Job Polarization and Structural Change (with Zsofia Barany)

forthcoming American Economic Journal: Macroeconomics, 2017
We document that job polarization -- contrary to the consensus -- has started as early as the 1950s in the US: middle-wage workers have been losing both in terms of employment and average wage growth compared to low- and high-wage workers. Given that polarization is a long-run phenomenon and closely linked to the shift from manufacturing to services, we propose a structural change driven explanation, where we explicitly model the sectoral choice of workers. Our simple model does remarkably well not only in matching the evolution of sectoral employment, but also of relative wages over the past fifty years.
AEJ:Macro, manuscript version

Female Relative Wages, Household Specialization and Fertility

Review of Economic Dynamics, Volume 24, March 2017, pp 152-174, DOI 10.1016/
Falling fertility rates have often been linked to rising female wages. However, over the last 40 years the US total fertility rate has been rather stable while female wages have continued to grow. Over the same period, women's hours spent on housework have declined, but men's have increased. I propose a model in which households are not perfectly specialized, but both men and women contribute to home production. As the gender wage gap narrows, the time allocations of men and women converge, and while fertility falls at first, the decline stops when female wages are close to male's. Rising relative wages increase women's labor supply and due to higher opportunity cost lower fertility at first, but they also lead to a reallocation of home production and child care from women to men, and a marketization. I find that both are important in understanding why fertility did not decline further. In a further quantitative exercise I show that the model performs well in matching fertility over the entire 20th century, including the overall decline, the baby boom, and the recent stabilization.
Open Access at RED, manuscript version, online appendix

Capital Taxes, Labor Taxes and the Household (with Rigas Oikonomou)

Journal of Demographic Economics, Volume 81, Issue 03, September 2015, pp 217-260, DOI 10.1017/dem.2015.7
We study the impact of capital and labor taxation in an economy where couples bargain over the intrahousehold allocation under limited commitment. In this framework more wealth improves commitment and gives rise to insurance gains within the household. Our theory motivates these gains by the empirical observation that wealth, in contrast to labor income, is a commonly held resource within households. Based on this observation we study whether eliminating capital taxes from the economy, and raising labor taxes to balance the government's budget, may generate welfare gains to married households. We illustrate that the quantitative effects from this reform are rather small. We attribute the small effects to the life cycle pattern of wealth accumulation and to the impact of labor income taxes on household risk sharing: In particular, we show that higher labor taxes may make the limited commitment friction more severe, even though they may make the distribution of labor income more equitable within the household.
manuscript version

Working Papers

Make Yourselves Scarce: The Effect of Demographic Change on the Relative Wages and Employment Rates of Experienced Workers (with Michael Boehm)

We propose a model in which rising supply of experience reduces experienced workers' relative wages and also lowers their relative labor market participation. We then quasi-experimentally investigate these effects, using variation across U.S. local labor markets (LLMs) over the last decades and instrumenting experience supply by the LLMs' age structures a decade earlier. We find that aging substantially reduces experienced workers' relative wages and employment rates, and also their labor market participation rates. Our results imply that the effect of demographic change on the labor market might be substantially more severe than previously recognized, as it reaches beyond wages.
August 2017

Disentangling occupation- and sector-specific technological change (with Zsofia Barany)

Occupational and sectoral labor market patterns display a significant overlap. This implies that economic models can explain these patterns to a large degree through either sector- or occupation-specific technological change, but stay silent about the level of specificity. We propose a model where technologies evolve at the sector-occupation level, allowing us to extract sector-only and occupation-only components and to quantify their importance. We find that most of productivity changes are occupation-specific, but that there is also a sizable sector component. We contrast the data and our baseline model against implications of models where technological change is restricted to be either at the sector or at the occupation level, or both. All three restricted models can replicate both sectoral and occupational outcomes very well, but occupation-specific changes are crucial for within-sector changes of occupational employment and income shares.
July 2017 version

Work in Progress

Domestic Market Size, Inward Orientation, and Industrialization (with Francesco Caselli and John Coleman)