International Economic Review最新文献

Agents make noncontractible investments before bargaining over who matches with whom and their terms of trade. An agent is a price taker when her investments do not change her potential partners' payoffs. This incentivizes socially optimal investments. Across a variety of noncooperative bargaining models featuring dynamic entry, we show that everyone necessarily becomes a price taker as the discount factor goes to 1 if there is a minimal amount of competition always present in the market. If this condition is not satisfied, dynamic entry need not create enough competition to guarantee price taking even if agents are arbitrarily patient.

I document new facts on life-cycle wage growth within three countries: Brazil, Mexico, and the United States. In every case, I find that experience–wage profiles are steeper in rich states. Differences in education and industry mix can account for a large share of the covariance between income and profile steepness in both developing countries, while differences in occupations are key in every case. Using a general equilibrium model, I estimate meaningful productivity gains from inducing migration to places with better learning environment and find that migration costs are important in explaining cross-country differences in life-cycle wage growth.

The unemployment-risk channel (URC) amplifies an initial contraction through a reduction in consumption demand by workers who fear unemployment. Crucial for this are the dynamics of job separations and firm hiring. In US data, the job-finding rate responds slower to identified macroeconomic shocks than the separation rate, but accounts for a similar share of the unemployment response. We calibrate a tractable heterogeneous-agent new-Keynesian model with endogenous separations and sluggish vacancy creation to match these facts. The share of output fluctuations due to the URC is twice as large as in a standard model with exogenous separations and free entry.

We develop an empirical framework integrating Child Development and Education Production Function literature. It accounts for classroom and parental influences, skill measurement issues, and cognitive/noncognitive interactions. Both home and school investments shape children's skills by kindergarten, with low-skill children benefiting most from improvements. While classrooms are generally more productive, reducing disparities in home investments is more effective in closing income-related skill gaps. This stems from greater inequality in home investments than in school quality across socioeconomic groups.

Many economic allocation decisions involve subjective judgment. This judgment may be perceived as fair when needs are considered but may seem unjust in cases of personal-taste discrimination. In an experimental impartial-spectator design, we explore perceptions of taste-based inequality and compare them to attitudes toward inequalities grounded in objective procedures, namely, merit and luck. We find that while taste-based inequality is perceived distinctly, it is treated as unfair, similar to luck and unlike merit. Additionally, our work suggests that the perception of merit as more fair than luck is primarily driven by individuals with above-average income.

We specify and estimate a life-cycle model of consumption, housing demand, and labor supply in an environment where individuals can file for bankruptcy and/or default on their mortgages in the presence of house price shock, income shock, and catastrophic expenditure events. A key feature of the model is that individuals differ by education, which dictates their income process and preference. We estimate the model using data on credit reports and mortgages combined with Census data. Our model demonstrates that current bankruptcy and foreclosure laws have significant distributional impact. Specifically, Chapter 7 bankruptcy benefits low educated individuals but imposes large welfare costs on those with high education. Chapter 13 bankruptcy also benefits the low education group and affects the high education group little. Recourse laws, by contrast, are costly to low education groups, but beneficial to the high education group.