Jonna Olsson

I am an Assistant Professor in Economics at the University of Amsterdam. I do research in macroeconomics, with an emphasis on quantitative models and labor supply questions in the short and long run.

I obtained my PhD from the Institute for International Economic Studies (IIES), Stockholm University, in 2019.

Link to CV

email | tel +46(0)70 765 5237 | visiting address University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam | postal address University of Amsterdam, Postbus 15867, 1001 NJ Amsterdam, the Netherlands |

Working papers

Structural transformation of the labor market and the aggregate economy [Paper]

Women's increased involvement in the economy has been the most significant change in labor markets during the past century. In this paper, I account for this period of structural change of the labor market in a macroeconomic model, and study how the increase in female labor force participation has affected the economy's response to aggregate shocks. I explicitly model heterogeneity in gender and household composition as well as the historical decrease of the gender wage gap. The model captures the salient features of historical data, including a strong increase in employment among married women, low crowding-out of married men, and relatively stable employment over time for single women. I then study how the changing labor force composition affects the economy's aggregate employment dynamics. The underlying trend in employment, driven by growth in female labor force participation, contributed to the perceived quick employment recovery after recessions before 1990, and the absence of growth thereafter consequently explains the more recent slower employment recoveries. In general, incorporating both one- and two-person households matters for employment dynamics, with single households reacting more strongly to shocks and employment responses by subgroups changing over time. Despite relatively large changes by subgroup, the aggregate effect is unchanged between the 1970s and the present time due to multiple counteracting forces.

"Health dynamics and heterogeneous life expectancies” (with Richard Foltyn) [Paper]

In this paper, we provide improved estimates for age-dependent health transitions and survival probabilities for different subsamples of the US population. The estimated yearly transition matrices can be used in any life-cycle model where health and survival dynamics is of interest. The results show substantial heterogeneity in life expectancy in the population. For a 70-year-old man in excellent health, the probability of reaching his 80th birthday is around 75%, while the corresponding probability for a man in poor health is just below 40%. There is also substantial inequality in life expectancy between different educational groups. In the group with less than a high school degree, the life expectancy at the age of 50 is 75 years, while the average for those with some college education or more is 80 years. This difference is due to two factors. First, at the age of 50, overall health is worse in the group with lower education. Second, even conditional on health status, the health dynamics and survival probabilities for this group are worse also from the age of 50 and onwards. We estimate that the difference in life expectancy across education groups mainly stems from the worse health and survival dynamics after the age of 50.

"Subjective life expectancies, time preference heterogeneity and wealth inequality” (with Richard Foltyn) [Paper]

There is a substantial heterogeneity in life expectancy in the population. However, an individual's consumption-savings decision is not necessarily guided by the objective statistical life expectancy, but rather by the individual's beliefs about survival. In this paper, we document a systematic bias in survival beliefs: individuals with a low survival probability relative to their peers underestimate their life expectancies, while individuals with a high survival probability overestimate theirs. To gauge the effect of heterogeneity in life expectancy (objective and subjective) on savings rates and ultimately wealth inequality, we introduce shocks to survival beliefs into an otherwise standard overlapping-generations model. We show that with a bequest motive calibrated to match asset decumulation in old age, such a model exhibits a counter-factual savings behavior as individuals increase their savings when their life expectancy drops. Nevertheless, the overall wealth inequality in the economy is virtually unaffected by heterogeneity in survival beliefs, contrary to previous literature which finds stronger effects of heterogeneous discount factors.

Research papers in progress

"Labor Supply under Heterogeneous Agents: The Case of Complete Markets" (with Timo Boppart and Per Krusell)

Most of applied macro -- e.g., newkeynesian models, but also long-run modelling -- uses a representative agent or abstracts from labor supply, and often both. Sometimes the models study frictional labor markets, but rarely with active labor supply and heterogeneity, and then there is usually no frictionless benchmark to refer to. This is the gap we fill in this paper: we consider what we believe to be highly realistic and a priori relevant heterogeneity and its role for aggregate labor supply and for who will/should work. The findings have bearing both on short-run macroeconomic analysis -- in particular the sensitivity of ``the'' Frisch elasticity to heterogeneity -- and on long-run growth, where the growth rate of the economy can depend nontrivially on working behavior. The class of potential utility functions to consider is large so we restrict attention to those that are consistent with balanced growth (BK/KPR). Moreover, we focus especially on the functions most commonly used in the applied macroeconomic literatures. We conclude that, although a realistic model of the economy would feature incomplete markets and other frictions, the results we derive here will reflect a benchmark first-best allocation also in those economies and will, likely to an important extent, be driving the positive and normative features of those frictional economies as well.

"Can Stable Preferences Explain Postwar U.S. Hours worked?" (with Timo Boppart and Per Krusell)

Cross-country and time-series evidence suggest that, along a path of approximately constant real output and productivity growth, income effects on labor supply slightly outweigh substitution effect. Yet in the postwar U.S., where these approximate growth features are satisfied, hours have not had a trend, unlike in the average of OECD economies. In this paper we try to account for the U.S. facts with a standard neoclassical -- and, for convenience, frictionless -- model, using preferences that do mean that income effects exceed substitution effects. It turns out, first, that it is possible to account for the data if one defines ``hours worked'' to include hours worked at home. Second, to account for hours at home and in the market separately, one (i) needs to consider women explicitly and (ii) needs trends in drivers of women's labor supply. We briefly discuss possible such drivers, some of which can be quantified and are shown to contribute part way toward the total.

"Self-selection into Retirement and Social Security Reform" (with Richard Foltyn)

We investigate optimal retirement behavior in a life-cycle model of agents who are heterogeneous with respect to age, assets, productivity, health and social security entitlements. Our model replicates stylized facts observed in the US, such as the delayed retirement of high earners. Furthermore, unlike in earlier work, we carefully model health transitions estimated from a panel of the elderly which allows us to quantify the effects of (expected) longevity on retirement decisions. We use our model to evaluate reforms to the US Social Security system, such as changes to the full retirement age or the earnings test for early retirees, and the heterogeneous effects on high vs low earners. Preliminary results indicate that the earnings test as currently implemented in the US is a major factor in delaying retirement for high earners.