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Working Paper
Job Polarization and the Natural Rate of Unemployment in the United States
I present a new estimate of the natural rate of unemployment in the United States that accounts for changes in the age, sex, and skill composition of the labor force. Using micro-level data from the Current Population Survey for the period 1994-2017, I find that the natural rate of unemployment declined by 0.5 percentage point since 1994 and currently stands at 4.5 percent. My projections show that ongoing demographic and technological changes could lower the trend rate further to 4.4 percent by the end of 2022.
Working Paper
Demographic Transition, Industrial Policies and Chinese Economic Growth
We build a unified framework to quantitatively examine the demographic transition and industrial policies in contributing to China’s economic growth between 1976 and 2015. We find that the demographic transition and industrial policy changes by themselves account for a large fraction of the rise in household and corporate savings relative to total output and the rise in the country’s per capita output growth. Importantly, their interactions also lead to a sizable fraction of the increases in savings since the late 1980s and reduce growth after 2010. A novel and important factor that ...
Report
Implications of Increasing College Attainment for Aging in General Equilibrium
We develop and calibrate an overlapping generations general equilibrium model of the U.S. economy with heterogeneous consumers who face idiosyncratic earnings and health risk to study the implications of exogenous trends in increasing college attainment, decreasing fertility, and increasing longevity between 2005 and 2100. While all three trends contribute to a higher old age dependency ratio, increasing college attainment has different macroeconomic implications because it increases labor productivity. Decreasing fertility and increasing longevity require the government to increase the ...
Working Paper
Population Aging, Credit Market Frictions, and Chinese Economic Growth
We build a unified framework to quantitatively examine population aging and credit market frictions in contributing to Chinese economic growth between 1977 and 2014. We find that demographic changes together with endogenous human capital accumulation account for a large part of the rise in per capita output growth, especially after 2007, as well as some of the rise in savings. Credit pol-icy changes initially alleviate the capital misallocation between private and public firms and lead to significant increases in both savings and output growth. Later, they distort capital allocation. ...
Working Paper
The Age Gap in Mortgage Access
This paper uses data on millions of single-borrower mortgage applications to study the relationship between applicant age and mortgage application outcomes. Conditional on a rich set of applicant, property, and loan characteristics, mortgage refinance applications submitted by older borrowers are associated with higher rejection probabilities. This pattern holds within lender and across loan types. Rejection probability increases smoothly with age and accelerates in old age. The acceleration is slower for female applicants. Inability to maintain properties may contribute as older applicants ...
Report
On Financing Retirement, Health Care, and Long-Term Care in Japan
Japan is facing the problem of how to finance retirement, health care, and long-term care expenditures as the population ages. This paper analyzes the impact of policy options intended to address this problem by employing a dynamic general equilibrium overlapping generations model, specifically parameterized to match both the macro- and microeconomic level data of Japan. We find that financing the costs of aging through gradual increases in the consumption tax rate delivers better macroeconomic performance and higher welfare for most individuals relative to other financing options, including ...
Discussion Paper
The Graying of American Debt
The U.S. population is aging and so are its debts. In this post, we use the New York Fed Consumer Credit Panel, which is based on Equifax credit data, to look at how debt is changing as baby boomers reach retirement age and millennials find their footing. We find that aggregate debt balances held by younger borrowers have declined modestly from 2003 to 2015, with a debt portfolio reallocation away from credit card, auto, and mortgage debt, toward student debt. Debt held by borrowers between the ages of 50 and 80, however, increased by roughly 60 percent over the same time period. This ...
Working Paper
Aging and the Real Interest Rate in Japan: A Labor Market Channel
This paper explores a causal link between aging of the labor force and declining trends in the real interest rate in Japan. We develop a search/matching model that features heterogeneous workers with respect to their ages and firm-specific skills. Using the model, we examine the long-run implications of the sharp drop in labor force entry in the 1970s. We show that the changes in the demographic structure induce significant low-frequency movements in per capita consumption growth and the real interest rate. The model suggests that aging of the labor force accounts for 40 percent or more of ...
Working Paper
Demographic Transition, Industrial Policies, and Chinese Economic Growth
We build a unified framework to quantitatively examine the demographic transition and industrial policies in contributing to China’s economic growth between 1976 and 2015. We find that the demographic transition and industrial policy changes by themselves account for a large fraction of the rise in household and corporate savings relative to total output and the rise in the country’s per capita output growth. Importantly, their interactions also lead to a sizable fraction of the increases in savings since the late 1980s and reduce growth after 2010. A novel and important factor that ...
Working Paper
Demographic Aging, Industrial Policy, and Chinese Economic Growth
We examine the role of demographics and changing industrial policies in ac- counting for the rapid rise in household savings and in per capita output growth in China since the mid-1970s. The demographic changes come from reductions in the fertility rate and increases in the life expectancy, while the industrial policies take many forms. These policies cause important structural changes; first benefiting private labor-intensive firms by incentivizing them to increase their share of employment, and later on benefiting capital-intensive firms resulting in an increasing share of capital devoted ...