Publication
"Legacies of the War on Poverty" with Robert Moffitt and Timothy Smeeding
The ANNALS of the American Academy of Political and Social Science, 771 (1), pp.38-56 (2024)
Abstract: We extend the work of Haveman et al. (2015) which conducted a comprehensive analysis of the evolution of the U.S. social welfare system from the start of War on Poverty through 2012. These authors chronicled changes in the welfare system, changing methods of measuring poverty, and analyzed poverty levels and trends. We extend their work through 2022, finding that the poverty rate declined from 2012 to 2019 because of improvements in the economy and not from changes in the transfer system but that the opposite occurred during the 2019-2022 Pandemic period, when changes in poverty rates were mostly driven by changes in government relief programs. The decline in poverty from 2012 to 2022 followed a run up in poverty from 2000-2012, leaving us with no improvement in poverty rates from the economy since 2000. We conclude that significant future reductions in poverty likely require further improvements in the safety net.
The ANNALS of the American Academy of Political and Social Science, 771 (1), pp.38-56 (2024)
Abstract: We extend the work of Haveman et al. (2015) which conducted a comprehensive analysis of the evolution of the U.S. social welfare system from the start of War on Poverty through 2012. These authors chronicled changes in the welfare system, changing methods of measuring poverty, and analyzed poverty levels and trends. We extend their work through 2022, finding that the poverty rate declined from 2012 to 2019 because of improvements in the economy and not from changes in the transfer system but that the opposite occurred during the 2019-2022 Pandemic period, when changes in poverty rates were mostly driven by changes in government relief programs. The decline in poverty from 2012 to 2022 followed a run up in poverty from 2000-2012, leaving us with no improvement in poverty rates from the economy since 2000. We conclude that significant future reductions in poverty likely require further improvements in the safety net.
Working papers
"Counting the Poor: The Liquidity-Adjusted Supplemental Expenditure Poverty Measure" with John Fitzgerald and Robert Moffitt
Abstract: Most poverty calculations use income-based or consumption-based measures. We introduce a new, third measure of poverty status which is based on household expenditure. Expenditure is the theoretically correct measure of resources actually transferred into a given period in the life cycle. But the presence of illiquid service flows from durable goods, which can only be used to purchase that good in the minimum standard of living bundle and no other good, requires an adjustment both to resources and to the poverty threshold to allow a proper comparison of liquid resources to liquidity-adjusted thresholds. We also show that the expenditure impact of transfers on the poverty rate requires an adjustment for effects of transfers on precautionary saving and for their role as consumption insurance. Using the 2009-2022 Consumer Expenditure Survey, our liquidity-adjusted poverty measure yields a 2022 poverty rate of 8.3 percent, declining by 11 percent since 2009. Our measure trends in broadly similar ways to income- and consumption-based measures but only because differences in how thresholds and resources are calculated are offsetting. We also find that accounting for precautionary saving and the insurance role of transfers could make the anti-poverty impact of transfers somewhat smaller than that estimated ignoring these effects.
Abstract: Most poverty calculations use income-based or consumption-based measures. We introduce a new, third measure of poverty status which is based on household expenditure. Expenditure is the theoretically correct measure of resources actually transferred into a given period in the life cycle. But the presence of illiquid service flows from durable goods, which can only be used to purchase that good in the minimum standard of living bundle and no other good, requires an adjustment both to resources and to the poverty threshold to allow a proper comparison of liquid resources to liquidity-adjusted thresholds. We also show that the expenditure impact of transfers on the poverty rate requires an adjustment for effects of transfers on precautionary saving and for their role as consumption insurance. Using the 2009-2022 Consumer Expenditure Survey, our liquidity-adjusted poverty measure yields a 2022 poverty rate of 8.3 percent, declining by 11 percent since 2009. Our measure trends in broadly similar ways to income- and consumption-based measures but only because differences in how thresholds and resources are calculated are offsetting. We also find that accounting for precautionary saving and the insurance role of transfers could make the anti-poverty impact of transfers somewhat smaller than that estimated ignoring these effects.
"Distributional Effects of Ability Learning and Career Choice"
Abstract: This paper examines occupational choices as a channel between wealth and earnings inequality. Selecting occupations that match workers' skills can lead to higher earnings. However, risk-averse workers might be reluctant to experiment and discover their highest earnings potential due to uncertainty. I construct a dynamic structural model that examines how workers gradually learn about their skills by performing different combinations of tasks. The results show that lower wealth leads to less experimentation in occupational choice, resulting in a greater loss in lifetime earnings. Additionally, the study finds that the payoff for performing cognitive tasks is much greater than that for motor tasks, but the costs of mismatching to a task are also greater for cognitive tasks. Simulation results using the estimated model show that a policy proposal for Baby Bonds can significantly reduce income inequality, particularly for people with low wealth.
Abstract: This paper examines occupational choices as a channel between wealth and earnings inequality. Selecting occupations that match workers' skills can lead to higher earnings. However, risk-averse workers might be reluctant to experiment and discover their highest earnings potential due to uncertainty. I construct a dynamic structural model that examines how workers gradually learn about their skills by performing different combinations of tasks. The results show that lower wealth leads to less experimentation in occupational choice, resulting in a greater loss in lifetime earnings. Additionally, the study finds that the payoff for performing cognitive tasks is much greater than that for motor tasks, but the costs of mismatching to a task are also greater for cognitive tasks. Simulation results using the estimated model show that a policy proposal for Baby Bonds can significantly reduce income inequality, particularly for people with low wealth.
"Unemployment Benefits and Occupational Mobility: Evidence from Emergency Unemployment Compensation Programs"
Abstract: This paper explores a new aspect of post-unemployment search outcomes, namely occupational choice. Workers' career choice and potential improvement of job match quality upon occupational change is largely studied in the context of on-the-job-searches rather than unemployment. Despite its potential benefits, changing occupations may involve various risks. In particular, this paper documents that those who switch occupations stay unemployed on average 6 more weeks compared to those who stay in the same occupation. In this paper, I examine whether Unemployment Insurance benefits provide additional security in the face of such risks by leveraging cross-state variation in unemployment benefits as part of the Extended Unemployment Compensation program during the early 1990s. Using Matching methods and classic Difference-Differences approach, I find that additional UI benefits as well as household wealth levels and poor match quality with pre-unemployment jobs are deciding factors for workers to experiment and switch job tasks upon re-employment.
Abstract: This paper explores a new aspect of post-unemployment search outcomes, namely occupational choice. Workers' career choice and potential improvement of job match quality upon occupational change is largely studied in the context of on-the-job-searches rather than unemployment. Despite its potential benefits, changing occupations may involve various risks. In particular, this paper documents that those who switch occupations stay unemployed on average 6 more weeks compared to those who stay in the same occupation. In this paper, I examine whether Unemployment Insurance benefits provide additional security in the face of such risks by leveraging cross-state variation in unemployment benefits as part of the Extended Unemployment Compensation program during the early 1990s. Using Matching methods and classic Difference-Differences approach, I find that additional UI benefits as well as household wealth levels and poor match quality with pre-unemployment jobs are deciding factors for workers to experiment and switch job tasks upon re-employment.
"Sectoral Differences in Matching Technology" with Hyunmin Park
Abstract: This paper estimates Cobb-Douglas matching functions for four sectors of the US labor market---production, sales, professional, and services---while allowing the search effort to vary across worker types and the matching functions to display increasing or decreasing returns to scale. We find that (a) the returns to scale in the sales sector is close to constant while the returns to scale in other sectors are increasing, (b) the vacancy elasticity is substantially higher in the professional sector than in other sectors, (c) the unemployment elasticity is substantially higher than the vacancy elasticity in all sectors, and (d) the baseline matching efficiency is the highest in the production sector than in other sectors.
Abstract: This paper estimates Cobb-Douglas matching functions for four sectors of the US labor market---production, sales, professional, and services---while allowing the search effort to vary across worker types and the matching functions to display increasing or decreasing returns to scale. We find that (a) the returns to scale in the sales sector is close to constant while the returns to scale in other sectors are increasing, (b) the vacancy elasticity is substantially higher in the professional sector than in other sectors, (c) the unemployment elasticity is substantially higher than the vacancy elasticity in all sectors, and (d) the baseline matching efficiency is the highest in the production sector than in other sectors.
"Employer Learning and Multi-Dimensional Ability" with Kyungmin Kang
Abstract: The literature on employer learning has mostly been concerned with testing whether employers learn about true productivity of workers in various education groups, assuming that the rate of employer learning is independent of the type of job task. In this paper, thus, we ask whether the role of employer learning varies by worker task type. We build a model in which workers and firms learn about workers' multi-dimensional skills from productivity signals, where signal accuracy depends on a job's task intensity. To test the model implication that the flow of information is larger at the jobs with intensive tasks, we focus on two task measures, abstract and social tasks, constructed using data from the Occupational Information Network (O*NET). To address the endogeneity associated with job mobility, we take an instrumental variable approach, using the Markov property of Bayesian learning, where the previous periods' occupation and occupational aspiration are used as instruments. We find that employer learning depends on task intensity, especially for cognitive skills. Moreover, the degree of task-based employer learning varies across educational groups. In particular, our analyses show that cognitive tasks play a key role in employer learning for college graduates, while social tasks are more important for high school graduates.
Abstract: The literature on employer learning has mostly been concerned with testing whether employers learn about true productivity of workers in various education groups, assuming that the rate of employer learning is independent of the type of job task. In this paper, thus, we ask whether the role of employer learning varies by worker task type. We build a model in which workers and firms learn about workers' multi-dimensional skills from productivity signals, where signal accuracy depends on a job's task intensity. To test the model implication that the flow of information is larger at the jobs with intensive tasks, we focus on two task measures, abstract and social tasks, constructed using data from the Occupational Information Network (O*NET). To address the endogeneity associated with job mobility, we take an instrumental variable approach, using the Markov property of Bayesian learning, where the previous periods' occupation and occupational aspiration are used as instruments. We find that employer learning depends on task intensity, especially for cognitive skills. Moreover, the degree of task-based employer learning varies across educational groups. In particular, our analyses show that cognitive tasks play a key role in employer learning for college graduates, while social tasks are more important for high school graduates.
"Universal Long-term Care Reform and the Labor Supply of Caregivers: Evidence from Korea" with Selin Secil Akin, Lidia Brun, Ignacio Gonzalez, and Ania Puig
Abstract: This study investigates the impact of Korea's universal long-term care insurance (LTCI) system, implemented in 2008, on the labor market outcomes of family caregivers. We exploit multiple discontinuities in LTCI benefits to estimate their effect on caregivers' employment. Analyzing data from a nationally representative survey, we find a significant increase in labor force participation among women attributable to LTCI benefits, while no corresponding effect is observed for men. Additionally, the benefits reduce the likelihood of women engaging in family caregiving as their primary activity, underscoring the gender-differentiated impact of Korea's LTCI. These findings highlight the crucial role of LTC policies in shaping labor market outcomes for caregivers, with notable implications for female labor supply dynamics.
Abstract: This study investigates the impact of Korea's universal long-term care insurance (LTCI) system, implemented in 2008, on the labor market outcomes of family caregivers. We exploit multiple discontinuities in LTCI benefits to estimate their effect on caregivers' employment. Analyzing data from a nationally representative survey, we find a significant increase in labor force participation among women attributable to LTCI benefits, while no corresponding effect is observed for men. Additionally, the benefits reduce the likelihood of women engaging in family caregiving as their primary activity, underscoring the gender-differentiated impact of Korea's LTCI. These findings highlight the crucial role of LTC policies in shaping labor market outcomes for caregivers, with notable implications for female labor supply dynamics.