We solve each household’s optimal saving decisions using a life cycle model that incorporates uncertain lifetimes, uninsurable earnings and medical expenses, progressive taxation, government ...transfers, and pension and social security benefits. With optimal decision rules, we compare, household by household, wealth predictions from the life cycle model using a nationally representative sample. We find, making use of household‐specific earnings histories, that the model accounts for more than 80 percent of the 1992 cross‐sectional variation in wealth. Fewer than 20 percent of households have less wealth than their optimal targets, and the wealth deficit of those who are undersaving is generally small.
•Endogenous family planning adoption lowers intergenerational mobility.•Reducing family planning costs raises absolute upward mobility by 0.3 standard deviations on average.•Differences in family ...planning costs can account for 20% of the racial gap in upward mobility.
Nearly 40% of births in the United States are unintended, and this phenomenon is disproportionately common among Black Americans and women with lower education. Given that being born to unprepared parents significantly affects children’s outcomes, could family planning access affect intergenerational persistence of economic status? We extend the standard Becker–Tomes model by incorporating an endogenous family planning choice. In a policy counterfactual where states reduce family planning costs for the poor, intergenerational mobility improves by 0.3 standard deviations on average. We also find that differences in family planning costs account for 20% of the racial gap in upward mobility.
Human capital and the wealth of nations Manuelli, Rodolfo E; Seshadri, Ananth
The American economic review,
09/2014, Letnik:
104, Številka:
9
Journal Article
Recenzirano
Odprti dostop
We reevaluate the role of human capital in determining the wealth of nations. We use standard human capital theory to estimate stocks of human capital and allow the quality of human capital to vary ...across countries. Our model can explain differences in schooling and earnings profiles and, consequently, estimates of Mincerian rates of return across countries. We find that effective human capital per worker varies substantially across countries. Cross-country differences in Total Factor Productivity (TFP) are significantly smaller than found in previous studies. Our model implies that output per worker is highly responsive to changes in TFP and demographic variables.
In the United States, there is considerable variation in intergenerational mobility across states. We argue that the distribution of public school spending across school districts under public school ...finance systems affects intergenerational mobility within the United States. We build a dynamic model in which school districts vote over public school spending per pupil taking the finance system as given. We embed this model with median voting at the district level within a fairly standard model of human capital accumulation. Our model can replicate the relationship between the distribution of public school spending and intergenerational mobility observed in data. Furthermore, three counterfactual simulations suggest that i) the correlation between parental human capital and a child's learning ability plays a significant role in explaining the cross-state variation in intergenerational mobility, ii) a more equal distribution of public school spending under a foundation program by relaxing a borrowing constraint improves intergenerational mobility, especially when a child's learning ability is not highly dependent on parental human capital, and iii) switching to a full state funding program improves intergenerational mobility, but not enormously. This is because full state funding limits public school spending, which hinders intergenerational mobility.
We present a model in which human capital investments occur over the life cycle and across generations, à la Becker and Tomes. The human capital technology features multiple stages of childhood ...investments, college, and life cycle accumulation. The model can explain a wide range of intergenerational relationships while remaining empirically consistent with cross-sectional inequality. Much of the latter is determined by early investments in children, so that borrowing constraints faced by young parents are important for understanding the persistence of economic status across generations. Education subsidies, especially early on, can significantly reduce the intergenerational persistence of economic status.
Many new technologies display long adoption lags, and this is often interpreted as evidence of frictions inconsistent with the standard neoclassical model We study the diffusion of the tractor in ...American agriculture between 1910 and 1960—a well-known case of slow diffusion—and show that the speed of adoption was consistent with the predictions of a simple neoclassical growth model. The reason for the slow rate of diffusion was that tractor quality kept improving over this period and, more importantly, that only when wages increased did it become relatively unprofitable to operate the alternative, laborintensive, horse technology.
Understanding the Great Gatsby Curve Durlauf, Steven N.; Seshadri, Ananth
NBER macroeconomics annual,
01/2018, Letnik:
32, Številka:
1
Journal Article
Recenzirano
The Great Gatsby Curve, the observation that for OECD countries greater cross-sectional income inequality is associated with lower mobility, has become a prominent part of scholarly and policy ...discussions because of its implications for the relationship between inequality of outcomes and inequality of opportunities. We explore this relationship by focusing on evidence and interpretation of an intertemporal Gatsby Curve for the United States. We consider inequality/mobility relationships that are derived from nonlinearities in the transmission process of income from parents to children and the relationship that is derived from the effects of inequality of socioeconomic segregation, which then affects children. Empirical evidence for the mechanisms we identify is strong. We find modest reduced-form evidence and structural evidence of an intertemporal Gatsby Curve for the United States as mediated by social influences.
Engines of Liberation Greenwood, Jeremy; Seshadri, Ananth; Yorukoglu, Mehmet
The Review of economic studies,
01/2005, Letnik:
72, Številka:
1
Journal Article
Recenzirano
Electricity was born at the dawn of the last century. Households were inundated with a flood of new consumer durables. What was the impact of this consumer durable goods revolution? It is argued here ...that the consumer goods revolution was conducive to liberating women from the home. To analyse this hypothesis, a Beckerian model of household production is developed. Households must decide whether or not to adopt the new technologies, and whether a married woman should work. Can such a model help to explain the rise in married female labour-force participation that occurred in the last century? Yes.
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