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Working Paper
Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?
In the United States, both taxes and old age Social Security benefits depend on one's marital status and tend to discourage the labor supply of the secondary earner. To what extent are these provisions holding back female labor supply? We estimate a rich life cycle model of labor supply and savings for couples and singles using the method of simulated moments (MSM) on the 1945 and 1955 birth-year cohorts and use it to evaluate what would happen without these provisions. Our model matches well the life cycle profiles of labor market participation, hours, and savings for married and single ...
Working Paper
The Lost Ones: The Opportunities and Outcomes of Non-College-Educated Americans Born in the 1960s
White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. ...
Working Paper
Why Does Consumption Fluctuate in Old Age and How Should the Government Insure it?
In old age, consumption can fluctuate because of shocks to available resources and because health shocks affect utility from consumption. We find that even temporary drops in income and health are associated with drops in consumption and most of the effect of temporary drops in health on consumption stems from the reduction in the marginal utility from consumption that they generate. More precisely, after a health shock, richer households adjust their consumption of luxury goods because their utility of consuming them changes. Poorer households, instead, adjust both their necessary and luxury ...
Working Paper
Health Inequality and Health Types
While health affects many economic outcomes, its dynamics are still poorly understood. We use k-means clustering, a machine learning technique, and data from the Health and Retirement Study to identify health types during middle and old age. We identify five health types: the vigorous resilient, the fair-health resilient, the fair-health vulnerable, the frail resilient, and the frail vulnerable. They are characterized by different starting health and health and mortality trajectories. Our five health types account for 84% of the variation in health trajectories and are not explained by ...
Working Paper
Health Inequality and Economic Disparities by Race, Ethnicity, and Gender
We measure health inequality during middle and old age by race, ethnicity, and gender and evaluate the extent to which it can explain inequalities in other key economic outcomes using the Health and Retirement Study data set. Our main measure of health is frailty, which is the fraction of one’s possible health deficits and is related to biological age. We find staggering health inequality: At age 55, Black men and women have the frailty, or biological age, of White men and women 13 and 20 years older, respectively, while Hispanic men and women exhibit frailty akin to White men and women 5 ...