Annasofie M. Olesen

Research 

Work in progress

"Fast Solution of Dynamic Intra-Household Bargaining Models",  Revise and resubmit, Quantitative Economics, with Adam Hallengreen and Thomas H. Jørgensen
[working paper]    [slides]

Dynamic household bargaining models are growing in popularity but are computationally demanding to solve and estimate. We propose a modification to the endogenous grid method (EGM) that allows this class of models to reap the benefits of the EGM. The method, which we refer to as interpolated EGM (iEGM), precomputes optimal intertemporal consumption as a function of the expected marginal value of wealth before solving the dynamic bargaining model. We illustrate the implementation of the iEGM in a simple example, where the iEGM is around 20 times faster than standard value function iterations. In a more complex quantitative model it is about 50 times faster, without compromising accuracy. We apply the iEGM to a rich household model to study how productivity shocks affect consumption inequality. Our results suggest that the degree of commitment of household members can affect the consequences of individual labor productivity shocks, such as e.g. skill-biased technological change.

"Retirement After Divorce: A Structural Model of Pension Sharing and Insurance"
with Amelie Mennerich
[slides]

Pension-sharing rules at divorce vary widely across countries, but little is known about how alternative rules affect behaviour and welfare. These policies may provide valuable insurance to the pension-poorer spouse, particularly when divorce occurs late in life. We study their effects in Denmark, where pension wealth is not divided between divorcing spouses. Empirically, we show that divorce is associated with delayed retirement, particularly among women. We then estimate a dynamic structural model of household bargaining, divorce, and retirement to study how households insure themselves against late-life divorce and evaluate two alternative pension-sharing policies. Cash compensation for pension wealth differentials  mainly smooths consumption around divorce and has little effect on retirement. In-kind pension sharing, by contrast, leads divorced women to retire earlier and reduces their reliance on public pensions. Ex ante, married households value the insurance provided by pension sharing, but the form of compensation matters: only in-kind compensation generates net positive willingness to pay. Both policies generate small positive fiscal externalities. 

"Pension Design for Couples and Singles"
with Amelie Mennerich

What is the effect of making social insurance a function of relationship status? This paper exploits administrative data and institutional features from Denmark to show that the divorce risk increases by 20% in response to financial incentives in a state pension of this kind. Total demographics also respond: For a 10% increase in individual income when single, the share of singles in the population increases by 1%. We develop a limited-commitment life-cycle model with endogenous divorce and retirement to evaluate the fiscal and welfare consequences of this policy. While this policy redistributes from couples to singles, it also provides insurance against divorce and widowhood, such that X% of those starting as married prefer the status quo to a revenue-neutral equalisation of pensions. For this reason, the insurance provided outweighs the fiscal cost of responses in divorce and the timing of retirement.

Teaching

• Teaching Assistant in the BSc/MSc elective Introduction to Programming and Numerical Analysis, University of Copenhagen (Spring 2023, spring 2024)