Was the increase in income inequality in the US due to permanent shocks or merely to anincrease in the variance of transitory shocks? The implications for consumption and welfaredepend crucially on the answer to this question. We use CEX repeated cross-section data onconsumption and income to...

This paper contributes to the already vast literature on demography-induced internationalcapital flows by examining the role of labor market imperfections and institutions. We setup atwo-country overlapping generations model with search unemployment, which we calibrateon EU15 and US data. Labor...

Financial markets provide imperfect insurance of labor income risk. However, workers can partly insure against labor market risk by commuting to adjacent regions. Since commuters own wage claims to output produced in adjacent regions, the business cycle in the neighborhood becomes a relevant...

Using a novel dataset from the 2006 Portuguese Labor Force Survey this paper examinesthe impact of a voluntary reduction in hours of work, before retirement, on the moment of exitfrom the labor force. If, as often suggested, flexibility in hours of work is a useful measure topostpone retirement,...

We estimate the responses of gross labor earnings with respect to marginal and average netof-tax rates in France over the period 2003-2006. We exploit a series of reforms to theincome-tax and the payroll-tax schedules that affect individuals who earn less than twice theminimum wage. Our estimate...

Given its significance in practice, piecewise linear taxation has received relatively littleattention in the literature. This paper offers a simple and transparent analysis of its maincharacteristics. We fully characterize optimal tax parameters for the cases in which budgetsets are convex and...

There has been little empirical work evaluating the sensitivity of fertility to financial incentives at the household level. We put forward an identification strategy that relies on the fact that variation of wages induces variation in benefits and tax credits among "comparable households...

This paper considers a simple model of self-fulfilling expectations that leads to a multiple equilibrium of gender gaps in wages and participation rates. Rather than resorting to moral hazard problems related to unobservable effort, like in most of the related literature, our model fully relies...

We estimate the effect of early child development on maternal labor force participation using data from teacher assessments. Mothers might react to having a poorly developing child by dropping out of the formal labor force in order to spend more time with their child, or they could potentially...

In this paper we develop a dynamic structural life-cycle model of labor supply behavior which fully accounts for the effect of income tax and transfers on labor supply incentives. Additionally, the model recognizes the demand side driven rationing risk that might prevent individuals from...