifications and SAR gave an estimate of 284,000 (central 95% range of sensitivity analyses 108,000–450,000), and statistical comparison of matched neighbouring local authorities gave an estimate of 594,000 (95% confidence interval 317,000–914,000). Approximately one case was averted for each case consenting to notification of their contacts. We estimated that for every percentage point increase in app uptake, the number of cases could be reduced by 0.8% (using modelling) or 2.3% (using statistical analysis). These findings support the continued development and deployment of such apps in populations that are awaiting full protection from vaccines.

Epidemiological changes on the Isle of Wight after the launch of the NHS Test and Trace programme: a preliminary analysis.

The Lancet Digital Health, 2020

With Michelle Kendall; Lucie Abeler-Dörner; Chris Wymant; Luca Ferretti; Mark Briers; Chris Holmes; David Bonsall; Johannes Abeler; Christophe Fraser

Paper, Replication files

We observed significant decreases in incidence and R on the Isle of Wight immediately after the launch of the Test and Trace programme. The Isle of Wight had a marked reduction in R, from 1·3 before the Test and Trace programme to 0·5 after by one of our measures, and went from having the third highest R before the Test and Trace programme, to the twelfth lowest afterwards compared with other UTLAs. Our results show that the epidemic on the Isle of Wight was controlled quickly and effectively after the launch of Test and Trace.

Acceptability of App-Based Contact Tracing for COVID-19: Cross-Country Survey Study.

JMIR mHealth and uHealth, 2020

With Samuel Altmann; Hannah Zillessen; Raffaele Blassone; Frederic Gerdon; Ruben Bach; Frauke Kreuter; Daniele Nosenzo; Séverine Toussaert; Johannes Abeler

Paper, Replication files

Epidemiological evidence shows that app-based contact tracing can suppress the spread of COVID-19 if a high enough proportion of the population uses the app and that it can still reduce the number of infections if uptake is moderate. We found strong support for the app under both regimes, in all countries, across all subgroups of the population, and irrespective of regional-level COVID-19 mortality rates. We investigated the main factors that may hinder or facilitate uptake and found that concerns about cybersecurity and privacy, together with a lack of trust in the government, are the main barriers to adoption.