Working Papers
“Wages, Taxes, and Labor Supply Elasticities: The Role of Social Preferences”, with Janjala Chirakijja, March 2024.
Paper (SSRN)
Economists conventionally do not distinguish between labor supply responses to wages and taxes in any substantial way. We show that in the presence of social preferences, the wage elasticity of labor supply differs in general from the net-of-tax rate elasticity of labor supply. We field a large-scale vignette experiment in the US and show that wage elasticities of labor supply are meaningfully larger than their net-of-tax rate counterparts, consistent with positive social preferences towards tax-funded government expenditure. To assess external validity for real labor market decisions, we additionally build on a meta-analysis of the elasticity of taxable income (ETI) and show that ETI estimates are correlated with real-world proxies for government-related social preferences. Hence, models calibrated using net-of-tax rate elasticities when wage elasticities are more suitable tend to underestimate the labor supply response of individuals.
“The Effect of Child Support on Labor Supply”, February 2024.
Paper (SSRN)
Child support frequently increases with the noncustodial fathers’ incomes. I study the effect on their work incentives. For identification, I exploit the end of child support when the children involved reach emancipation age. Empirically, child support paid drops to near zero on emancipation; fathers correspondingly increase their work hours and annual earnings. Formally, each 10 percentage point increase in the child support rate leads to an 8–11 percent decrease in labor supply conditional on working. I find weaker extensive margin responses. In a structural model, I map these estimates to the intertemporal elasticity of labor supply (Frisch elasticity).
“Automation, Deskilling, and Labor Supply: Empirical Evidence”, with Ivan Png, September 2023.
Paper (SSRN)
We investigate the effect of automation of cognitively demanding tasks in job design (“technological deskilling”) on job amenities and labor supply. Technological deskilling can enhance fit between job task requirements and worker’s skill, which is motivating and increases psychological flow. Empirical evidence from two large occupations accords with the theory of task-skill fit. Conventionally, supermarket cashiers scan purchases and collect payments. In a supermarket which automated the payments task, cashiers valued the new job design at 4.1 percent of wages and increased labor supply by 11 percent. Ride hail drivers must find their way and drive. Absent map apps to automate the way-finding task, drivers with poor road knowledge were three times less likely to work than those with good road knowledge. Managers facing a labor crunch in front-line workers should consider technologically deskilling jobs to increase amenities and labor supply, and underpin a low-cost strategy.
“The Riskiness of Owning Versus Renting Housing”, with Lee M. Lockwood, Scott R. Baker, and Lorenz Kueng, October 2019.
Homeowners and renters have mirror-image exposures to the substantial risks in housing prices. The costs of these exposures depend crucially on their correlations with other important exposures in household portfolios. Using over 70 years of data on local markets in the U.S., we find that rents and home prices are strongly positively correlated with wages at all horizons. As a result, renting insures earnings risk, and—contrary to widely-held views—for many households owning is much riskier than renting. Combined with evidence that many households view ownership of a home as a particularly safe asset, our findings suggest that the efficiency costs of the substantial tax preferences for owner-occupied housing are greater than previously thought.
Publications
The Mortality Effects of Winter Heating Prices, with Janjala Chirakijja and Seema Jayachandran, The Economic Journal, 2024, 134(657): 402–417.
Work in progress
“The Effect of the Supplemental Nutrition Assistance Program on Local Area Economic Outcomes: Evidence from the American Recovery and Reinvestment Act”.
“The Effect of Seasonal Unemployment on Substance Use”, with Jason Ward.
“Wages, Taxes, and Labor Supply Elasticities: The Role of Social Preferences”, with Janjala Chirakijja.