Working Papers
"Technology Usage and Life-cycle Earnings", Draft
Abstract: This paper investigates how technology usage affects growth in earnings and in earnings inequality over the life-cycle. I first document technology usage patterns empirically and investigate their relationship with earnings. Then, I develop a life-cycle model with a college decision, technology choices, human capital investments, and incomplete markets to quantify the impact of technology. Counterfactual experiments suggest that technology usage accounts for 15% (30%) of the growth in mean earnings (life-cycle inequality). Furthermore, I evaluate the role of technology usage on non-linear taxation policies, showing that progressive taxes have larger distortionary effects on earnings growth with endogenous technology 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.
"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 39% of college attendance and decreases aggregate output by 1.3%. In addition, I evaluate the optimal policy of taxation and college subsidy, and find that lowering college subsidy and the progressivity of labor income tax would increase social welfare by 5.9%. This policy system mitigates over-investment in human capital and alleviates negative externalities brought by the competitive margin.
"The Role of Information Technology Behind the Rise of Earnings Inequality", work in progress