Work in Progress

WORKING PAPERS

"Who Picks Up the Slack? Spousal Responses to Unemployment Spells." With Sara LaLumia, Shanthi Ramnath, and Michael Stevens. Revise and Resubmit requested at Labour Economics.

• We use a large panel of married households to update estimated added worker effects. In response to a primary earner’s job loss, secondary earners are 3 percentage points more likely to work and compensate for 6% of the displaced worker's lost earnings. When a secondary earner is displaced, spousal labor force participation is unchanged but there is a substantial earnings reduction. These small compensatory responses are explained by an increased probability that the nondisplaced spouse exits employment, either through correlated unemployment shocks or retirement. Conditional on relative-earner status within the couple, the gender-based differences in added worker effects are small.

"On the Determinants of Young Adult Outcomes: An Examination of Random Shocks to Children in Military Families." With Bruce Sacerdote, William Skimmyhorn and Michael Stevens. Under Review.

• Using the quasi-random assignment of 760,000 children in U.S. military families, we show that neighborhood attributes experienced during childhood have powerful impacts on SAT scores, college-going and earnings. For earnings and college going outcomes, location during high school is twice as important as location during elementary school, and for SAT scores, location during middle school has the strongest impact. There is little evidence of positive interactions in neighborhood quality across ages groups. Importantly, the same locations benet children with equal potency across race or sex. Twenty years of exposure in a 1 standard deviation \better" county raises SAT composite scores by 10 points (1.8 percentiles), raises college attendance by 1.7 percentage points, earnings by 2.2 percentile points, and lowers EITC receipt by 10%. Impacts are three times more potent when we measure neighborhood quality at the zip code level: twenty years of exposure to a one (county level) standard deviation better zip code raises college going by 6.7 percentage points, SAT composite by 38 points and income percentile at age 25 by 6.1 points. By equalizing average neighborhood quality for Black and White families, we estimate that the Army's quasi-random assignment reduces Black-white earnings gaps among the children of Army personnel by 23%.

"You Can't Handle the Truth: The Effects of the Post 9-11 GI Bill on Higher Education and Earnings." With Andrew Barr, Bruce Sacerdote, William Skimmyhorn and Michael Stevens.

• The Post 9/11 GI Bill (PGIB) is among the largest and most generous college subsidies enacted thus far in the U.S. We examine the impact of the PGIB on veterans’ college-going, degree completion, federal education tax benefit utilization, and long run earnings. Among veterans potentially induced to enroll, the introduction of the PGIB raised college enrollment by 0.17 years and B.A. completion by 1.2 percentage points (on a base of 9 percent). But, the PGIB reduced average annual earnings nine years after separation from the Army by $900 (on a base of $32,000). Years enrolled effects are larger and earnings effects more negative for veterans with lower AFQT scores and those who were less occupationally skilled. Under a variety of conservative assumptions, veterans are unlikely to recoup these reduced earnings during their working careers.  All veterans who were already enrolled in college at the time of bill passage increase their months of schooling, but only for those in public institutions did this translate into increases in bachelor’s degree attainment and longer-run earnings. For specific groups of students, large subsidies can modestly help degree completion but harm long run earnings due to lost labor market experience. 

"A Transparent Look at How Tax Systems Affect Growth: Evidence from Cross-Country Panel Data." With John Olsen, Joel Slemrod and Meng Hsuan Hsieh.

• We review the literature that estimates the effect of tax policy on economic growth using cross-country panel data and, in our own analysis, evaluate how different methodological choices affect the conclusions drawn. We find these analyses do not credibly support claims that tax rate changes have a statistically robust medium-term impact on national income. We further assess this literature in light of the recent econometric insights on estimation with staggered treatments. We show why the commonly-used linear projection approach yields biased estimates in this setting, and find that a causal estimate of the effect of the first tax change again yields no statistically significant effect of taxes on economic growth. 

"Estimating the Elasticity of Broad Income in the Presence of Income Growth and Volatility" With Caroline Weber and Andrew Whitten  

• This paper precisely estimates the elasticity of broad income (EBI) with respect to the marginal net-of-tax rate for high-income taxpayers. We study the introduction of a new top income tax bracket in 2013 using a large panel of high-income taxpayers drawn from administrative tax records. Our estimation strategy — inverse probability weighting — takes into account the tremendous income volatility experienced by high-income taxpayers. We obtain an intent-to-treat (ITT) EBI of 0.013. After rescaling to account for taxpayers crossing the top income tax bracket threshold, we obtain a treatment-effect-on-the-treated elasticity that is bounded below by the ITT estimate and above by 0.034.