Jonna Olsson

Publications

Labor supply when productivity keeps growing (with Timo Boppart and Per Krusell) [Paper]
Review of Economic Dynamics (2023)

We examine the intensive and extensive margins of labor supply in an incomplete-markets framework where productivity keeps growing. What are, in particular, the long-run implications for who will work how much, and how the distribution of economic welfare among households will change? We insist the relative strengths of income and substitution effects to be such as to match historical and cross-country observations. That is, hours will fall toward zero as productivity and income rise, while wages per hour will keep rising and be consistent with stable income shares for labor and capital. Despite this rather drastic path toward zero hours worked we find that few features of the distribution of outcomes in the population are affected much at all by productivity growth. In particular, the relative distribution of hours worked and of consumption will look very similar to the case without productivity growth. 

Integrated epi-econ assessment of vaccination (with Timo Boppart, Karl Harmenberg, and Per Krusell) [Paper]
Journal of Economic Dynamics and Control (2022)

Using an integrated epi-econ model, we compute the value of vaccines for Covid-19, both under a planner’s solution and in competitive equilibrium. The specific model, developed in Boppart, Harmenberg, Hassler, Krusell, and Olsson (2020), factors in not just value-of-life aspects along with standard economic variables but also the value of leisure activities that rely on a social component. We find that the societal value of vaccination is large; we estimate that, translated into monetary terms, the value of vaccinating one young individual in the competitive equilibrium is $17,800. Externalities are large: less than half the societal value is internalized by individuals (assuming that they act purely in their self-interest). Finally, behavioral responses are important, with a substantial share of the value of vaccines being attributed to people enjoying more socially-oriented leisure when more people are vaccinated. 

Working papers

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

Women’s increased involvement in the economy has been an important 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.

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. 

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

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. 

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.

Policy writing 

Confronting epidemics: the need for epi-econ IAMs (with Timo Boppart, Karl Harmenberg, John Hassler, and Per Krusell) [Link]
[Prepared for the National Institute of Economic Research, Sweden, 2021]

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.