Search Results
Working Paper
Luxuries, Necessities, and the Allocation of Time
Households enjoy utility from activities that require a combination of time and goods. We classify activities into two types: luxuries and necessities. Luxuries (necessities) are activities for which time and expenditure shares rise (decline) with income. We develop and estimate a model with nonhomothetic preferences and find that time and goods are substitutable in producing activities. Activities are also substitutable among themselves. Hence, wage and price changes cause large reallocations of time and expenditures across activities. This effect is quantitatively important for welfare ...
Working Paper
Crude substitution: the cyclical dynamics of oil prices and the college premium
Higher oil price shocks benefit unskilled workers relative to skilled workers: Over the business cycle, energy prices and the skill premium display a strong negative correlation. This correlation is robust to different detrending procedures. We construct and estimate a model economy with energy use and heterogeneous skills and study its business cycle implications, in particular the cyclical behavior of oil prices and the skill premium. In our model economy, the skill premium and the ratio of hours worked by skilled workers to hours worked by unskilled workers are both negatively correlated ...
Working Paper
Bundling Time and Goods: Implications for Hours Dispersion
We document the large dispersion in hours worked in the cross-section. We account for this fact using a model in which households combine market inputs and time to produce a set of nonmarket activities. To estimate the model, we create a novel data set that pairs market expenditures and time use at the activity level using data from the Consumer Expenditure Survey and the American Time Use Survey, respectively. The estimated model can account for a large fraction of the dispersion of hours worked in the data. The substitutability between market inputs and time within an activity and across a ...
Journal Article
When more is better: assessing the southeastern economy with lots of data
The authors estimate a model that provides a single indicator for the southeastern economy, making it easier for policymakers and analysts to assess regional economic conditions and compare them to the broader economy.
Discussion Paper
Wage Growth over Unemployment Spells
This article looks at the wage growth associated with a spell of unemployment during the past three recessions. Our main findings are threefold. First, half of all unemployed workers experience a lower hourly wage once they regain employment. Second, afteran unemployment spell, older workers and those without a college degree experience lower wage growth. Third, workers who regain employment in a different industry than they were in previously tend to experience a substantial wage decline. The analysis suggests that the COVID-19 pandemic not only led to unprecedented job losses, but it could ...
Journal Article
Is more still better? Revisiting the Sixth District Coincident Indicator
A revised version of the D6 Factor model of the southeastern economy is better than the original at describing contemporary economic activity and allows for historical comparisons across several business cycles.
Working Paper
Accounting for the cyclical dynamics of income shares
Over the business cycle, labor's share of output is negatively but weakly correlated with output, and it lags output by about four quarters. Profit's share is strongly procyclical. It neither leads nor lags output, and its volatility is about four times that of output. Despite the importance of understanding the dynamics of income shares for understanding aggregate technology and the degree of competition in factor markets, macroeconomics lacks models that can account for these dynamics. This paper constructs a model that can replicate those facts. We introduce costly entry of firms in a ...
Working Paper
Capital-skill complementarity and inequality: a sensitivity analysis
In ?Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis,? Krusell et al. (2000) analyzed the capital-skill complementarity hypothesis as an explanation for the behavior of the U.S. skill premium. This paper shows that their model?s fit and the values of the estimated parameters are very sensitive to the data used: Alternative measures of the capital series predict skill premia that bear little resemblance to the data. We also include ten additional years of data to address the claim made by other authors that the evolution of the skill premium changed during the 1990s, but ...
Working Paper
Uninsurable individual risk and the cyclical behavior of unemployment and vacancies
This paper is concerned with the business cycle dynamics in search-and-matching models of the labor market when agents are ex post heterogeneous. We focus on wealth heterogeneity that comes as a result of imperfect opportunities to insure against idiosyncratic risk. We show that this heterogeneity implies wage rigidity relative to a complete insurance economy. The fraction of wealth-poor agents prevents real wages from falling too much in recessions since small decreases in income imply large losses in utility. Analogously, wages rise less in expansions compared with the standard model ...
Working Paper
Productivity, energy prices, and the Great Moderation: a new link
We study how total factor productivity (TFP), energy prices, and the Great Moderation are linked. First we estimate a joint stochastic process for the energy price and TFP and establish that until the second quarter of 1982, energy prices negatively affected productivity. This spillover has since disappeared. Second, we show that within the framework of a dynamic stochastic general equilibrium model, the disappearance of this energy-productivity spillover generates the significantly lower volatility of output and its components. Specifically, the change in the joint stochastic process ...