"The Effects of Uncertainty Shocks: Implications of Wealth Inequality," European Economic Review 154, no. C (2023).
Abstract: This paper investigates whether and how the effects of time-varying macroeconomic uncertainty depend on the distribution of wealth. I show that increases in wealth inequality amplify the responses of uncertainty shocks. Using deciles of the distribution of wealth along with a series of macroeconomic volatility for the United States, I find that consumption growth falls by approximately 0.25 percentage points more in response to a one standard deviation uncertainty shock when wealth inequality is high relative to when it is low. In order to understand the nonlinear effects of uncertainty on consumption growth, I consider a two-agent New Keynesian model. I calibrate this simple model to qualitatively match the empirical responses of consumption growth to a one standard deviation uncertainty shock and show that nominal rigidities are key to magnifying the effects of uncertainty under high wealth inequality.
"Parental Beliefs, Social Learning, and Intergenerational Mobility" (JMP)
Abstract: This paper examines the role of information frictions in shaping parental beliefs over child development and intergenerational mobility by incorporating social learning into a heterogeneous-agent model of overlapping generations. Information frictions implicit in my model of social learning influence individual-specific beliefs about the return to parental investments in children's human capital and distort parental investment choices. I calibrate the model using data from the U.S. and show that its predictions are consistent with the evidence from a randomized controlled trial that changed parents' beliefs by providing them with information about child development. Using the calibrated model, I show that, in equilibrium, distortions in beliefs amplify the persistence of earnings across generations by 6%. A low-cost, large-scale policy that provides low-income parents with information about the return to parental investments generates a 1.4% increase in intergenerational mobility, not only because low-income parents are more certain about the impact of their investments and they increase investments in their children's human capital, but because these choices spill over into the beliefs held by the next generation.
"Intergenerational Mobility and Credit," with J. Carter Braxton, Kyle Herkenhoff, and Gordon Phillips (Revise & Resubmit at Review of Economic Studies) NBER Working Paper IZA Discussion Paper IZA Opinion Piece
Abstract: We combine the Decennial Census, credit reports, and administrative earnings to create the first panel dataset linking parent's credit access to the labor market outcomes of children in the U.S. We find that a 10% increase in parent's unused revolving credit during their children's adolescence (13 to 18 years old) is associated with 0.28% to 0.37% greater labor earnings of their children during early adulthood (25 to 30 years old). Using these empirical elasticities, we estimate a dynastic, defaultable debt model to examine how the democratization of credit since the 1970s -- modeled as both greater credit limits and more lenient bankruptcy -- affected intergenerational mobility. Surprisingly, we find that the democratization of credit led to less intergenerational mobility and greater inequality. Two offsetting forces underlie this result: (1) greater credit limits raise mobility by facilitating borrowing and investment among low-income households; (2) however, more lenient bankruptcy policy lowers mobility since low-income households dissave, hit their constraints more often, and reduce investments in their children. Quantitatively, the democratization of credit is dominated by more lenient bankruptcy policy and so mobility declines between the 1970s and 2000s.
"The Scarring Effects of Workplace Sexual Harassment," with Natalie Duncombe and Birthe Larsen
Abstract: We document new facts about the sources and consequences of sexual harassment in the workplace using administrative and survey data from Denmark. We estimate that following workplace sexual harassment, victims, both men and women, see earnings losses of around 6 percent. Losses are largely driven by workers who transition to new firms following harassment suggesting that the consequences of harassment persist even when workers leave the job where the harassment occurred. Victims who leave their employer after an incident of workplace sexual harassment incident move to firms with a larger share of colleagues who share their own gender.
"The Aggregate Costs of Workplace Sexual Harassment," with Natalie Duncombe and Birthe Larsen
Power, violence, and consequences at work, Federal Reserve Bank of Minneapolis, January 2023
Household Insecurity Matters for U.S. Macroeconomic Stability, Washington Center for Equitable Growth, May 2018