Working Papers
"College as Human Capital Investments or Tournament: A Macroeconomics Analysis", Draft
Abstract: A college education is commonly viewed as a productive investment in the human capital theory. However, it also serves a competitive purpose to stand out in the job market, like a tournament contest. In this paper, I study the relative importance of these two channels in determining college attendance. I build a general equilibrium life-cycle model with a college decision, human capital investments, and skill allocation. The model’s novelty is that workers are allocated to different occupations based on their relative ranking of human capital, so college education also has a competitive value. Results show that the competitive channel accounts for 27% of college attendance butalso has a positive impact on output. I evaluate the optimal policy of taxation and college subsidies, and find that lowering college subsidies and the progressivity of labor income tax would increase social welfare by 0.9%. The new policy mitigates competition in college education and alleviates negative externalities.
"Occupational Choice, Human Capital Formation and Life-cycle Earnings", Draft, R&R at European Economic Review
Abstract: This paper examines the interaction between occupational choice and human capital formation in shaping life-cycle earnings. I focus on occupations’ technology exposure, measured as the intensity of information technology usage, and empirically demonstrate its impact on productivity. I develop a life-cycle model with a college decision, human capital investments, occupational choices, and incomplete markets. Results suggest occupational choice incentivizes human capital formation over the life-cycle and hence affects life-cycle earnings. In particular, it contributes to14% of the growth in mean log earnings and 30% of the growth in life-cycle inequality. Furthermore, I evaluate the role of occupational choice on non-linear taxation policies, showing that progressive taxes have larger distortionary effects on earnings growth with endogenous occupational choice.
"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.
Work in progress
``Information Frictions, Skill Accumulation, and Labor Market Dynamics", with Sujan Bandyopadhyay and Matthew Millington, draft available soon
Abstract: High rates of labor turnover early in jobs point to substantial information frictions in the labor market. How do information frictions interact with skill accumulation and search frictions to shape aggregate outcomes like employment, lifecycle wage growth, inequality, and welfare? To answer this question, we build and calibrate a lifecycle equilibrium model with uncertain match quality, frictional search, and skill accumulation. Match quality uncertainty is partially resolved in a screening stage before job matches are formed and further revealed during the employment relationship. In the aggregate, the screening stage is far more consequential than the production stage, suggesting that better screening leads to significant welfare gains. Using the model, we also study the effects of firing costs and find that moderate firing costs can be welfare-improving, although the gain is concentrated among high-skill workers.
"Marital Sorting, Joint Labor Supply and the Gender Wage Gap", with Terry Cheung and Mehmet Demir, draft available soon
Abstract: We study how joint household decisions shape gender gaps in hours and wages. We document that these gaps vary systematically with both spouses’ occupations, that hourly wages are nonlinear in hours worked, and that family size increases non-market time mainly through childcare and reduced female market hours. To interpret these facts, we develop a static household model in which couples jointly choose market hours, childcare time, and expenditures under occupation-specific nonlinear earnings schedules and progressive taxation. Counterfactuals show that margins affecting the returns to hours worked substantially increase mothers’ labor supply and reduce the aggregate gender wage gap, while subsidies to monetary child investment raise child spending but leave the gap essentially unchanged.
"Spatial Health: How Smoking Shapes our Neighborhoods", with Jesus Bueren and Carla Revilla, draft available soon
Abstract: We study segregation in health behavior and its welfare implications. We develop a general equilibrium life-cycle model with neighborhood choice and endogenous local spillover effects on education and smoking. Using tract-level data from Add Health, we document neighborhood-level smoking externalities and quantify how these local spillovers influence residential sorting. We find that the spillover effect on smoking accounts for half of the variation in life expectancy across neighborhoods and the spillover effect in education further amplifies this segregation. We also evaluate place-based policies that encourage integration, and find that a housing voucher program can reduce inequality in life expectancy across neighborhoods by 33% and improve aggregate social welfare by 1.5%.
"The Formation of Management Occupations and Its Macroeconomic Consequences", with Alexander Monge-Naranjo