Research

Working Papers

 "Technology Usage and Life-cycle Earnings", Draft

Abstract: This paper studies how technology usage affects earnings growth and earnings inequality over the life-cycle. I first construct an index to measure technology usage at the individual level and investigate its empirical relationship with earnings. However, reduced-form analysis could understate the impact of technology as it cannot capture the interaction with human capital. To address this concern, I then develop a life-cycle model with a college decision, technology choices, human capital investments, and incomplete markets to quantify the relative importance of technology. The model features rich interactions between technology usage and human capital investment such that workers with high human capital are more likely to work with advanced technologies and vice versa. Counterfactual experiments suggest that technology usage contributes 25% of the growth in mean earnings and 46% of the growth in life-cycle inequality. In particular, the model generates a reinforcement mechanism between human capital and technology usage which amplifies the growth in mean earnings and earnings inequality. Lastly, I evaluate the role of technology usage for policy implications of non-linear taxation. Results show that the distortionary effect of a progressive tax on earnings growth is larger with the presence of technology usage compared to an otherwise standard human capital model due to the reinforcement mechanism. 

 "Life-cycle Skill Premiums across Cohorts", Draft

Abstract: I document and investigate life-cycle profiles of skill premiums across cohorts. My empirical analysis shows that younger cohorts have steeper growth in the skill premium before age 40 but flatter growth after 40. I use a human capital investment model to account for the cross-cohort variation in skill premium profiles. The results indicate that the flattened growth after age 40 is caused by the drop in human capital (of high-skill workers) near the end of the life cycle. Besides, the magnitude of life-cycle growth in the skill premium is mainly driven by the relative skill price, which is the log ratio of wage rates between high-skill workers and low-skill workers.

"The Role of Information Technology Behind the Rise of Earnings Inequality", work in progress