Research
Working Papers
Female Labor Supply and Jobless Recovery
Abstract: Female labor force participation rose steadily over the U.S. post-war era until the late 1980s. Since then, the upward trend has largely subsided. Concurrent with this leveling off, starting in 1990, recessions in the U.S. have featured jobless recoveries. This paper considers the connection between these two recent patterns, examining both empirically and through the lens of a general equilibrium macroeconomic model, the extent to which the weakened trend contributes to slower recoveries. My empirical analysis shows that young, married women with children were the primary drivers of aggregate employment recoveries prior to 1990. These findings inform the development of a theoretical model that I use to study the interaction between female and male labor supply at the household and at the aggregate level. My model predicts that post-1990 aggregate employment recoveries were significantly slower than pre-1990 recoveries due to the weakened trend for young married women with children and is thus consistent with my empirical evidence both in the aggregate and in which individual groups show these changes. Decomposing the relative contributions of several underlying factors responsible for this pre-1990s rise, the model predicts that the narrowing gender wage gap is the most important factor in the overall increase. However, until the mid-1980s, when the upward trend in female labor supply was the strongest and recoveries in aggregate employment were brisk, a reduction in the number of young children for married women was the most crucial factor. With this insight, I use my framework to discuss policy implications for mitigating jobless recoveries.
Gender, Marriage, and Portfolio Choice: Role of Income Risk (with Anand Chopra)
Abstract: This paper examines the source of gender and marital status differences in portfolio choices across U.S. households. Using the Panel Study of Income Dynamics (PSID) and the Survey of Consumer Finances (SCF), we find evidence that single female-headed households invest the least in risky assets, followed by single male-headed households. Further, married households invest the most in risky assets. Towards explaining these differences in portfolio allocations, we further document that women earn lower incomes and face higher individual income risk relative to men. To quantitatively investigate the importance of these gender differences in income profiles, we develop a two-asset incomplete market life-cycle model with heterogeneous households. Using the model, we show that the gender wage gap is important in explaining portfolio choice differences during the initial years of working life; however, higher income risk leads to lower risk-taking behavior by female-headed households afterward. We also show that dual-earner households exhibit higher investment in risky assets compared to single-earning couples, which is consistent with our empirical findings, indicating a role for spousal insurance.
Firm size and Female Employment (with Kanika Mahajan)
Abstract: Using firm and household-level data from India, we establish a positive association between relative female employment and firm size. We find that the proportion of female workers is higher in firms with a larger number of total employees (elasticity of 0.67) and output (elasticity of 0.1). To establish this positive relationship causally, we exploit a natural experiment in the amendment of labor laws across the Indian states, which increased the firm size thresholds for the applicability of regulatory requirements. Using a difference-in-difference estimation, we find an increase in the proportion of female workers by 20% in treated states vs. control states. Further, one of the channels behind an increase in relative female employment is the increase in firm size by around 10% due to the amendments. We show that higher benefits and amenities offered by larger firms, like maternity benefits and paid leave, which are likely to be valued more by female workers, are a plausible mechanism behind our findings. Theoretically, we propose a task-based explanation that leads to greater relative demand for women in bigger firms and, consequently, higher investment by them in amenities valued by women. Taken together, our results show that policies that increase firm growth or amenities valued by women (without employer backlash) are likely to affect female employment positively.
Female Earnings and Wealth Accumulation
Abstract: In this paper, I study the effect of a rise in female earnings on wealth accumulation decisions of households. I argue that spousal labor supply acts as a form of insurance, thus influencing household savings behavior. Since the rise in female participation in the U.S. was primarily driven by married women, the role of this insurance has changed over time. The theoretical framework in this paper predicts that as wealth levels increase, households are able to invest in riskier assets. Further, couples invest a higher fraction of their wealth in riskier assets as compared to their single counterparts. Also, higher-income couples are able to take on more risk as compared to those with low incomes. Thus, as female earnings rise, the wealth accumulated by couples increases.
Inefficiencies due to Skill choice (Last updated: December 2017)
Abstract: In this paper, I examine how the skill investment choices that individuals make can lead to inefficient outcomes due to the existence of search frictions. My work is motivated by the finding that in India, enrollment in an engineering degree contributes to around 25% of the total college enrollment; however, 60% of engineering graduates remain unemployed. I hypothesize that some college degrees, such as engineering, provide multiple job options, which may incentivize individuals to invest in them. However, this may lead to over-investment in this skill type, which eventually contributes to higher unemployment among engineers, owing to the search frictions that are present in the economy. I analyze this question by using a two-sector two-skill search theoretic framework and find that under certain conditions, this may lead to inefficient outcomes. A government intervention which taxes individuals who invest in these skills and subsidizes workers who invest in skills that are more focused and hence have fewer job options can help to reduce this inefficiency.
Works-in-Progress
Support prices, input subsidies, and misallocation in Indian agriculture (with Anand Chopra and Lalit Contractor) STEG Research Grant
Abstract: In this paper, we study the implications of agricultural price support programs (which offer a minimum price to producers of supported crops) and input (electricity and fertilizer) price subsidies, which are common to several low-income economies, for occupational choices and quantify the resulting misallocation of talent across the agricultural and non-agricultural sectors. These programs can distort cropping choices, sorting across sectors, and contribute to low agricultural productivity. As agriculture comprises a large share of employment in many developing economies, low agricultural productivity can help explain the income differences between rich and poor economies. We formalize this argument by using an incomplete-markets general equilibrium model with two sectors and two cropping choices to understand the consequences of the various distortions to farm size and land use in the presence of agricultural risk. Unlike much of this literature, our analysis employs a dynamic model with agent heterogeneity by productivity and asset holdings to focus on specific distortions, viz., a minimum price that producers of certain crops can avail of or input price subsidies, in the context of India.