Research
Immigration and Spending on Public Education: California,
1970-2000
Abstract
The evolution of education spending in California has received
plenty of attention by both academics and practitioners after this state's
education finance reform of the 1970's. The impact on public education spending
of the demographic trends associated with immigration has not been thoroughly
analyzed, instead. This paper quantifies the contribution of immigration to the
relative decline in elementary and secondary public education spending per
student in California in the period 1970 to 2000. A simple quantitative model
of school choice and voting over public education is used to perform the
counterfactual experiment of interest. The model allows for household
heterogeneity in income, number of school-age children, citizenship and
immigration status, and preference for education. The results indicate that immigration
played a quantitative important role in accounting for the relative decline in
education spending in California, especially after 1990. In the year 2000, the
model predicts that education spending per student in California would have
been 24 percent higher than in reality if U.S. immigration had been restricted
to its 1970 level.
Understanding Gross Worker Flows Across U.S. States
Abstract
A surprising but robust characteristic of workers'
migration patterns across locations (states and metropolitan areas) within the
U.S. is the positive correlation between inflow and outflow rates. This pattern
cannot be accounted for by standard equilibrium models of employment
reallocation across geographic areas in which net and gross flows of workers
coincide. Further, micro-level evidence shows that inflows and outflows of
workers tend to simultaneously occur within narrowly defined demographic
groups, suggesting that the positive inflow-outflow correlation is not the
symptom of a changing demographic composition of employment across locations.
This paper develops and estimates a dynamic general equilibrium model of gross
and net migration flows to explain this pattern. Due to a selection effect,
workers migrating into a location have a higher propensity to migrate again
than workers already living there. Thus, U.S. states that absorb large numbers
of internal migrants also tend to display relatively large outflow rates. The
time-series pattern of inflow and outflow rates across states is consistent
with this interpretation.
The Effect of Household Appliances on Female Labor Force
Participation: Evidence from Micro Data joint with
Steven Lugauer and Alexis León
Abstract
We estimate the effect of household
appliance ownership on the labor force participation rate of married women
using micro-level data from the 1960 and 1970 U.S. Censuses. In order to
identify the causal effect of home appliance ownership on married women's labor
force participation rates, our empirical strategy exploits both time-series and
cross-sectional variation in these two variables. To control for endogeneity, we instrument a married woman's ownership of
an appliance by the average ownership rate for that appliance among single
women living in the same U.S. state. Single women's labor force participation
rates did not increase between 1960 and 1970. By our estimation, the diffusion
of household appliances accounts for about forty percent of the observed
increase in married women's labor force participation rates during the 1960's.
Owning Capital or Being Shareholders: An Equivalence Result
with Incomplete Markets joint with Eva
Carceles-Poveda.
Abstract
Many recent papers in
macroeconomics have studied the implications of models with household heterogeneity
and incomplete financial markets under the assumption that households own the
stock of physical capital and undertake the intertemporal
investment decisions. In these models, production exhibits constant returns to
scale, households maximize expected discounted utility, and firms rent capital
and labor from households to maximize period by period profits. This paper
considers the case in which infinitely lived firms, rather than households,
make the intertemporal investment decisions. Under this
assumption, it shows that there exists an objective function for firms that
results in the same equilibrium allocation as in the standard setting with one
period lived firms. The objective requires that firms maximize their asset
value, which is defined as the discounted value of future cash flows using
present value processes that do not allow for arbitrage opportunities.
Shareholders Unanimity with Incomplete
Markets joint with Eva Carceles-Poveda, forthcoming International Economic Review.
Abstract
When markets are incomplete, shareholders
typically disagree on the firm's optimal investment plan. This paper studies
the shareholders' preferences with respect to the firm's investment in a model
with aggregate risk, incomplete markets and heterogeneous households who trade
in firms' shares instead of directly accumulating physical capital. If the
production function exhibits constant returns to scale and borrowing limits are
not binding, a firm's shareholders unanimously agree on its optimal level of
investment. In contrast, with binding borrowing constraints, constrained
shareholders prefer a higher level of investment than unconstrained ones.
Why Have Aggregate Skilled Hours Become So Procyclical Since the Mid-1980’s? joint with Rui Castro, International Economic
Review, Vol. 49 (1), pp. 135-185, February 2008.
Abstract
This paper documents and discusses a dramatic
change in the cyclical behavior of aggregate hours worked by individuals with a
college degree (skilled workers) since the mid-1980's. Using the CPS outgoing
rotation data set for the period 1979:1-2003:4, we find that the volatility of
aggregate skilled hours relative to the volatility of GDP has nearly tripled
since 1984. In contrast, the cyclical properties of unskilled hours have
remained essentially unchanged. We evaluate the extent to which a simple
Markups,
Aggregation, and Inventory Adjustment, American
Economic Review, Vol. 94 (5), pp.
1328-1353, December 2004.
Abstract
In this paper
I
Reform Implementation Under Sequential Bargaining, joint with Rui Castro, International Economic
Review, Vol. 44 (3), pp. 1061-1078, August 2003.
Abstract
This paper proposes an
explanation for why efficient reforms are not carried out when losers have the
power to block their implementation, even though compensating them is feasible.
We construct a signaling model with two-sided incomplete information in which a
government faces the task of sequentially implementing two reforms by
bargaining with interest groups. The organization of interest groups is
endogenous. Compensations are distortionary and
government types differ in the concern about distortions. We show that, when
compensations are allowed to be informative about the government's type, there
is a bias against the payment of compensations and the implementation of
reforms. This is because paying high compensations today provides incentives
for some interest groups to organize and oppose
Margin Requirements and Equilibrium Asset Prices, Journal of Monetary Economics, Vol. 52 (2) , pp. 449-475, March 2005.
Abstract
This
paper studies the effect of margin requirements on asset prices and trading
volume in a general equilibrium asset pricing model where Epstein-Zin investors
differ in their degree of risk aversion. Under the as
Effects of Differences in Risk Aversion on the Distribution of
Wealth, Macroeconomic
Dynamics, Vol. 8, pp. 617-632, 2004.
Abstract
This paper studies the role
played by differences in risk aversion in affecting the long run distribution of
wealth across agents in the context of an endowment economy. The economy is
populated by two types of Epstein-Zin agents who differ only in their attitudes
toward risk. By choosing riskier portfolio strategies less risk averse agents
enjoy returns on their investments characterized by a higher mean and a higher
variance than the ones enjoyed by more risk averse agents. The former effect
tends to make less risk averse agents wealthier over time, while the latter
tends to make them poorer. The paper shows that, contrary to the re