Jonna Olsson

Working papers

Integrated epi-econ assessment: quantitative theory (with Timo Boppart, Karl Harmenberg, John Hassler, and Per Krusell) [Paper]

We formulate an economic time use model and add to it an epidemiological SIR block. In the event of an epidemic, households shift their leisure time from activities with a high degree of social interaction to activities with less, and also choose to work more from home. Our model highlights the different actions taken by young individuals, who are less severely affected by the disease, and by old individuals, who are more vulnerable. We calibrate our model to time use data from ATUS, employment data, epidemiological data, and estimates of the value of a statistical life. There are qualitative as well as quantitative differences between the competitive equilibrium and social planner allocation and, moreover, these depend critically on when a cure arrives. Due to the role played by social activities in people's welfare, simple indicators such as deaths and GDP are insufficient for judging outcomes in our economy.

Singles, couples, and their labor supply: long-run trends and short-run fluctuations [Paper]
[R&R AEJ:Macro]
(previously circulated as: Structural transformation of the labor market and the aggregate economy)

Women’s increased involvement in the economy was the most significant change in labor markets during the past century. I show that a macroeconomic model taking into account gender and household composition in an otherwise parsimonious off-the-shelf setting captures key historical labor supply facts regarding trend and volatility across subgroups. Evaluating the economy’s response to aggregate shocks at different points in time shows that the underlying trend growth in married women’s employment contributed to the perceived quick employment recoveries after recessions before 1990, and the absence of growth thereafter consequently helps explain the more recent slower recoveries.

Health dynamics and heterogeneous life expectancies (with Richard Foltyn) [Paper]
[Online appendix] [Companion website]

Using biennial data from the Health and Retirement Study, we estimate age-dependent health dynamics and survival probabilities at annual frequency conditional on race, sex, and health for the US population. The health gradient in life expectancy is steep and persists after controlling for socioeconomic status. Moreover, even conditional on health and socioeconomic status, the racial gap in life expectancy remains large. Model simulations show that this gap affects savings rates but does not play a major role in explaining the racial wealth gap. However, we find that differences in mortality alone imply that black individuals on average can expect to receive 15 percent less in Social Security benefits in present value terms.

Subjective life expectancies, time preference heterogeneity and wealth inequality (with Richard Foltyn) [Paper]
[R&R Quantitative Economics]

This paper examines how objective and subjective heterogeneity in life expectancy affects savings behavior between healthy and unhealthy people. Using data from the Health and Retirement Study, we first document systematic biases in survival beliefs across self-reported health: those in poor health not only have shorter actual lifespan, but are also more pessimistic about their remaining time of life. To gauge the effect on savings behavior and wealth accumulation, we then use an overlapping-generations model where survival probabilities and beliefs evolve according to a health and survival process estimated from data. We conclude that differences in life expectancy can explain one fifth of the differences in accumulated wealth and that pessimism among the unhealthy plays an important role.

Papers not intended for publication

Confronting epidemics: the need for epi-econ IAMs (with Timo Boppart, Karl Harmenberg, John Hassler, and Per Krusell) [Link]

We discuss what tools would be useful in confronting epidemics, especially from the perspective of economics. Our main proposal is for policymakers to employ “epi-econ IAMs”: explicit Integrated Assessment Models, where epidemiology is integrated with economics. These models are under rapid development, but arguably not yet quite ready for quantitative use.