Daniel Jonas Schmidt

Working papers

The effect of Flexible Retirement on the Marginal Propensity to Consume: Theory and Evidence.

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This paper studies the effect of flexible retirement on the marginal propensity to consume out of a windfall gain. Using data from the Survey of Consumer Expectations, I find that the MPC of workers is about 20% lower than the MPC of retirees, even when controlling for age and other individual characteristics. In a simple theoretical model, I demonstrate that endogenous retirement can explain this difference in MPCs: Older workers use a part of the windfall to finance early retirement which decreases their consumption response compared to retirees. To quantify this mechanism, I build a life-cycle model with a realistic social security system and durable goods. I find that flexible retirement can account for most of the MPC difference in the data. My results have important implications for the response of aggregate consumption to stock market booms and for the use of MPCs as sufficient statistics in public finance.

Presented at the KVS New Paper Sessions (2023, The Hague), Netspar International Pension Workshop (2023, Leiden), Munich Research Institute for the Economics of Aging (2024), RGS Doctoral Conference (2024, Essen), Theories and Methods in Macro (2024, Amsterdam), Meeting of the Society of Economics of the Household (2024, Singapore), Baltic Economic Conference (2024, Tallinn).

Property Transfer Taxes, Residential Mobility and Welfare.

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This paper analyzes the effects of property transfer taxes on homeownership, residential mobility, and welfare. Using an overlapping generations model calibrated to the Netherlands, I find that an abolition of the 2% transfer tax increases the likelihood that homeowners sell their old house and buy a new one by about 40%. It also leads to a rise of the homeownership rate by 1-5 percentage points (depending on how revenue neutrality is achieved). Newborns prefer to live in an economy without property transfer taxes if the forgone tax revenues are replaced with higher annual property taxes, but not if revenue neutrality is achieved with higher income taxes. I also consider a partial reform that only exempts young first-time homebuyers from the transfer tax and is financed with higher annual property taxes. The resulting welfare gains are more than one half of the welfare gains from the complete reform.

Presented at the European Meeting of the Urban Economics Association (2022, London), Echoppe Conference on the Economics of Housing and Housing Policies (2022, Toulouse), Verein für Socialpolitik Jahrestagung (2022, Basel), Nederlandse Economendag (2022, The Hague), University of Konstanz (2024), De Nederlandsche Bank (2025).

Work in progress

Why Is Flood Insurance Take-Up Low? Insights from a Dynamic Model.

Fewer than half of US homeowners in high-risk flood zones purchase flood insurance despite subsidized premiums. This paper develops a dynamic model of household decision-making under flood risk that incorporates key institutional features: the National Flood Insurance Program (NFIP), disaster grants, and liquidity-providing policies that enable households to smooth the impact of flood damages on consumption (disaster loans, penalty-free retirement fund withdrawals, and mortgage relief). We find that a modest 10% underestimation of flood risk is sufficient to replicate the observed insurance protection gap. Under rational expectations about flood risk, the median willingness to pay for flood insurance exceeds the actuarially fair premium by only 5%, which is insufficient to cover NFIP administrative costs. Our results suggest that liquidity-providing policies, rather than wealth transfers or risk misperception, primarily explain the low willingness to pay for flood insurance.

Removing Fiscal Subsidies for Homeowners in the Netherlands.

(Joint work with Cindy Biesenbeek.)

Policy work

Bouveret, A., Darpeix, P.-E., Ferrari, M., Grill, M., Molestina Vivar, L., Okseniuk, D., Raillon, F., Schäfer, A., Schmidt, D. J. & Weistroffer, C. (2025) Containing risks from leverage in alternative investment funds. ESRB Occasional Paper. European Systemic Risk Board.

Bouveret, A., Ferrari, M., Grill, M., Molestina Vivar, L., Schmidt, D. J., & Weistroffer, C. (2025). Leveraged investment funds: A framework for assessing risks and designing policies. Macroprudential Bulletin, Issue 26. European Central Bank. 

Banu, E., Evrard, J., Schmidt, D. J., & Wedow, M. (2025). Crossing two hurdles in one leap: how an EU savings product could boost returns and capital markets. The ECB Blog. European Central Bank.