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Report
The Macroeconomic Dynamics of Labor Market Policies
We develop a dynamic macroeconomic framework with worker heterogeneity, putty-clay adjustment frictions, and firm monopsony power to study the distributional impact of labor market policies over time. Our framework reconciles the well-known tension between low short-run and high long-run elasticities of substitution across inputs of production, especially among workers with different skills within a same education group. We use this framework to evaluate the effects of redistributive policies such as the minimum wage and the Earned Income Tax Credit. We argue that since these policies ...
Working Paper
Heterogeneous Workers and Federal Income Taxes in a Spatial Equilibrium
This paper studies the incidence and efficiency of a progressive income tax in a spatial equilibrium. We use US census data to estimate an empirical spatial equilibrium with heterogeneous workers, landowners, and firms. The US income tax shifts skilled workers out of high-productivity cities, leading to a deadweight loss of 2% of tax revenue. Flattening the tax schedule significantly increases welfare inequality between skilled and unskilled workers and does not increase overall worker welfare, as the efficiency gains are captured by landowners. This suggests that progressive income taxes ...
Briefing
Career Progressions and Wage Growth: Is There a One-Size-Fits-All Job Ladder?
Differences in earnings across workers are large and become larger as workers age. In this article, we explore the contribution of different career dynamics to the earnings gap between poorer and richer workers. We emphasize how poorer workers do not lack opportunities to change jobs, as they have high job mobility rates. Thus, they potentially could work at increasingly better-paying firms but seldom do so in practice. Indeed, despite many job changes, wages and employer quality are stagnant over the life cycle for poorer workers. We discuss this finding in light of previous economic ...