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Working Paper
The Sufficient Statistic Approach: Predicting the Top of the Laffer Curve
We provide a formula for the tax rate at the top of the Laffer curve as a function of three elasticities. Our formula applies to static models and to steady states of dynamic models. One of the elasticities that enters our formula has been estimated in the elasticity of taxable income literature. We apply standard empirical methods from this literature to data produced by reforming the tax system in a model economy. We find that these standard methods underestimate the relevant elasticity in models with endogenous human capital accumulation.
Working Paper
Decomposing the gender wage gap with sample selection adjustment: evidence from Colombia
Despite the remarkable improvement of female labor market characteristics, a sizeable gender wage gap exists in Colombia. We employ quantile regression techniques to examine the degree to which current small differences in the distribution of observable characteristics can explain the gender gap. We find that the gap is largely explained by gender differences in the rewards to labor market characteristics and not by differences in the distribution of characteristics. We claim that Colombian women experience both a ?glass ceiling effect?? and also (what we call) a ?quicksand floor effect? ...
Journal Article
Oil Prices: Is Supply or Demand Behind the Slump?
A standard decomposition suggests the role of oil supply (understood as the current physical availability of crude) has been small.
Journal Article
Higher taxes for top earners: can they really increase revenue?
Working Paper
Understanding permanent black-white earnings inequality
Average annual earnings of black US households have remained at around half the average earnings of white households for more than 30 years. Why are the earnings of black households so low compared to those of white households? Why can blackwhite earnings inequality of such magnitude be permanent? This paper provides a quantitative answer based on neighborhood effects. The economic and demographic characteristics of neighborhoods and the distribution of earnings are determined endogenously from the location and investment decisions of altruistic parents. Permanent racial inequality arises ...
Journal Article
Recent ECB Policy and Inflation Expectations
Market participants may not expect recent ECB policy to boost inflation.
Journal Article
Top Earners: Cross-Country Facts
We provide a common set of life cycle earnings statistics based on administrative data from the United States, Canada, Denmark, and Sweden. We find three qualitative patterns, which are common across countries. First, top-earnings inequality increases over the working lifetime. Second, the extreme right tail of the earnings distribution becomes thicker with age over the working lifetime. Third, top lifetime earners exhibit dramatic earnings growth over their working lifetime. Models of top earners should account for these three patterns and, importantly, for how they quantitatively differ ...