"A Dynamic Model of Personality, Schooling, and Occupational Choice," Quantitative Economics, 11.1 (2020): 231-275. (with Petra Todd) Supplemental Material Online Appendix.
This paper develops a dynamic model of schooling and occupational choices that incorporates personality traits, as measured by the “big five” traits. The model is estimated using the HILDA dataset from Australia. Personality traits are found to play an important role in explaining education and occupation choices over the lifecycle. Results show that individuals with a comparative advantage in schooling and white-collar work have, on average, higher cognitive skills and higher personality trait scores. Allowing personality traits to evolve with age and with schooling proves to be important to capturing the heterogeneity in how people respond to educational policies. The estimated model is used to evaluate two education policies: compulsory senior secondary school and a 50% college tuition subsidy. Both policies increase educational attainment and also affect personality traits.
“Personality Traits, Intra-household Allocation and the Gender Wage Gap,” European Economic Review, 109 (2018): 191-220. (with Christopher Flinn and Petra Todd) Supplemental Material
A model of how personality traits affect household time and resource allocation decisions and wages is developed and estimated. In the model, households choose between two behavioral modes: cooperative or noncooperative. Spouses receive wage offers and allocate time to supply labor market hours and to produce a public good. Personality traits, measured by the so-called “Big Five” traits, can affect household bargaining weights and wage offers. Model parameters are estimated by Simulated Method of Moments using the Household Income and Labor Dynamics in Australia (HILDA) data. Personality traits are found to be important determinants of household bargaining weights and of wage offers and to have substantial implications for understanding the sources of gender wage disparities.
“Welfare Reform and Children's Early Cognitive Development,” Contemporary Economic Policy, 32.4 (2014): 729-751. (with Hau Chyi and Orgul Demet Ozturk)
In this paper, we use a dynamic structural model to measure the effects of (1) single mothers’ work and welfare use decisions and (2) welfare reform initiatives on the early cognitive development of the children of the NLSY79 mothers. We use PIAT-Math scores as a measure of attainment and show that both the mothers’ work and welfare use benefit children on average. Our simulation of a policy that combines a time limit with work requirement reduces the use of welfare and increases employment significantly. These changes in turn significantly increase children’s cognitive attainment. This implies that the welfare reform was not only successful in achieving its stated goals, but was also beneficial to welfare children’s outcomes. In another policy simulation, we show that increasing work incentives for welfare population by exempting labor income from welfare tax can be a very successful policy with some additional benefits for children’s outcomes. Finally, a counterfactual with an extended maternal leave policy significantly reduces employment and has negative, though economically insignificant, impact on cognitive outcomes.
“Distributional Effects of Local Minimum Wage Hikes: A Spatial Job Search Approach,” This version December 2018. SSRN Working Paper 3309362.
This paper develops and estimates a spatial general equilibrium job search model to study the effects of local and universal (federal) minimum wage policies. In the model, firms post vacancies in multiple locations. Workers, who are heterogeneous in terms of location and education types, engage in random search and can migrate or commute in response to job offers. I estimate the model by combining multiple databases including the American Community Survey (ACS) and Quarterly Workforce Indicators (QWI). The estimated model is used to analyze how minimum wage policies affect employment, wages, job postings, vacancies, migration/commuting, and welfare. Empirical results show that minimum wage increases in local county lead to an exit of low type (education < 12 years) workers and an influx of high type workers (education ≥ 12 years), which generates negative externalities for workers in neighboring areas. I use the model to simulate the effects of a range of minimum wages. Minimum wage increases up to $14/hour increase the welfare of high type workers but lower welfare of low type workers, expanding inequality. Increases in excess of $14/hour decrease welfare for all workers. I further evaluate two counterfactual policies: restricting labor mobility and preempting local minimum wage laws. For a range of minimum wages, both policies have negative impacts on the welfare of high type workers, but beneficial effects for low type workers.
"Labor Market Returns to Personality: A Job Search Approach to Understanding Gender Gaps," This version January 2021. (with Christopher Flinn and Petra Todd) An ealier version: Human Capital and Economic Opportunity Working Group Working Papers 2020-010.
This paper investigates the effects of the so-called big five personality traits on labor market outcomes and on gender disparities within a job search, matching and bargaining model with heterogeneous workers. In the model, parameters pertaining to productivity, job offer arrival rates, job dissolution rates and the division of surplus from an employer-employee match depend on worker personality traits, education, and other demographics. The model's estimation is based on a German panel dataset. Parameter estimates show that four of the five personality traits are statistically significant determinants of job search parameters and labor market outcomes. Also, women and men are rewarded differently for two traits, conscientiousness and agreeableness, which largely explains gender labor market disparities. If women were to receive the same return that men receive for their personality traits, the wage gap would be eliminated.
"The Gender Gap in Household Bargaining Power:A Portfolio-Choice Approach," This version August 2021. (with Ran Gu and Cameron Peng) SSRN Working Paper 3814200.
We quantify how bargaining power is distributed when spouses make portfolio decisions together. We build a model in which each spouse has their own risk preference and must bargain with each other to make asset allocation decisions for the household. By structurally estimating the model using representative sample from Australia and Germany, we find a significant gender gap in household bargaining power: in Australia, the husband’s risk preference matters 44% more for the average household’s asset allocation than the wife’s; in Germany, the husband’s risk preference is twice as important as the wife’s. These gaps in bargaining power are partially explained by gender differences in income and employment status, but they are also due to gender effects. We provide further evidence that links the distribution of bargaining power to views on gender norms.
"Prospering through Prospera: CCT Impacts on Educational Attainment and Achievement in Mexico," This version Oct 2021. (with Jere Behrman, Susan Parker and Petra Todd) PIER Working Paper Archive 21-025.
This paper develops and estimates a dynamic model of student enrollment, school choice, academic achievement and grade progression to evaluate the impacts of Mexico's conditional cash transfer program Prospera on educational outcomes over grades 4-9. Academic achievement is measured by nationwide standardized test scores in mathematics and Spanish. Enrollment decisions are the outcomes of sequential decisions at each age from individuals' feasible choice sets, determined by the types of schools locally available and local-labor-market opportunities. The achievement production function has a value-added structure. Model parameters are estimated by maximum likelihood using nationwide administrative test-score data (the ENCEL data) combined with survey data from students and parents, census labor-market data, and geo-coded school-location data. The estimation approach controls for selective school enrollment in different types of schools, grade retention and unobserved heterogeneity. The results show that the Prospera program increases school enrollment and academic achievement for program beneficiaries in lower-secondary school grades (grades 7-9). The average test-score impacts are 0.09-0.13 standard deviations in mathematics and 0.03-0.05 standard deviations in Spanish. Students from the most disadvantaged backgrounds experience the largest impacts. The availability of telesecondary distance-learning schools is shown to be an important determinant of the Prospera program's impacts on educational outcomes.
"Non-College Occupations, Workplace Routinization, and the Gender Gap in College Enrollment," This version Nov 2021. (with Amanda Chuan).
Women used to lag behind men in college enrollment but now exceed them. We argue that changes in non-college job prospects contributed to these trends. We first document that routine-biased technical change disproportionately displaced non-college occupations held by women. We next employ a shift-share instrument for the impact of routinization to show that declining non-college job prospects for women increased female enrollment. Results show that a one percentage point decline in the share of routine task intensive jobs leads to a 0.6 percentage point rise in female college enrollment, while the effect for male enrollment is directionally smaller and insignificant. We next embed this instrumental variation into a dynamic model that links education and occupation choices. The model finds that routinization decreased returns to non-college occupations for women, leading them to shift to cognitive work and increasing their college premium. In contrast, non-college occupations for men were less susceptible to routinization. Altogether, our model estimates that workplace routinization accounted for 63% of the growth in female enrollment and 23% of the change in male enrollment between 1980 to 2000.