We characterize the optimal linear tax on capital in an Overlapping Generations model with two period lived households facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general equilibrium effects of private precautionary saving on factor prices and taxes capital unless the weight on future generations in the social welfare function is sufficiently … Read more
Optimal taxes on capital in the OLG model with uninsurable idiosyncratic income risk
The lost ones: The opportunities and outcomes of white, non-college-educated Americans born in the 1960s
White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s; men’s wages declined more than women’s. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in … Read more
Sources of U.S. wealth inequality: Past, present, and future
The distribution of wealth in most countries for which there is reliable data is strikingly uneven. There is also recent work suggesting that the wealth distribution has undergone significant movements over time, most recently with a large upward swing in dispersion in several Anglo-Saxon countries (Piketty 2014; Saez and Zucman 2016). For example, according to … Read more
The Intergenerational Elasticity of Earnings: Exploring the Mechanisms
Rich parents have rich children. Why is that? This paper evaluates several different potential channels that might explain the persistence in earnings between parents and children. In particular, the researchers study the relative importance of differences in years of schooling, cognitive skills, parental investments, and family background. To do so, they use a cohort born … Read more
Should Germany have built a new wall? Macroeconomic lessons from the 2015-18 refugee wave
This research uses economic data modelling to look at whether the arrival of large numbers of refugees in 2015-16 depressed wages in Germany. It concludes that while some low-skilled natives did suffer, this effect was more than compensated for by welfare benefits to older residents. The researchers used data capturing the arrival of more than … Read more
The Lost Ones: The Opportunities and Outcomes of Non-College-Educated Americans Born in the 1960s
Long-term changes in married couples’ labor supply and taxes: Evidence from the US and Europe since the 1980s
This study uses large-scale survey data from Europe and the United States to ask what factors have affected decisions made by married couples about whether to work, and for how many hours. It finds income tax can influence women to work more hours. The researchers analysed data from the European Labour Force Survey and the … Read more