1. Human Capital and the Business Cycle Effects on the Postgraduate Wage Premium, Forthcoming, Review of Economic Dynamics

  • The previous title of this paper is “Specific Capital, Firm Insurance, and the Dynamics of the Postgraduate Wage Premium”, IFS Working Paper WP19/26

  • Media Coverage: LSE Business Review, Royal Economic Society

  • Abstract: Postgraduate degree holders experience lower cyclical variation in real wages than those with undergraduate degrees. Moreover, postgraduate jobs require more specific human capital and take longer to adapt to. Using an equilibrium search model with dynamic incentive contracts, this paper attributes the cyclicality of the postgraduate-undergraduate wage gap to the differences in specific capital. Greater specific capital leads to lower mobility, thereby improving risk-sharing between workers and firms. The estimates of the model reveal that specific capital can explain the differences both in labour turnover and in real wage cyclicality between education groups.

Papers under Revision

1. Durables and Lemons: Private Information and the Market for Cars, with Richard Blundell, Hamish Low, Soren Leth-Petersen, and Costas Meghir, R&R Quantitative Economics

  • Previous version: NBER Working Paper w26281

  • Media Coverage: The Economist, NEP-DGE blog

  • Abstract: We quantify the aggregate implications and distributional consequences of asymmetric information, focusing on the car market. Private information introduces a lemons penalty, a wedge between the sale price and average quality in the population. We estimate an equilibrium model of car ownership with private information using Danish linked registry data on car ownership, income and wealth. In the first year of ownership, the lemons penalty is 11% of the price. The penalty declines sharply with the length of ownership. The penalty leads to large reductions in transaction volumes and in the rate of turnover of cars. But the market does not collapse: income shocks induce individuals to sell their cars, even if of good quality, and this limits the lemons problem. The size of the lemons penalty declines when income uncertainty in the economy increases, as happens in recessions.

2. Effects of Stay-at-home Orders on Skill Requirements in Vacancy Postings, with Ling Zhong, R&R Labour Economics

  • Abstract: The COVID-19 pandemic and containment policies have profound economic impacts on the labor market. Most states issued stay-at-home orders (SAHOs) that change the location and the way of working. We categorize the skill requirements of online job postings from 2018 to 2021. Exploiting spatial variations in the SAHO duration, we find that the time span of this temporary policy has persistent impacts on the skill requirement in labor demand after restrictions are lifted. Longer SAHOs motivate management style transformation to adapt to remote working schemes by requiring more self-management skills and less on personality to reduce reliance on people management skills of managers. SAHOs increase the demand for administration and language skills. We also find that SAHOs have larger and more thorough impacts for occupations with partial work-from-home capacity, and jobs that do not require a postsecondary degree. The evidence suggests SAHOs change management structure and job task assignments in firms.

Working Papers

1. The Gender Gap in Household Bargaining Power: A Portfolio-Choice Approach, with Cameron Peng and Weilong Zhang, Submitted, New version April 2022!

  • Previous version: IFS Working Paper WP21/11

  • Abstract: When members of the same household have different risk preferences, whose preference matters more for investment decisions and why? We propose an intrahousehold model that aggregates individual preferences at the household level. This allows us to back out the distribution and determinants of bargaining power from household portfolio choice. We structurally estimate the model, analyze the determinants of bargaining power, and find a significant gender gap in bargaining power. While the gap is partially explained by gender differences in individual characteristics such as income and employment, it is also due to gender effects. These patterns hold broadly across Australia, Germany, and the US. We further link the distribution of bargaining power to perceived gender norms in the cross-section of households.

Work in Progress

1. Unemployment Insurance Extensions and the Dynamics of Labour Force Participation, with Similan Rujiwattanapong

My co-authors

Richard Blundell
Hamish Low
Soren Leth-Petersen
Costas Meghir
Cameron Peng
Similan Rujiwattanapong
Weilong Zhang
Ling Zhong