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Working Paper
The macroeconomics of microfinance
We provide a quantitative evaluation of the aggregate and distributional impact of microfinance or credit programs targeted toward small businesses. We find that the redistributive impact of microfinance is stronger in general equilibrium than in partial equilibrium, but the impact on aggregate output and capital is smaller in general equilibrium. Aggregate total factor productivity (TFP) increases with microfinance in general equilibrium but decreases in partial equilibrium. When general equilibrium effects are accounted for, scaling up the microfinance program will have only a small impact ...
Working Paper
Lifetime labor supply and human capital investment
We develop a model of retirement and human capital investment to study the effects of tax and retirement policies. Workers choose the supply of raw labor (career length) and also the human capital embodied in their labor. Our model explains a significant fraction of the US-Europe difference in schooling and retirement. The model predicts that reforms of the European retirement policies modeled after the US can deliver 15?35 percent gains in per-worker output in the long run. Increased human capital investment in and out of school accounts for most of the gains, with relatively small changes ...
Journal Article
Financial markets: an engine for economic growth
Do developed financial markets lead to economic growth or result from it? While some economists argue for the latter, the author maintains that financial markets?despite their shortcomings of late?are an essential ingredient for an economy to grow in the long run.
Journal Article
There are two sides to every coin—even to the bitcoin, a virtual currency
Central to Bitcoin is its independence from any institution or government, allowing anyone to engage in a direct transaction at a low cost. So, what exactly is it, and how does it work?
Journal Article
Occupational Mobility and Lifetime Earnings
People?s occupations have a significant amount of information about their wages. However, because people?especially young workers?go through multiple occupations and employment statuses during their working lives, we find that their occupations at a young age do not predict their lifetime earnings well. When educational attainment and gender are considered, we find that across education-gender groups the differences in lifetime earnings are even larger than the differences in average occupational wages: Workers in high-wage education-gender groups (men with college degrees, for example) work ...
Journal Article
Misallocation and Manufacturing TFP in Korea, 1982-2007
The authors apply the analysis of Hsieh and Klenow (2009) to assess the degree of resource misallocation in the Republic of Korea manufacturing sector from 1982 to 2007. They find improvement in the aggregate allocative efficiency during the first decade and a strong reversal after 1992. This pattern reflects the dynamics of the within-industry distortion measures for most industries and is consistent with the evolving systematic relationship between the age/value added of establishments and their measured idiosyncratic distortions over the sample period. Their finding suggests that the ...
Journal Article
Industrial and Occupational Employment Changes During the Great Recession
The U.S. labor market contracted sharply during the Great Recession. The ensuing recovery has been sluggish and by some measures still incomplete. In this paper, we break down aggregate employment during the Recession and the recovery into changes across industries and occupations. There is a clear asymmetric pattern: The contraction is driven by sectors and the recovery by occupations. In particular, the contraction between 2008 and 2010 primarily reflects a steep decline in construction employment, partially mitigated by expansions in the food services, education, and health industries. The ...