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Working Paper
Hours Worked and Lifetime Earnings Inequality
Bick, Alexander; Rogerson, Richard; Blandin, Adam (2024-09-16)
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 Papers , Paper 2024-024

Working Paper
The Evolution of Lifetime Hours and the Gender Wage Gap
Leukhina, Oksana; Vandenbroucke, Guillaume (2023-09)
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 Papers , Paper 2022-025

Report
Tuition, Debt, and Human Capital
Chakrabarti, Rajashri; Liberman, Andres; Yannelis, Constantine; Fos, Vyacheslav (2020-02-01)
This paper investigates the eﬀects of college tuition on student debt and human capital accumulation. We exploit data from a random sample of undergraduate students in the United States and implement a research design that instruments for tuition with relatively large changes to the tuition of students who enrolled at the same school in diﬀerent cohorts. We ﬁnd that $10,000 in higher tuition causally reduces the probability of graduating with a graduate degree by 6.2 percentage points and increases student debt by $2,961. Higher tuition also reduces the probability of obtaining an ...
Staff Reports , Paper 912

Discussion Paper
Benefits Cliffs and the Financial Incentives for Career Advancement: A Case Study of the Health Care Services Career Pathway
Altig, David E.; Terry, Ellyn; Ruder, Alexander; Ilin, Elias (2020-01-01)
Benefits cliffs, which occur when earnings gains are offset by the loss of public benefits, have long been recognized to create financial disincentives for low-income individuals to earn more income. In this paper, the authors develop a new methodology to study benefits cliffs in the context of career advancement. The authors illustrate the change in net financial resources for an individual pursuing the health care services career pathway from certified nursing assistant (CNA) to licensed practical nurse (LPN) to registered nurse (RN). Accounting for increases in taxes and the loss of public ...
FRB Atlanta Community and Economic Development Discussion Paper , Paper 2020-01

Working Paper
The Income-Achievement Gap and Adult Outcome Inequality
Nielsen, Eric R. (2015-05-14)
This paper discusses various methods for assessing group differences in academic achievement using only the ordinal content of achievement test scores. Researchers and policymakers frequently draw conclusions about achievement differences between various populations using methods that rely on the cardinal comparability of test scores. This paper shows that such methods can lead to erroneous conclusions in an important application: measuring changes over time in the achievement gap between youth from high- and low-income households. Commonly-employed, cardinal methods suggest that this ...
Finance and Economics Discussion Series , Paper 2015-41

Working Paper
Expanding Access to Selective Colleges
Hendricks, Lutz; Koreshkova, Tatyana; Leukhina, Oksana (2026-05-24)
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 Papers , Paper 2026-005

Working Paper
Hours Worked and Lifetime Earnings Inequality
Bick, Alexander; Rogerson, Richard; Blandin, Adam (2025-04-06)
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 Papers , Paper 2024-024

Working Paper
Gender Gap
Leukhina, Oksana; Vandenbroucke, Guillaume (2022-04-15)
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 Papers , Paper 2022-025

Working Paper
Causes and Consequences of Student-College Mismatch
Leukhina, Oksana; Koreshkova, Tatyana; Hendricks, Lutz (2021-12-10)
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 ...
Working Papers , Paper 2022-026

Working Paper
The Optimal Taxation of Business Owners
Phelan, Tom (2019-11-19)
Business owners in the United States are disproportionately represented among the very wealthy and are exposed to substantial idiosyncratic risk. Further, recent evidence indicates business income primarily reflects returns to the human (rather than financial) capital of the owner. Motivated by these facts, this paper characterizes the optimal taxation of income and wealth in an environment where business income depends jointly on innate ability, luck, and the accumulated past effort exerted by the owner. I show that in (constrained) efficient allocations, more productive entrepreneurs ...
Working Papers , Paper 19-26

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