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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 ...
Individuals, married couples respond differently to U.S. income tax changes
Changes in effective income taxes can impact labor supply with different outcomes for married couples and singles, and changes can have a particularly notable impact on married women.
Working Paper
Estate taxation, entrepreneurship, and wealth
We study the effects of abolishing estate taxation in a quantitative and realistic framework that includes the key features that policy makers are worried about: business investment, borrowing constraints, estate transmission, and wealth inequality. We use our model to estimate effective estate taxation. We consider various tax instruments to reestablish fiscal balance when abolishing estate taxation. We find that abolishing estate taxation would not generate large increases in inequality, and would, in some cases, generate increases in aggregate output and capital accumulation. If, however, ...
Newsletter
Inequality and Recessions
The increase in inequality over the past several decades has received widespread attention from both academics and the public at large. While much of this discourse centers on either the causes or normative implications of increasing inequality, it is important to ask whether the widening gap between the rich and poor has any direct effects on macroeconomic aggregates and, in particular, on the severity of the Great Recession, when output and consumption dropped precipitously and were slow to recover (see figure 1).
Working Paper
Projected U.S. demographics and social security
Without policy reforms, the aging of the U.S. population is likely to increase the burden of the currently unfunded social security and medicare systems. In this paper we build an applied general equilibrium model and incorporate the population projections made by the Social Security Administration (SSA) to evaluate the macroeconomic and welfare implications of alternative fiscal responses to the retirement of the baby- boomers. Our calculation suggest that it will be costly to maintain the benefits at the levels now promised because the increases in distortionary taxes required to finance ...
Journal Article
The asset-backed securities markets, the crisis and TALF
The authors explain the role of asset-backed securities markets in generating credit and liquidity and how this role was disrupted during the financial crisis. They discuss the implementation of the Term Asset-Backed Securities Loan Facility (TALF) and argue that this program helped reestablish the ABS markets and the credit supply. and the reversion to a stable fiscal regime.
Journal Article
Evidence on entrepreneurs in the United States: data from the 1989–2004 survey of consumer finances
Using data from the Federal Reserve Board?s Survey of Consumer Finances, the authors examine characteristics of entrepreneurs and the businesses they run. Their analysis confirms that business owners are important sources of saving and wealth creation in the U.S. and that they are less risk averse than other wealthy households. This discounts the notion that the wealth of entrepreneurs disproportionately reflects a buildup of precautionary balances to guard against financial risk.
Working Paper
A conversation with 590 nascent entrepreneurs
This paper summarizes interviews from 1998 with 590 individuals trying to create a business centered around five questions: ?Who are you??, ?What are you trying to accomplish??, ?What have you and others put into the business??, ?What have you accomplished??, ?What remains to be done?? There is a great deal of heterogeneity across these Nascent entrepreneurs, but they tend to have more education than the general population. Growing up in a family in which one or both parents had a business does not seem to be an important determinant of entry into entrepreneurship for males, while it seems to ...
Journal Article
Income inequality and redistribution in five countries
This article studies income inequality in five countries and compares the redistributive consequences of taxes and transfers across these countries.
Newsletter
Piketty’s Book and Macro Models of Wealth Inequality
Thomas Piketty?s book Capital in the Twenty-First Century is, in the author?s own words, a book about the history of the distribution of income and wealth. Among other interesting and important facts, the book quantifies the evolution of wealth inequality and wealth concentration over time and across a number of countries. Wealth is highly concentrated, and its distribution is skewed with a long right tail; a small number of very rich individuals hold a large share of total wealth in the economy.