Working Paper
Why Does Consumption Fluctuate in Old Age and How Should the Government Insure it?
De Nardi, Mariacristina; Borella, Margherita (2020-10-23)
In old age, consumption can fluctuate because of shocks to available resources and because health shocks affect utility from consumption. We find that even temporary drops in income and health are associated with drops in consumption and most of the effect of temporary drops in health on consumption stems from the reduction in the marginal utility from consumption that they generate. More precisely, after a health shock, richer households adjust their consumption of luxury goods because their utility of consuming them changes. Poorer households, instead, adjust both their necessary and luxury ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 40

Working Paper
Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labor Supply?
Yang, Fang; De Nardi, Mariacristina; Borella, Margherita (2020-10-23)
In the United States, both taxes and old age Social Security benefits depend on one's marital status and tend to discourage the labor supply of the secondary earner. To what extent are these provisions holding back female labor supply? We estimate a rich life cycle model of labor supply and savings for couples and singles using the method of simulated moments (MSM) on the 1945 and 1955 birth-year cohorts and use it to evaluate what would happen without these provisions. Our model matches well the life cycle profiles of labor market participation, hours, and savings for married and single ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 41

Working Paper
The Lost Ones: The Opportunities and Outcomes of Non-College-Educated Americans Born in the 1960s
Yang, Fang; De Nardi, Mariacristina; Borella, Margherita (2019-03-18)
White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. ...
Opportunity and Inclusive Growth Institute Working Papers , Paper 19