Research
Working Papers
While the United States and Canada share many similarities, there are stark differences in their levels of income inequality and intergenerational earnings persistence. This paper investigates college quality distributions, tuition subsidies, student loan systems, and tax policies as possible sources of these differences. A heterogeneous agent model is developed where human capital investments occur over the lifecycle and across generations. The model is calibrated to the U.S. economy and is able to match key moments on intergenerational mobility, lifetime inequality, and higher education. The benchmark counterfactual exercise finds that the system of higher education accounts for approximately 22% of the differences in income inequality and 11% of the differences in intergenerational mobility between the U.S. and Canada. The distribution of college qualities accounts for the majority of differences in inequality, whereas its net effect on intergenerational mobility is small.
On the Changing Relationship
between Net Public Foreign Assets and Growth
with Juliana Gamboa-Arbelaez (submitted)
replication package
This paper documents novel stylized facts and illustrates a simple mechanism explaining patterns of net public foreign assets across countries and time. Previous literature found an unexpected negative correlation between growth and net public foreign assets from 1980 to the mid-2000s. Analyzing data up to 2019 we find that this result no longer holds. We document a significant reversal since 2004, with the correlation now zero or weakly positive. Empirically, we attribute this shift to a substantial substitution from public debt towards international reserves, particularly for slower-growing countries. Simultaneously, low-growth countries experienced heightened productivity volatility. Augmenting an open economy neoclassical growth model to include uncertainty, we demonstrate that this increased risk faced by low-growth economies explains 46% of the change in correlation.
Across all education levels, policymakers use re-sorting of students in attempt to diversify the socioeconomic status of student bodies. We study how education re-sorting policies interact, using a heterogeneous agent overlapping generations model featuring multiple periods of child and adult development. Households sort into public schools through housing location, and into college via a competitive admissions process. Quality of schools and colleges are endogenous through peer effects. At the public school level, we simulate a re-sorting policy that randomly shifts students across schools. For college, we consider an income-based affirmative action policy. Public school re-sorting weakens the link between residential location and school quality, increasing intergenerational mobility by 2.5%. On the other hand, a college affirmative action policy decreases intergenerational mobility by 0.7%: when the high-quality college reserves seats for low-income students, it makes college more competitive, and as a result the link between house prices and public school quality strengthens. In fact, we find that a re-sorting policy that combines public school re-sorting and college affirmative action leads to minimal changes in opportunity.
Teen employment in the United States has fallen by more than 50% over the last 30 years. We provide causal evidence attributing the majority of this decline to crowding out of teen labor by adults. To determine the macroeconomic consequences of this decline, we begin by causally estimating the returns to teen employment. We find significantly higher wages and lower unemployment rates later in life for teens who worked while in high school and did not attend university. Next, we develop a general equilibrium model and calibrate it to match our causal estimates. The model features adolescents choosing between accumulating human capital on-the-job or in school, and adults choosing teen vs. non-teen occupations. Using this quantitative framework, we simulate a shock to adult occupations that leads to the displacement of teen workers. We find that teens crowded out by adults experience significant welfare losses, partly due to a loss of work experience. We show that education policies, such as optional vocation training, are effective at reducing adverse effects for teens who have been crowded out of the labor market.