The researchers will use an historical accounting methodology, established in earlier work, to examine the extent to which changes in household leverage have contributed to shifts in aggregate demand over the past 80 years. They will expand this accounting framework to analyze municipal debt—both an important asset in financial markets and a critical source of finance for local public goods. The results and underlying data will likely provide new evidence on how debt affects the macroeconomy and will have implications for monetary policy as well as policy responses to levels of private and public leverage.
Archives: Grant
College and intergenerational mobility: New evidence from administrative data
Many argue that higher education is one of the best ways to increase intergenerationalmobility. Students from lower-income backgrounds can move up the income ladder if they attend the right college or university. But how equal is access to those schools? If qualified low-income students aren’t attending the schools that provide the most opportunity, then the college attendance process may be retarding upward economic mobility. This research project will look at the role of colleges and universities in transmitting income inequality into the next generation. Using gold-standard restricted-access tax data, the author will identify where students from across the income distribution attend college, and which colleges are improving the economic standing of students up and down the income ladder.
Impact of the great rise in finance on resource allocation and employment
The authors will investigate how large increases in household debt affect the allocation of labor across geographical areas and industries. This project is a continuation of their previous research on household debt, and will result in the creation of a new historical county-level panel of household balance sheets and industry-specific employment—a harmonized data set (1946-2012) that will be available to other researchers. A second contribution is a test of whether the run-up in debt led to imbalances in employment, a corollary to the findings in Mian and Sufi (2014) about employment shocks during the Great Recession. A better understanding of the interaction between household debt and structural changes in the allocation of labor could help researchers better identify and understand the root causes behind the labor market slowdown.
Inequality, aggregate demand, and secular stagnation
Over the past two years, “secular stagnation” has been widely discussed within the policy community. Supporters of the secular-stagnation hypothesis believe that demand may be permanently below supply capacity, with low interest rates and inflation targets by central banks preventing real interest rates from falling to the point necessary to restore the supply and demand balance. Widening income inequality has been cited as one cause of secular stagnation. This project will develop a theoretical model to illuminate how income inequality affects aggregate income and therefore economic growth. The model has important implications for economic policy, particularly monetary policy.
The impact of inequality on young workers’ career progression
Research shows that a worker’s first few years in the labor force have outsized effects over their entire lifetime earning’s trajectory. This project will look at how earnings, employment, and job transitions have changed for young workers over the past three decades. The researcher will also look at how rising income inequality affects career outcomes.
Student loans: vehicle of opportunity or trojan horse?
How does the dramatic increase of student loan debt affect how college graduates search for jobs in the labor market? Do the effects of student debt on job search differ across the distribution of family income? This project addresses these important questions, with immediate implications for contemporary policy conversations about student debt reform, as well as the broader fate of Millennials in the labor market.
Inequality of economic precarity and uncertainty and family formation and instability
Economic inequality and family insecurity have risen in the United States over the past several decades. The interaction between the two phenomena is a matter of debate, as many researchers and policymakers have pointed to family structure, particularly non-marital childbirth, as a key source of rising economic inequality. But what if the relationship went the other way, and rising inequality and economic insecurity were themselves causes of family insecurity? The researchers tackle this question by looking at individual families and their evolution over time. Family instability has major implications for the development of human capital, which in turn feeds directly into long-term economic growth prospects.
Intragenerational income mobility in the United States
Using federal income tax data, this project will investigate intragenerational income mobility in the United States. The researchers will explore the determinants of mobility—such as aging, employment history, industry trends, marriage or divorce, and geographical mobility—and examine how household income profiles respond to earnings shocks.
Financial behavior and uncertain tax refunds: a new test of precautionary saving among low-income households
This research seeks to better understand how readily low-income households spend an extra dollar of income by utilizing a novel quasi-experimental design based on the uncertainty of tax refunds. A better understanding of the marginal propensity to consume at the bottom of the income distribution has important implications for the design of fiscal stimulus and unemployment insurance systems, as well as the tax system.
The consequences of tougher sentencing and the prison boom: Recidivism, human capital accumulation, and intergenerational effects
This project examines the effect of incarceration on various outcomes, including recidivism, human capital accumulation, employment, and earnings. The authors will do so using a natural experiment leveraging variation in sentencing outcomes due to differences between randomly assigned judges. Taking advantage of the considerable administrative data capacities of University of Chicago’s Chapin Hall, the authors aim to make novel contributions extending well beyond the current literature, which largely relies on survey data. This research will address critical questions such as the flat lining of male labor force participation, and the importance of the prison boom in driving the black/white wage gap.