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Report
How do college students form expectations?
This paper focuses on how college students form expectations about various major-specific outcomes. For this purpose, I collect a panel data set of Northwestern University undergraduates that contains their subjective expectations about major-specific outcomes. Although students tend to be overconfident about their future academic performance, they revised their expectations in expected ways. The updating process is found to be consistent with a Bayesian learning model. I show that learning plays a role in the decision to switch majors, and that major-switchers respond to information from ...
Working Paper
Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle
We examine racial disparities in key labor market outcomes for men and women over the past four decades, with a special emphasis on their evolution over the business cycle. Blacks have substantially higher and more cyclical unemployment rates than whites, and observable characteristics can explain very little of this differential, which is importantly driven by a comparatively higher risk of job loss. In contrast, the Hispanic-white unemployment rate gap is comparatively small and is largely explained by lower educational attainment of (mostly foreign-born) Hispanics. Regarding labor force ...
Working Paper
Schooling and Political Activism in the Early Civil Rights Era
Does education lead to political engagement? The empirical literature is mixed. Theory suggests economic context matters. Individuals unable to take advantage of education in the labor market are more likely to engage in political activity. We find support for this channel during the rapid expansion of NAACP branches in the South around WWII. Branch growth was stronger where Black workers were denied returns to schooling due to Jim Crow occupational discrimination. We further show that a pre-1931 large-scale school construction program caused greater NAACP activity during the 1940s and 1950s ...
Report
Can subjective expectations data be used in choice models? Evidence on cognitive biases
A pervasive concern with the use of subjective data in choice models is that the data are biased and endogenous. This paper examines the extent to which cognitive biases plague subjective data, specifically addressing 1) whether cognitive dissonance affects the reporting of beliefs, and 2) whether individuals exert sufficient mental effort when probed about their subjective beliefs. For this purpose, I collect a unique panel data set of Northwestern University undergraduates that contains their subjective expectations about outcomes specific to different majors in their choice set. I do not ...
Working Paper
The Dynamics of the Racial Wealth Gap
What drives the dynamics of the racial wealth gap? We answer this question using a dynamic stochastic general equilibrium heterogeneous-agents model. Our calibrated model endogenously produces a racial wealth gap matching that observed in recent decades along with key features of the current cross-sectional distribution of wealth, earnings, intergenerational transfers, and race. Our model predicts that equalizing earnings is by far the most important mechanism for permanently closing the racial wealth gap. One-time wealth transfers have only transitory effects unless they address the racial ...
Journal Article
Work, Leisure, and Family: From the Silent Generation to Millennials
This article analyzes the changes in family structure, fertility behavior, and the division of labor within the household from the Silent generation (cohort born in 1940-49) to the Millennial generation (cohort born in 1980-89). Using data from the Panel Study of Income Dynamics, this article documents the main trends and life-cycle profiles for each generation. The main findings are that (i) the wage-age profile has been shifting down over generations, especially for Millennial men; (ii) the returns to a four-year college degree or higher for men have increased for all generations; (iii) ...
Working Paper
On the Economics of Discrimination in Credit Markets
This paper develops a general equilibrium model of both taste-based and statistical discrimination in credit markets. We find that both types of discrimination have similar predictions for intergroup differences in loan terms. The commonly held view has been that if there exists taste-based discrimination, loans approved to minority borrowers would have higher expected profitability than to majorities with comparable credit background. We show that the validity of this profitability view depends crucially on how expected loan profitability is measured. We also show that there must exist ...
Working Paper
The Dynamics of the Racial Wealth Gap
We reconcile the large and persistent racial wealth gap with the smaller racial earnings gap, using a general equilibrium heterogeneous-agents model that matches racial differences in earnings, wealth, bequests, and returns to savings. Given initial racial wealth inequality in 1962, our model attributes the slow convergence of the racial wealth gap primarily to earnings, with much smaller roles for bequests or returns to savings. Cross-sectional regressions of wealth on earnings using simulated data produce the same racial gap documented in the literature. One-time wealth transfers have only ...
Working Paper
The Labor Market Impact of Covid-19 on Asian Americans
Asian Americans faced a disproportionately larger surge in unemployment rates than other racial and ethnic groups during the Covid-19 pandemic. While existing literature typically examines labor demand channels to explain this, we instead explore a labor supply channel. Our hypothesis is that Asian Americans are more cautious about Covid-19 infections and thus more selective about job opportunities, contributing to their higher unemployment rate than other groups. Analysis of cellphone data during the pandemic indicates that non-work mobility significantly decreased in areas with larger Asian ...
Working Paper
The Economic Gains from Equity
How much is inequity costing us? Using a simple growth accounting framework we apply standard shift-share techniques to data from the Current Population Survey (1990-2019) to compute the aggregate economic costs of persistent educational and labor market disparities by gender and race. We find significant economic losses associated with these gaps. Building on this finding, we consider which disparities generate the largest costs, paying specific attention to differences in employment, hours worked, educational attainment, educational utilization, and occupational allocation. We also examine ...