Research

Selected Working Papers

September 2024. Submitted

Abstract:

We present a dynamic general equilibrium model of homelessness calibrated to the U.S. data and evaluate the effectiveness of several policies in the fight against homelessness. The model is designed to capture the most at-risk groups, producing a diverse homeless population that includes a significant portion experiencing short-term homelessness due to labor market shocks and a smaller portion facing chronic homelessness mostly due to health shocks. Our policy experiments reveal that the existing housing voucher program effectively reduces homelessness especially when the general equilibrium effects are accounted for. We show that increasing the reach of the program for eligible individuals can lead to further declines in the aggregate homeless rate relative to alternative forms of subsidies. However, policies targeted to help decrease homelessness are not as popular as general poverty reduction tools such as cash subsidies, which generate a larger welfare gain in our experiments.

"How Important Is Health Inequality for Lifetime Earnings Inequality?" (with Roozbeh Hosseini and Karen Kopecky)

February 2024. Revised and resubmitted at Review of Economic Studies Online Appendix

In this paper, we show that health inequality is an important determinant of lifetime earnings inequality using a health process that features fixed heterogeneity (a non-time-varying fixed effect), an AR(1) shock, and a transitory shock. See our other paper “The Evolution of Health over the Life Cycle” where we show that this process generates health and mortality dynamics over the lifecycle that match those in the underlying data extremely well.

Abstract:

We study the effect of poor health on labor supply and its implications for lifetime earnings inequality. Using a dynamic panel approach, we provide empirical evidence that negative health shocks significantly reduce earnings. The effect is primarily driven by the participation margin and is concentrated among the less educated and those in poor health. Next, we develop a life cycle model of labor supply featuring risky and heterogeneous health profiles that affect individuals’ productivity, likelihood of access to social insurance, disutility from work, mortality, and medical expenses. Individuals can either work or not work and apply for social security disability insurance (SSDI/SSI). Eliminating health inequality in our model reduces the variance of log lifetime (accumulated) earnings by 28 percent at age 55. About 60 percent of this effect is due to the impact of poor health on the probability of obtaining SSDI/SSI benefits. Despite this, we show that eliminating the SSDI/SSI program reduces ex ante welfare.

"Financial Frictions and the Optimal Quantity of Government Debt" (with Chunzan Wu) in progress

"The Joint Determination of Health and Human Capital" (with Neha Bairoliya, Roozbeh Hosseini and Karen Kopecky) in progress