Third Edition - 2024/25

Spring Term

☘️Session 8 (5 June 2025)

"From joint to individual: The distributional and labour supply effect of tax individualisation in Ireland"

Agathe Simon (Economic and Social Research Institute)

Abstract: This paper evaluates the redistributive and labour supply effects of transitioning from a joint to a fully individualised income tax system in Ireland. The current system, partially joint since the early 2000s, allows married couples to share tax bands and credits, offering financial advantages. However, it also imposes higher marginal tax rates on secondary earners, typically women, discouraging their labour market participation. Using SWITCH, an Irish microsimulation model, we estimate that full individualisation would lead to income losses, especially for higher-income households, and a slight increase in overall and child-specific at-risk-of-poverty rates. We developed a discrete choice labour supply model to estimate change in working hours from the reform and show an increased labour supply among married women and modest reductions in hours worked by married men due to intra-household substitution. The resulting rise in women’s employment helps offset income losses from the reform. Overall, individualisation strengthens women’s earnings and promotes their economic independence.

☘️Session 7 (1 May 2025)

"The intergenerational transmission of health revisited: Exploring long-run patterns across Africa"

Dimitrios Argyros (University College Dublin)

Abstract: Despite significant economic progress, Africa remains marked by deep poverty and inequality, with limited intergenerational mobility. Child health plays a crucial role in the persistence of socio-economic status, yet its dynamics across generations remain understudied in the African context. This paper examines long-run trends in intergenerational health transmission across 29 African countries over the 1975–2017 period, using data from 104 Demographic and Health Surveys covering 4.5 million children. We document strong intergenerational health persistence, with substantial cross-country variation linked to baseline development. Over time, we observe a Kuznets-style dynamic in many countries—initially rising persistence followed by a decline—reflecting evolving patterns of inequality. However, country-specific trends differ markedly, motivating an exploration of structural and institutional drivers through a growth-accounting decomposition. To further assess convergence in intergenerational trajectories, we apply the Phillips and Sul (2007) club convergence method. We find no full convergence, but identify four distinct convergence clubs shaped by differences in public health systems, maternal education, and economic development. These findings underscore the importance of structural factors in shaping health mobility and provide new insights into the dynamics of inequality in Africa.

☘️Session 6 (3 April 2025)

"Intellectual Resistance: The Female Performance in Italian High Schools Under Fascism"

Petru Calenici (University College Dublin)

Abstract: This paper aims at investigating the impact of feminization of teaching in Italian secondary schools during the interwar years on women themselves. By first analyzing the feminization trends of teaching and students bodies, we ask whether students' performance was affected by their gender and in case this were to be the case, if the percentage of female teachers and female students impacted on the performance of female pupils. Our interest on this specific historical period stems from the significant legislative efforts put in place after 1923 in order to prevent the feminization of secondary education for both students and teachers. For our purposes we use a newly created panel dataset on the Italian secondary system over the interwar period, presenting a hierarchical structure over four levels (regional, school track, student gender and school year). This allowed us to estimate multilevel models with random slopes. Our main results are that: 1) despite the 1920s restrictive laws, the feminization of teaching did not stop, although it slowed down; 2) the feminization of students suffered a decline in correspondence of the implementation of the 1923 reform, but then recovered over the following years; 3) female students outperformed their male peers, with their performance being positively associated with the feminization of the teaching body (a possible role mode effect) and the increasing presence of female students (a peer effect).

☘️Session 5 (27 February 2025)

"Time to Grow Up? The Distributional Effects of Parental Leave Policies on Fertility and Child Human Capital"

Giorgia Conte (Trinity College Dublin)

Abstract: This paper examines the distributional effects of introducing paid leave policies in the US on fertility and children’s human capital. Using a life cycle model calibrated to US data, I simulate the introduction of a paid parental leave policy, and find that it raises fertility by 9%, primarily among low-income families. The policy generates a quantity-quality trade-off: while paid leave increases parental time investment in newborns, fostering early development, it reduces investments in later childhood for families with stronger fertility responses who face financial constraints, leading to losses in human capital. These findings highlight the potential for paid leave to boost fertility but also reinforcing income-related disparities in child outcomes.

☘️Session 4 (6 February 2025)

"Consumer Credit Regulation and Financial Stability"

Patrik Gorše (University of Vienna & Central Bank of Ireland)

Abstract: This paper builds on the heterogenous agent model with consumer credit to study the effects of macroprudential policy on financial stability. The model consists of households choosing between consuming and borrowing/saving, international banks taking deposits and giving out consumer loans, and the government paying out pensions, dictating minimal capital requirements for banks, setting borrower-based measures for consumer credit and running deposit insurance agency saving banks that declare bankruptcy. Debt contracts can not be enforced, therefore some households may optimally choose to default. Due to this reason, the aggregate interest rate for borrowing is higher than the average cost of lending, i.e. banks charge higher interest rates to recoup losses incurred by bankruptcies. Furthermore, banks operate on a limited liability basis and thus can also declare bankruptcy themselves. When a bank becomes insolvent, it is taken over by a deposit insurance agency that is funded by a lump sum tax on all households. Stricter macroprudential policy effectively constrains households in their borrowing and this would, ceteris paribus, lower their welfare. Nevertheless, this also lowers household/bank bankruptcy rates, which leads to lower aggregate interest rates for borrowers and fewer taxes from deposit insurance agency.

Fall Term

☘️Session 3 (28 November 2024)

"Avoidance Behaviours and Constraints: Temperature and Labour Supply in the UK"

Garreth Gibney (University of Galway)

Abstract: People allocate their time to maximise their welfare. For example, individuals may reallocate their time to take advantage of current conditions and avoid hazards. Such hazards include extremes of temperature, which can be detrimental to human health. In a world with rising temperatures, these avoidance behaviours will likely have important implications for labour supply. Labour markets, in turn, might be important mediators of individual exposure to temperature. To date, analysis of the interplay between temperatures and time allocation has been limited to particular labour markets. Using time allocation data from the UK, we investigate the impact of temperature on the allocation of time to labour and non-labour activities. Exploiting plausibly exogenous variation within regions and months, we document that on a high-temperature days workers in weather-exposed sectors reduce their labour supply by almost two hours. We find evidence that workers partly compensate for lost working hours via inter-temporal substitution, increasing their labour supply on the day following a high-temperature day. These responses are consistent with avoidance behaviours. Finally, we find suggestive evidence of unequal time allocation response across the income distribution.

☘️Session 2 (7 November 2024)

"Faraway, So Close: Business Cycle Effect of Long-Run Ambiguity"

Filippo Maurici (Roma Tre University)

Abstract: This paper explores forward-looking ambiguity (Knightian uncertainty) in a model with homogeneous workers and credit-constrained heterogeneous entrepreneurs. Agents are ambiguity-averse, using worst-case criteria to form expectations about future productivity. We compare our economy with one that lacks uncertainty and find that ambiguity: (i) lowers the productivity threshold for market entry, (ii) reduces the equilibrium interest rate, and (iii) shifts expenditures between workers and entrepreneurs. These results stem from persistent expectation-realization mismatches. While ambiguity does not affect stability, it alters the convergence rate to the steady state and helps explain key macroeconomic comovements.

☘️Session 1 (3 October 2024)

"Beyond Borders, Within Societies: Inequality and the Global Transmission of US Monetary Policy"

Simone Arrigoni (Trinity College Dublin & University College Dublin)

Abstract: A central question in the international macroeconomics literature is how United States (US) monetary policy affects economic conditions in the rest of the world. I study the heterogeneity of monetary policy spillovers, conditioned on the recipient country's level of disposable income inequality. I employ state-dependent local projections and exploit variation in within-country inequality across a panel of 87 countries. The empirical findings suggest that household heterogeneity significantly influences how foreign GDP responds to a US monetary policy tightening. However, greater inequality strengthens the negative spillover effects in advanced economies while mitigating them in emerging market economies. To rationalise this finding, I make use of a three-country Two-Agent New Keynesian (TANK) model. The model suggests that this divergence is driven by differences in participation in international financial markets between countries. Households in emerging market economies face higher barriers to investing internationally. This prevents them from re-balancing their portfolios towards higher-return bonds after the shock, thereby reducing the macroeconomic effect of higher inequality on domestic conditions.

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