Search Results
Working Paper
The Evolution of Lifetime Hours and the Gender Wage Gap
The gender wage gap decreased (opened) from 1940 to 1975 and then increased (closed) until 2010. We use the model introduced in Ben-Porath (1967) to assess the role of gender differences in life cycle profiles of market time in explaining this dynamics. Men's profiles changed little across cohorts, but women's profiles converged to that of men implying, eventually, stronger incentives for women to accumulate human capital. We calibrate the model and find that (1) The 1940-75 decrease of the gap was because men valued human capital more than women due to their working more. The 1975-10 ...
Working Paper
Expanding Access to Selective Colleges
This paper studies the effects of expanding high-quality public university capacities on student earnings and welfare. Using a quantitative model of college choice, we find that expanding the most selective colleges by 20 percent increases skilled labor supply by 5.3 percent, aggregate earnings by 0.8 percent, and welfare by 2.2 percent. The gains arise because a large number of high ability students are rationed out of selective colleges. When admitted, these students graduate at high rates and enjoy substantial earnings gains. The earnings gains generated by expanding college capacity are ...
Working Paper
Insurance and Inequality with Persistent Private Information
We study the implications of optimal insurance provision for long-run welfare and inequality in economies with persistent private information. A principal insures an agent whose private type follows an ergodic, finite-state Markov chain. The optimal contract always induces immiseration: the agent’s consumption and utility decrease without bound. Under positive serial correlation, it also backloads high-powered incentives: the sensitivity of the agent’s utility with respect to his reports increases without bound. These results extend—and help elucidate the limits of—the hallmark ...
Working Paper
Gender Gap
We employ the Ben-Porath (1967) human capital model to study the evolution of the gender wage gap over the long run. We consider the effect of changing lifecycle profiles of female market hours. We find that the implied response in unobserved investment in human capital accumulation accounts for most of the long run gender wage gap dynamics. This finding is consistent with the labor economists’ view that changing selection on unobservables played a critical role in the gender wage gap dynamics. Our contribution is to make explicit and quantify the link between market hours and (unobserved) ...
Working Paper
Causes and Consequences of Student-College Mismatch
College admissions are highly meritocratic in the U.S. today. It is not the case in many other countries. What is the tradeoff? On one hand, meritocracy produces more human capital overall if higher ability students learn more in college and if they learn more in higher quality colleges. This leads to a higher overall level of earnings (i.e. greater efficiency, loosely speaking). On the other hand, more meritocracy generates a higher degree of earnings inequality. In this paper, we quantify this efficiency-equality tradeoff. Our results suggest small efficiency losses/gains from student ...
Making Progress on Diversity in the Economics Profession
Three prominent economists discuss their efforts as American Economic Association leaders to help diversify their profession.
Working Paper
Insurance and Inequality with Persistent Private Information
We study optimal insurance contracts for an agent with Markovian private information. Our main results characterize the implications of constrained efficiency for long-run welfare and inequality. Under minimal technical conditions, there is Absolute Immiseration: in the long run, the agent?s consumption and utility converge to their lower bounds. When types are persistent and utility is unbounded below, there is Relative Immiseration: low-type agents are immiserated at a faster rate than high-type agents, and ?pathwise welfare inequality? grows without bound. These results extend and ...
Working Paper
Causes and Consequences of Student-College Mismatch
Our objective is to understand the observed patterns of student-college sorting and earnings premia associated with college quality in the United States. Higher quality colleges have higher graduation rates and their graduates earn more. Yet, a large fraction of high scoring students enroll in two-year schools and low quality four-year schools – this “undermatch” phenomenon is more pronounced for low income students. To understand these patterns, we develop a model with heterogeneous students and colleges that differ in human capital production technology and financial costs. We ...
The Household Shift from Paid Work to Home Production
When U.S. workers lose their jobs or have reduced work hours, how does this affect time spent on activities like cooking and child care?
Journal Article
The Changing Role of Family Income in College Selection and Beyond
Previous literature has established that the role of family income has grown substantially at predicting college entry decisions when comparing the 1979 and 1997 National Longitudinal Surveys of Youth (e.g., Belley and Lochner (2007)). In this article, I further examine the changing role of family income as a determinant of college quality choice, degree attainment, and post-schooling earnings. I document that the role of family income has remained important and relatively stable at explaining college quality choice, its importance increasing only for the choice of four- over two-year ...