Research

Working Papers


Disentangling the Roles of Preferences and Shocks in Labor Supply (Job Market Paper)



Labor supply differs across people, even for the same levels of wages and assets. These differences can be driven by heterogeneity in preferences or by shocks to employment opportunities. Disentangling the two forces is important for policy but difficult to do in practice. I show that retirement decisions and their interactions with assets and labor history help to tell preferences and shocks apart. I document that wealthy people retire later and people with higher prime-age labor supply retire earlier. These facts can be jointly rationalized by the presence of preference heterogeneity and labor market constraints. I quantify the roles of preferences and shocks by calibrating a life-cycle model with endogenous retirement decision to German SOEP data. The model requires significant heterogeneity in bequest motives and allocates a big role to labor market constraints. Labor market shocks explain 50% of total variation in prime-age employment, while preferences explain 10%.


Inferring Changes in Technology from Labor Share and Workweek of Capital 



In this paper I propose a new way to identify changes in capital bias and returns to scale in the US manufacturing sectors over the time period from 1974 to 2004. This strategy is based on the observed movements in sector-level labor share and workweek of capital. I set up a cost-minimization problem of a firm with endogenous workweek and show that while labor share and workweek respond to changes in relative price of capital and capital bias with the same magnitude, workweek is much more responsive to changes in returns to scale than labor share. Since in the data labor share and workweek are not perfectly correlated, the model suggests that there is scope for changes in returns to scale. I show that the returns to scale indeed have been changing over time in many sectors, and that the changes have been heterogeneous ranging from 18% increase in metals sector to 8% decrease in dairy sector. Moreover, these changes appear to be positively correlated with changes in capital bias. This implies that there have been massive and heterogeneous changes in technology over time.


Growing Up with an Unemployed Mother  
(with Paulo Lins)

 
We study the long-term consequences of maternal unemployment on children's labor market outcomes. Using the NLSY, we show that children exposed to maternal unemployment during childhood have lower wages and employment probabilities as adults. These effects remain even after controlling for family income, indicating that income loss alone cannot explain the observed scarring effects. Our results suggest that (i) greater parental time availability does not mitigate the damage and (ii) non-income channels play a key role. Finally, we find that the negative effects are concentrated in adolescence, with maternal unemployment during these years leading to earlier labor force entry and reduced educational attainment.