Search Results
Working Paper
College Access and Intergenerational Mobility
This paper studies how college admissions preferences for lower-income students affect intergenerational earnings mobility. We develop a quantitative model of college choice with quality-differentiated colleges. We find that admissions preferences substantially increase lower-income enrollment in selective colleges and intergenerational earnings mobility. The associated losses of aggregate earnings are very small.
Working Paper
On the Transition to Sustained Growth: The Importance of Recent Agricultural Employment
We study a model where a single good can be produced using a diminishing-returns technology (Malthus) and a constant-returns technology (Solow). We map the former to agriculture and show that the share of agricultural employment declines at a constant rate during the economic transition and that recent observations on the share are sufficient to estimate the onset of transition. Our model implies that (i) output growth is higher and increasing after the onset of transition, (ii) during the transition, it is a first-order autoregressive process, and (iii) the rate of decline in the share of ...
Working Paper
Hours Worked and Lifetime Earnings Inequality
We document large differences in lifetime hours of work using data from the NLSY79 and argue that these differences are an important source of inequality in lifetime earnings. To establish this we develop and calibrate a rich heterogeneous agent model of labor supply and human capital accumulation that allows for heterogeneity in preferences for work, initial human capital and learning ability, as well as idiosyncratic shocks to human capital throughout the life-cycle. Our calibrated model implies that almost 20 percent of the variance in lifetime earnings is accounted for by differences in ...
Working Paper
Measuring Geopolitical Fragmentation: Implications for Trade, Financial Flows, and Economic Policy
Recent geopolitical tensions have revived interest in understanding the economic consequences of geopolitical fragmentation. Using bilateral trade flows, portfolio investment data, and detailed records of economic policy interventions, we revisit widely-used geopolitical distance metrics, specifically the Ideal Point Distance (IPD) derived from United Nations General Assembly voting. We document substantial variability in measured fragmentation, driven significantly by methodological choices related to sample periods and vote categories, especially in the wake of Russia’s 2022 invasion of ...
Working Paper
Was the Post-Lockdown Inflation Surge Mainly Supply Driven?
By December 2022, the price level of personal consumption expenditures on core goods and services had risen more than 10 percent over the preceding two years. This paper studies consumption price and quantity changes at the disaggregate level using a generalization of Shapiro’s (2024) inflation decomposition method. Categories with inflation and consumption growth innovations that positively co-move are labeled as experiencing current demand-pull inflation. Negative co-movement in the two innovations indicates current supply-push inflation. Category inflation is then decomposed into supply ...
Working Paper
Measuring The Effect of Shocks on Inequality: It's All About the Data
To identify shocks in VARs using short-run sign or exclusion restrictions, the highest frequency data possible is usually preferred. For income inequality, there is tension between high frequency and high quality. Annual datasets that survey large numbers of people provide high-quality estimates of income. Higher frequency surveys generally provide a sparser sampling of individual income. Some previous studies have used the higher frequency data, presumably to match the frequency necessary to identify the shock. Using data obtained from the higher frequency, lower respondent surveys might ...
Working Paper
Fed-Driven Systemic Tail Risk: High-Frequency Measurement, Evidence and Implications
We develop a framework to measure market-wide (systemic) tail risk in the cross-section of asset returns. Using high-frequency data on individual U.S. stocks and sector-specific ETF portfolios, we estimate time-varying jump intensities and multi-asset tail risk around Fed policy announcements. While most FOMC announcements generate systemic left-tail risk, there is no evidence that macro announcements have a similar effect. The magnitude of the tail risk induced by Fed policy announcements varies over the business cycle, peaks during the global financial crisis and remains high during phases ...
Working Paper
Dissecting the Great Retirement Boom
Between 2020 and 2023, the fraction of retirees in the working-age population in the U.S. increased above its pre-pandemic trend. Several explanations have been proposed to rationalize this gap, including increases in net worth, the deterioration of the labor market with higher job separations, the expansion of fiscal transfer programs, and higher mortality risk. We develop an incomplete markets, overlapping generations model with a frictional labor market to quantitatively study the interaction of these factors and decompose their contributions to the rise in retirements. We find that new ...
Working Paper
Taxation, Compliance, and Clandestine Activities
We investigate the delicate balance policymakers have to strike between raising tax revenues for public good provision and controlling the distortionary effects of taxes on (i) tax evasion, (ii) total work hours, and (iii) the allocation of work hours to illegal activities. These distortions lower the constrained optimal tax rate and result in the under-provision of the public good. This under-provision problem is mitigated when surplus from the audit agency is seamlessly transferred to the taxing authorities. Extensions of the basic model incorporate agent heterogeneity and a more general ...
Working Paper
The Allocation of Immigrant Talent: Macroeconomic Implications for the U.S. and Across Countries
We quantify the labor market barriers that immigrants face, using an occupational choice model with natives and immigrants of multiple types subject to wedges that distort their allocations. We find sizable output gains from removing immigrant wedges in the U.S., representing 25% of immigrants' overall economic contribution, and that these wedges alter the impact of alternative immigration policies. We harmonize microdata across 19 economies and exploit cross-country variation in immigrant outcomes and estimated wedges to examine the drivers of differences in wedges and gains from their ...
