Mi Luo

Assistant Professor in the Department of Applied Economics, Guanghua School of Management, Peking University.

CV (Updated October 2022).

Address: Rm 453, Guanghua Building #2, Peking University.

Research Interests

Macroeconomics, household finance, and labor economics

Publications

1. Wealth Distribution and Social Mobility in the U.S.: A Quantitative Approach, with Jess Benhabib and Alberto Bisin. 2019. American Economic Review. (lead article)

2. Measuring and Modeling Inter-generational Links in Relation to Long-Term Care, with Andrew Caplin and Kathleen McGarry. 2018. Economic Inquiry.

3. Earnings Inequality and Other Determinants of Wealth Inequality, with Jess Benhabib and Alberto Bisin. 2017. American Economic Review Papers & Proceedings.

Working Papers

1. Unintended Effects of Estate Taxation on Wealth Inequality.

Intergenerational wealth transmission occurs not only at the end of life (bequests) but also throughout the life cycle (inter-vivos transfers). This paper documents that bequests are largely accidental, and inter-vivos transfers are intentional and negatively correlated with the recipient’s current income. This paper builds and estimates a general-equilibrium lifecycle model of intergenerational wealth transfers, where parents potentially value inter-vivos transfers differently from bequests. The model renders a response in inter-vivos transfers to estate tax changes close to the data. Under the current U.S. tax codes, increasing the estate tax does not necessarily reduce top wealth inequality. Instead, it could potentially increase inequality with a sufficiently strong response in inter-vivos transfers. Such a response is partly caused by differential tax treatment between inter-vivos transfers and bequests, and partly amplified by how parents value inter-vivos transfers differently from bequests.

2. Assets and Job Choice: Student Debt, Wages and Job Satisfaction, with Simon Mongey. (R&R at the Review of Economic Studies)

Higher student debt causes college students to take jobs with higher wages and lower job satisfaction. We arrive at this finding using representative samples of college graduates and exploiting within-college across-cohort variation in financial aid policies. When we extend the search with asset accumulation framework of Lise (2013) to accommodate non-pecuniary amenities the model matches our empirical findings: higher debt tilts acceptance policies toward high wage, low satisfaction jobs. In a quantitative extension we identify the utility value of amenities through observed search behavior conditional on reported satisfaction and income, finding that high satisfaction jobs are valued at 6 percent of lifetime consumption relative to low satisfaction jobs. This trade-off is large enough that computing welfare gains in a counterfactual income-based repayment policy using only wages leads to a mistaken inference that students prefer a fixed repayment policy.

3. The Distribution and Dynamics of Lifetime Inter-vivos Transfers of Older Americans to Adult Children, with John Ameriks, Joseph Briggs, Andrew Caplin, and Chris Tonetti. (one of the Vanguard Research Initiative projects, coming soon!)

We provide new measurement for inter-vivos transfers by surveying Vanguard clients and build a new model of inter-generational transmission of wealth. Parents want to save in order to help with financial need from children through timely inter-vivos transfers. This precautionary savings motive turns out more important than the end-of-life bequest motive in accounting for retirement savings.

4. Overconfidence and Health Insurance Participation among the Elderly, with Wei Huang. November 2015.

Using national representative samples of the elderly in US and China, we find that people with lower socio-economic status and poorer health are relatively less likely to realize how unhealthy they are and this overconfidence is associated with no insurance participation. Accurate health information provided through physical examinations induces relatively higher participation among the overconfident people afterwards.

Work in Progress

1. The Evolution of Wealth Inequality and Social Mobility in the U.S., with Jess Benhabib, Alberto Bisin.