Professor at CEMFI
ICREA Research Professor at MOVE (on leave)
Adjunct Faculty, Department of Economics and Economic History, Universitat Autònoma de Barcelona (on leave)
Research Professor, Barcelona Graduate School of Economics (on leave)
European Research Council (ERC) Starting Grant Holder, 2010-2015.
I am a Managing Editor of Economic Journal, and an Associate Editor of Journal of Demographic Economics and SERIEs (the Journal of the Spanish Economic Association)
In 2018, I am serving as the President of the Spanish Economic Association.
Phone: 34-91-429 4017 E-mail: email@example.com
Is Marriage for White People? Incarceration and the Racial Marriage Divide (Elizabeth Caucutt and Christopher Rauh)
During the last few decades, there has been a dramatic decline of marriage among blacks in the US. About 89% of black women between ages 25 and 54 were ever married in 1970. Today only 51% of them are. Wilson (1987) suggests that the lack of marriageable black men due to incarceration and unemployment is responsible for low marriage rates among blacks. In this paper, we take a dynamic look at the Wilson Hypothesis. We argue that the current incarceration policies and labor market prospects make black men much riskier spouses than white men. They are not only more likely to be, but also to become, unemployed or incarcerated than their white counterparts. We develop an equilibrium search model of marriage, divorce and labor supply that takes into account the transitions between employment, unemployment and prison for individuals by race, education, and gender. We calibrate this model to be consistent with key statistics for the US economy. We then investigate how much of the racial divide in marriage is due to differences in the riskiness of potential spouses, heterogeneity in the education distribution, and heterogeneity in wages. We find that differences in incarceration and employment dynamics between black and white men can account for more than half of the existing black-white marriage gap in the data.
Marriage and Health: Selection, Protection and Assortative Mating (with Yuliya Kulikova and Joan Llull), European Economic Review, May 2018, Volume 104, Pages 138-166.
(previously titled as "Does Marriage Make You Healthier?")
Using data from the Panel Study of Income Dynamics (PSID) and the Medical Expenditure Panel Survey (MEPS), we analyze the health gap between married and unmarried individuals of working-age. Controlling for observables, we find a gap that peaks at 10 percentage points at ages 55-59 years. The marriage health gap is similar for men and women. If we allow for unobserved heterogeneity in innate health (permanent and age-dependent), potentially correlated with timing and likelihood of marriage, we find that the effect of marriage on health disappears below age 40 years, while about 5~percentage points difference between married and unmarried individuals remains at older ages (55-59 years). This indicates that the observed gap is mainly driven by selection into marriage at younger ages, but there might be a protective effect of marriage at older ages. Exploring the mechanisms behind this result, we find that better innate health is associated with a higher probability of marriage and a lower probability of divorce, and there is strong assortative mating among couples by innate health. We also find that married individuals are more likely to have a healthier behavior compared to unmarried ones. Finally, we find that health insurance is critical for the beneficial effect of marriage.
Managers and Productivity Differences (with Andrii Parkhomenko and Gustavo Ventura), Review of Economic Dynamics, Vol 29, July 2018, 256-282
We document that for a group of high-income countries the life-cycle earnings growth of managers relative to non managers is positively correlated with output per worker. We interpret this evidence through the lens of an equilibrium life-cycle, span-of-control model where managers invest in their skills. We use the model to quantify the importance of exogenous productivity differences and the size-dependent distortions emphasized in the misallocation literature. Our findings indicate that such distortions are critical to generate the observed differences in the growth of relative managerial earnings across countries. Distortions that halve the growth of relative managerial earnings, a move from the U.S. to Italy in our data, lead to a reduction in managerial quality of 27% and to a reduction in output of about nearly 7% --more than half of the observed gap between the U.S. and Italy. Cross-country variation in distortions accounts for about 42% of the cross-country variation in output per worker gap with the U.S.
Family Economics Writ Large (with Jeremy Greenwood and Guillaume Vandenbroucke), Journal of Economic Literature, Vol 55, December 2017, 1346-1434.
A survey of the macroeconomic literature on family economics.
Powerful currents have reshaped the structure of families over the last century. There has been (i) a dramatic drop in fertility and greater parental investment in children; (ii) a rise in married female labor-force participation; (iii) a decline in marriage and a rise in divorce; (iv) a higher degree of assortative mating; (v) more children living with a single mother; (vi) shifts in social norms governing premarital sex and married women’s roles in the labor market. Macroeconomic models explaining these aggregate trends are surveyed. The relentless flow of technological progress and its role in shaping family life are stressed.
Optimal Spatial Taxation: Are Big Cities Too Small? (with Jan Eeckhout)
We analyze the role of optimal income taxation across different local labor markets. Should labor in large cities be taxed differently than in small cities? We find that a planner who needs to raise a given level of revenue and is constrained by free mobility of labor across cities does not choose equal taxes for cities of different sizes. The optimal tax schedule is location specific and tax differences between large and small cities depends on the level of government spending, the concentration of housing wealth and the strength of agglomeration economies. Our estimates for the US imply higher optimal marginal rates in big cities than in small cites. Under the current Federal Income tax code with progressive taxes, marginal rates are already higher in big cities which have higher wages, but the optimal difference we estimate is lower than what is currently observed. Simulating the US economy under the optimal tax schedule, there are large effects on population mobility: the fraction of population in the 5 largest cities grows by 7.6% with 3.4% of the country-wide population moving to bigger cities. The welfare gains however are smaller. This is due to the fact that much of the output gains are spent on the increased costs of housing construction in bigger cities. Aggregate goods consumption goes up by 1.51% while aggregate housing consumption goes down by 1.70%.
Child-Related Transfers, Household Labor Supply and Welfare (with Remzi Kaygusuz and Gustavo Ventura)
What are the macroeconomic and welfare effects of expanding transfers to households with children in the United States? How do childcare subsidies compare to alternative policies? We answer these questions in a life-cycle equilibrium model with household labor-supply decisions, skill losses of females associated to non participation, and heterogeneity in terms of fertility, childcare expenditures and access to informal care. We consider the expansion of transfers that are contingent on market work -- childcare subsidies and Child and Dependent Care Tax Credits (CDCTC) -- versus those that are not -- Child Tax Credits (CTC). We find that expansions of transfers of the first group have substantial positive effects on female labor supply that are largest at the bottom of the skill distribution. Universal childcare subsidies at a 75% rate lead to long-run increases in the participation of married females of 8.8%, while an equivalent expansion of the CTC program leads to the opposite -- a reduction of about 2.4%.We find that welfare gains of newborn households are substantial and up to 2.3% under the CDCTC expansion. The expansion of none of the existing programs, however, receives majority support at the time of its implementation. Our findings show substantial heterogeneity in welfare effects, with a small fraction of households --young and poorer households with children -- who gain significantly while many others lose.