This paper studies the effect of the HIV/AIDS epidemic on saving behaviour. Two important characteristics of HIV result in opposing forces on savings: mortality increases, which reduces savings, and long-term illness risk increases, which enhances savings. We use a two period life-cycle model...

Existing evidence from U.S. middle-class households shows that their MPCs out of tax rebates greatly exceed the PIH's prediction and are weakly related to their liquid assets. The standard precautionary-saving model predicts the first fact but counterfactually requires MPCs to decrease with...

This article explores the aggregate effects of women's empowerment on intra- and intertemporal household choices within a Bewley-style heterogeneous agent framework to aggregate household level decisions into macroeconomic variables. Emphasis is placed on the role of attitudes towards risk and...

Using data of households approaching retirement in the U.S., I find that the Whites' median saving rates are 9 percentage points larger than the Mexican Americans' rates (ethnic gap) and than the African Americans' rates (racial gap). Two-thirds of each gap correspond to changes in asset prices...

In the USA, the share of household wealth held by the richest 1% increased from 23.5% in 1980 to 41.8% in 2012. This paper contributes to understanding the causes behind this increase. First, using an accounting decomposition, I show that more than half of the increase in the share of the top 1%...

When it comes to estimating the benefits of long-term savings, many people rely on their intuition. Focusing on the domain of retirement savings, we use a randomized experiment to explore people's intuition about how money accumulates over time. We ask half of our sample to estimate future...

A canonical but untested assumption in economics is that choices are determined only by preferences and budget constraints, but not by how people approach decision making. In particular, it is believed that people behave “as if they optimized”, even if they do not engage in any formal...

We construct a theoretical model of labor markets with human capital accumulation to understand and quantify the earnings losses for young workers generated by unemployment: unemployment represents time forgone in terms of human capital accumulation, which adversely affects long-term income...

We study the entry into legitimate employment and earnings of a large sample of convicts released from Hungarian prisons in 2002-08. The employment rate of the prisoners falls short of 20% one year before incarceration, and they earn 25% below the national average. We identify the effect of...

Since the beginning of the financial crisis in 2008, the Dutch economy lost 6% of gdp relative to Germany, even though the Netherlands (unlike the GIPSI countries) did not face serious problems to finance its sovereign debt. This bad performance is explained by the interaction of fiscal policy...