Research

Published/Forthcoming Papers:  

Portfolio Allocation over the Life Cycle with Multiple Late-in-Life Saving Motives [Publisher], Journal of Empirical Finance, 74, December 2023.

Cognitive Decline, Limited Awareness, Imperfect Agency, and Financial Well-being [Publisher] (with John Ameriks, Andrew Caplin, Matthew D. Shapiro, and Christopher Tonetti), American Economic Review: Insights, 5, March 2023.  

Nursing Home Aversion Post-Pandemic: Implications for Savings and Long-term Care Policy [Publisher] (with Bertrand Achou, Philippe De Donder, Franca Glenzer, and Marie-Louise Leroux),  Journal of Economic Behavior & Organization, 201, September 2022.

The Welfare and Distributional Effects of Fiscal Volatility: a Quantitative Evaluation [Publisher] (with Ruediger Bachmann, Jinhui Bai, and Fudong Zhang), Review of Economic Dynamics, 38, October 2020. 

Forced Retirement Risk and Portfolio Choice [Publisher] (with Guodong Chen and Tong-yob Nam), Journal of Empirical Finance, 58, September 2020.

Heterogeneity in Expectations, Risk Tolerance, and Household Stock Shares [Publisher] (with John Ameriks, Gabor Kezdi, and Matthew D. Shapiro), Journal of Business & Economic Statistics, 38 (3), June 2020.   

Older Americans Would Work Longer If Jobs Were Flexible [Publisher] (with John Ameriks, Joseph Briggs, Andrew Caplin, Matthew D. Shapiro, and Christopher Tonetti), American Economic Journal: Macroeconomics, 12 (1), January 2020. 

Working Papers:  

Nursing Homes in Equilibrium: Implications for Long-term Care Policies [PDF] (with Tatyana Koreshkova)

Abstract: 

We build an equilibrium model of a nursing home market with decision-makers on both sides of the market. On the demand side, heterogeneous households with stochastic needs for long-term care solve dynamic optimization problems, choosing between in-home and nursing home care as well as the number of care hours if using in-home care. On the supply side, locally competitive nursing homes decide prices and intensities of care given the household demand. Medicaid provides long-term care to the poorest, but allocating care not based on prices also causes inefficiency. We use our equilibrium model to examine the impacts of various long-term care policies. We find that a lump-sum subsidy to the out-of-pocket cost of in-home care significantly increases households’ welfare without a large increase in government expenditure because the policy diverts individuals away from Medicaid-paid care. We show that equilibrium analysis is important for assessing welfare and distributional effects of policies.

How Worker Productivity and Wages Grow with Tenure and Experience: The Firm Perspective [PDF] (with Andrew Caplin, Søren Leth-Petersen, Johan Sæverud, and Matthew D. Shapiro), NBER Working Paper 30342

Abstract: 

How worker productivity evolves with tenure and experience is central to economics, shaping, for example, life-cycle earnings and the losses from involuntary job separation. Yet, worker-level productivity is hard to identify from observational data. This paper introduces direct measurement of worker productivity in a firm survey designed to separate the role of on-the-job tenure from total experience in determining productivity growth. Several findings emerge concerning the initial period on the job. (1) On-the-job productivity growth exceeds wage growth, consistent with wages not being allocative period-by-period. (2) Previous experience is a substitute, but a far less than perfect one, for on-the-job tenure. (3) There is substantial heterogeneity across jobs in the extent to which previous experience substitutes for tenure. The survey makes use of administrative data to construct a representative sample of firms, check for selective non-response, validate survey measures with administrative measures, and calibrate parameters not measured in the survey.

The Welfare and Distributional Consequences of Corporate Tax Cuts in Open Economies [PDF] (with Mamoon Kader, Hashmat Khan, and Raúl Razo-García), under revision for the Journal of Money, Credit and Banking

Abstract: 

We develop an open-economy heterogeneous household model with incomplete markets to quantitatively evaluate the welfare and distributional effects—both within and across countries—of the recent corporate tax cut (Tax Cuts and Jobs Act, TCJA) in the U.S. The model allows for examining outcomes under various possibilities including the tax cut in the U.S. being permanent versus temporary and potential fiscal responses of other countries to the TCJA. We find that the TCJA is regressive in the U.S. and has relatively more regressive outcomes in other countries. Whether the wealth-poor in the U.S. benefit from the TCJA or not depends on the persistence of the tax cut. Finally, when a small country reduces its corporate tax in response to the TCJA, it has a progressive distributional result in its own economy.

At Home versus in a Nursing Home: Long-term Care Settings and Marginal Utility [PDF] (with Bertrand Achou, Philippe De Donder, Franca Glenzer, and Marie-Louise Leroux)

Abstract: 

Marginal utility of financial resources when needing long-term care, and the related incentives for precautionary savings and insurance, may vary significantly by whether one receives care at home or in a nursing home. In this paper, we develop strategic survey questions to estimate those differences. All else equal, we find that the marginal utility is significantly higher when receiving care at home rather than in a nursing home. We then use these estimates within a quantitative life cycle model to evaluate the impact of the expected choice of care setting (home versus nursing home) on precautionary savings and insurance valuation. The estimated marginal utility differences imply a significant increase in the incentives to save when expecting to receive care at home. Larger incentives to self-insure also translate to a higher valuation of additional subsidies for home care than for nursing homes, shedding light on an efficient way to expand public long-term care subsidies. We also examine how the magnitude of our results quantitatively varies with the existing public long-term care subsidies.     

The Wealth of Wealthholders [PDF] (with John Ameriks, Andrew Caplin, Matthew D. Shapiro, and Christopher Tonetti), Vanguard Research Initiative Working Paper and NBER Working Paper 20972, under revision for the Review of Income and Wealth.

Abstract: 

This paper introduces the Vanguard Research Initiative (VRI), a new panel survey of wealthholders designed to yield high-quality measurements of a large sample of older Americans who arrive at retirement with significant financial assets. The VRI links survey data with a variety of administrative data from Vanguard. The survey features an account-by-account approach to asset measurement and a real-time feedback and correction mechanism that are shown to be highly successful in eliciting accurate measures of wealth. Specifically, the VRI data reflect unbiased and precise estimates of wealth when compared to administrative account data. The VRI sample has characteristics similar to populations meeting analogous wealth and Internet access eligibility conditions in the Health and Retirement Study (HRS) and Survey of Consumer Finances (SCF). To illustrate the value of the VRI, the paper shows that the relationship between wealth and expected retirement date is very different in the VRI than in the HRS and SCF—mainly because those surveys have so few observations where wealth levels are high enough to finance substantial consumption during retirement.