Technology and the Changing Family: A Unified Theory of Marriage, Divorce, Educational Attainment and
Married Female Labor-Force Participation with Jeremy Greenwood, Georgi Kocharkov and Cezar Santos, January 2015.
Marriage has
declined since 1960, with the drop being bigger for non-college educated
individuals versus college educated ones. Divorce has increased, more so for
the non-college educated. Additionally, positive assortative
mating has risen. Income inequality among households has also widened. A
unified model of marriage, divorce, educational attainment and married female
labor-force participation is developed and estimated to fit the postwar U.S.
data. Two underlying driving forces are considered: technological progress in
the household sector and shifts in the wage structure. The analysis emphasizes
the joint role that educational attainment, married female labor-force
participation, and assortative mating play in determining
income inequality.
Does
Marriage Make You Healthier? with Yuliya Kulikova and Joan Llull, December
2014.
We use the Panel Study of Income Dynamics (PSID) and the
Medical Expenditure Panel Survey (MEPS) to study the relationship between
marriage and health for working-age (20 to 64) individuals. In both data sets
married agents are healthier than unmarried ones, and the health gap between
married and unmarried agents widens by age. After controlling for observables,
a gap of about 12 percentage points in self-reported health persists for ages
55-59. We estimate the marriage health gap nonparametrically
as a function of age. If we allow for unobserved heterogeneity in innate
permanent health, potentially correlated with timing and likelihood of
marriage, we find that the effect of marriage on health disappears at younger
(20-39) ages, while about 6 percentage points difference between married and
unmarried individuals, about half of the total gap, remains at older (55-59)
ages. These results indicate that association between marriage and health is
mainly driven by selection into marriage at younger ages, while there might be
a protective effect of marriage at older ages. We analyze how selection and
protective effects of marriage show up in the data.
Read the Economist Blog feature on
this article
Read the VOXEU feature on this article
Read the "Nada es
Gratis" feature on this article (in Spanish)
Read the interview with Nezih Guner on this article in La Vanguardia
(in Spanish)
Optimal
Spatial Taxation: Are Big Cities Too Small? with Jan Eeckhout, December
2014.
We
analyze the role of optimal income taxation across different local labor
markets. Should labor in large cities be taxed differently than in small
cities? We find that a planner who needs to raise revenue and is constrained by
free mobility of labor across cities does not choose equal taxes for cities of
different sizes. The optimal tax schedule is location specific and tax
differences between large and small cities depends on the level of government
spending and on the concentration of housing wealth. Our estimates for the US
implies higher marginal rates in big cities, but lower than what is observed.
Simulating the US economy under the optimal tax schedule, there are large
effects on population mobility: the fraction of population in the 5 largest
cities grows by 8.0% with 3.5% of the country-wide population moving to bigger
cities. The welfare gains however are smaller. Aggregate consumption goes up by
1.53%. This is due to the fact that much of the output gains are spent on the
increased costs of housing construction in bigger cities. Aggregate housing
consumption goes down by 1.75%.
Heterogeneity and
Government Revenues: Higher Taxes at the
Top?
with Martin Lopez Daneri and Gustavo Ventura, July 2014
We
evaluate the effectiveness of a more progressive tax scheme in raising
government revenues. We develop a life-cycle economy with heterogeneity and
endogenous labor supply. Households face a progressive income tax schedule,
mimicking the Federal Income tax, and flat-rate taxes that capture payroll,
state and local taxes and the corporate income tax. We parameterize this model
to reproduce aggregate and crosssectional
observations for the U.S. economy, including the shares of labor income for top
earners. We find that a tilt of the Federal income tax schedule towards high
earners leads to small increases in revenues which are maximized at an
effective marginal tax rate of about 36.9% for the richest 5% of households –
in contrast to a 21.7% marginal rate in the benchmark economy. Maximized
revenue from Federal income taxes is only 8.4% higher than it is in the
benchmark economy, while revenues from all sources increase only by about 1.6%.
The room for higher revenues from more progressive taxes is even lower when
average taxes are higher to start with. We conclude that these policy
recommendations are misguided if the aim is to exclusively raise government
revenue.
Read the VOXEU.org feature on this
article
Childcare Subsidies and
Household Labor Supply with Remzi Kaygusuz and Gustavo Ventura, June 2014
What would be the aggregate effects
of adopting a more generous and universal childcare subsidy program in the
U.S.? We answer this question in a life-cycle equilibrium model with joint
labor-supply decisions of married households along extensive and intensive
margins, heterogeneity in terms of the presence of children across households
and skill losses of females associated to non participation. We find that
subsidies have substantial effects on female labor supply, that are largest at
the bottom of the skill distribution. Fully subsidized childcare available to
all households leads to long-run increases in the participation of married
females and total hours worked by about 10.1% and 1.0%, respectively. There are
large differences across households in welfare gains, as a small number of
households - poorer households with children - gain significantly while others
lose. Welfare gains of newborn households amount to 1.9%. Our findings are
robust to differences among households in fertility and childcare expenditures.
Marital
Instability and the Distribution of Wealth, with John
Knowles, July 2007.
The levels of wealth differ significantly among
people who are approaching their retirement both by current marital status as
well as by marital histories. We develop an equilibrium model of marriage and
divorce and household savings, in which the interplay between endogenous
formation and dissolution of families and savings decisions plays a key role.
We show that a calibrated version of the model can reproduce observed patterns
of wealth inequality by marital status and marital history, and highlight the
role of endogenous marriage formation in wealth accumulation.
An Economic Analysis of Family Structure: Inheritance Rules
and Marriage Systems, manuscript (first version November 1998). Updated version coming soon.
Traditional societies had norms governing the choice of mates and rules for
determining inheritances. The goal here is to analyze how different inheritance
rules and marriage systems are determined. To do this, an overlapping
generations model of an agrarian economy is constructed. On the one hand, a
young adult’s prospects on the marriage market depend upon the inheritance he
or she will receive from their parents. The size of the inheritance is a
function of who the children marry. On the other hand, parents depend upon
their children to support them in old age. In the analysis, the size of
inheritance and the level of old age support are determined as a result of a
multilateral bargaining process between parents and their children. Assortative mating, patrilineal
inheritance rules and polygamy emerge naturally out of the model.