Research

My research interests lie at the intersection of analysis of risk-sharing and price formation using dynamic general equilibrium models and search models. I have written and published papers on immigration, social security and taxation; immigration and education choices of the natives; unemployment benefit design, wage formation and exits from unemployment; insurance contract design, consumer search behavior and price distribution in the healthcare market; quantitative analysis of within-family risk-sharing motives in the U.S.; accounting for frictions affecting individual's choices in the marriage market that lead to changing patterns of assortative-mating across generations in the U.S.; and, most recently, price formation in dynamic models where search must end before a deadline.


Some papers and abstracts:


  • "Transition Dynamics in Equilibrium Search", 2022. AEJ: Microeconomics. (with Brennan C. Platt)

https://www.aeaweb.org/articles?id=10.1257/mic.20200227&&from=f

We study a dynamic equilibrium search model where sellers differ in their urgency to liquidate an asset. Buyers strategically make price offers without knowing a given seller's urgency. We study liquidity and price dynamics on the transition path after an unexpected shock. Generically, the transition includes a phase where all buyers offer the same price, causing a market collapse; however, price dispersion resumes in finite time, leading to a recovery where both types make sales. We show that prices and liquidity can overshoot before converging to the steady state. When relaxed sellers randomly become desperate, dampening oscillations can occur.


Spouse quality, measured by educational attainment, varies significantly with the age at which an individual marries, peaking in the mid-twenties then declining through the early-forties. Interestingly, this decline is much sharper for women than men, meaning women increasingly marry less educated men as they age. Moreover, quality has worsened for educated women over several decades, while it has improved for men. Using a non-stationary sequential search model, we identify and quantify the search frictions that generate these age-dependent marriage outcomes. We find that single-life utility is typically the dominant friction, though college women in the 1950 and 1970 cohorts are affected even more by deteriorating suitor quality. Regardless of educational status, individual choice (as opposed to pure luck) is pivotal in explaining marriage market outcomes earlier in life.


  • "Risk-sharing within Families: Evidence from the Health and Retirement Study," 2015. Journal of Economic Dynamics and Control. (with Oksana Leukhina)

https://doi.org/10.1016/j.jedc.2014.12.005


We report strong empirical support for the presence of self-interest-based risk sharing within extended families in the U.S. A standard model of self-interest-based risk sharing predicts that the share of current family income consumed by a child positively depends on that child׳s permanent income. It follows that parental transfers to children that are expected to earn more over the period of risk-sharing arrangements should exhibit less sensitivity to the recipient׳s income fluctuations. We test this distinguishing prediction of self-interest-based risk sharing by exploiting the variation of transfer receipts among siblings, observed over 17 years of longitudinal data spanned by the Health and Retirement Study.

We ask how the ability to recall past prices affects the dynamics of search and price formation. In the model, buyers have limited time to purchase a good and face uncertainty regarding the availability of past price quotes in the future. Sellers cannot observe a potential buyer’s remaining time until deadline nor her quote history, and hence post prices that weigh the probability of sale versus the profit once sold. We find that, in contrast to conventional wisdom, reducing the consumer’s recall ability may actually improve his expected utility because it lowers the average expected price in the market and reduces the duration of search.

  • "Insurance, Consumer Search and Equilibrium Price Distributions," 2014. Journal of Risk and Insurance.

link.gale.com/apps/doc/A372553468/AONE?u=anon~9bba7197&sid=googleScholar&xid=b0a11f43.

We examine a service market with two frictions: search is required to obtain price quotes, and insurance coverage for the service reduces household search effort. While fewer draws from a price distribution will directly raise a household's average price, the indirect effect of reduced search on price competition has a much greater impact, accounting for at least 89 percent of increased average expenditures. In this environment, a monopolist insurer will exacerbate the moral hazard by offering full insurance. A competitive insurance market typically results in partial insurance and significant price dispersion, yet a second-best contract would offer even less insurance coverage.

  • "Running Out of Time: Limited Unemployment Benefits and Reservation Wages," 2012. Review of Economic Dynamics. (with Brennan C. Platt)

https://doi.org/10.1016/j.red.2011.06.001


We study unemployment insurance (UI) in an equilibrium environment in which unemployed workers only receive benefits for a finite length of time. Although all workers have identical productivity and leisure value, the random arrival of job offers creates ex-post differences with respect to their time remaining until benefit expiration. Firms, which are also homogeneous, can exploit these differences, leading to an endogenous wage distribution.

This allows us to examine the equilibrium effect of policy changes in both the size and length of UI benefits. Surprisingly, an increase in benefits can actually cause wages to fall, which is contrary to the predictions of on-the-job-search models. Moreover, we explain well-documented patterns of how the hazard rate of exiting unemployment responds to these policy changes. Our theory also explains why this hazard rate jumps at the time of benefit exhaustion.

  • "Rushing to Overpay: The REIT Premium Revisited," 2011. Journal of Real Estate Finance and Economics.

https://link.springer.com/article/10.1007/s11146-012-9372-1

We explore the questions of why Real Estate Investment Trusts (REITs) pay more for real estate than non-REIT buyers and by how much. First, we develop a search model where REITs optimally pay more for property because (1) they are willing, due to cost of capital advantages and, (2) they are occasionally rushed, due to external regulatory time constraints and internal incentives to deploy capital quickly. Second, using commercial real estate transactions, we find that the extant hedonic pricing models contain an unobserved explanatory variables bias leading to inflated estimates of the REIT premium. Third, using a repeat-sales methodology that controls for unobserved property characteristics, we derive more plausible estimates of the REIT premium. Consistent with our model, we also find the REIT-buyer premium depends on the size of the REIT advantage, the rush to deploy, and the relative presence of REITs in the market.

  • "Immigration, Fiscal Policy, and Welfare in an Aging Population," 2012. The B.E. Journal of Macroeconomics (Advances).

https://www.degruyter.com/document/doi/10.1515/1935-1690.2352/html

I evaluate the welfare effects of exogenous changes in immigration policy by constructing a heterogeneous agent overlapping generations model with agents differing in age, origin, and skills. Calibrating the model to Germany, I match the main features of the social security and tax systems, and account for differences in inter-generational transmission of skills and fertility between immigrants and natives. I find that a prohibition on immigration reduces welfare for the natives, whereas a policy that allows an annual inflow equal to 0.4 percent of the population increases welfare for all agents on the new balanced growth path. Interactions between the social security system, taxes, and equilibrium prices are crucial: immigration reduces wages, but raises the rental rate of capital and the number of workers per retiree, allowing for higher pension benefits and a lower consumption tax rate.