We study efficient allocations and optimal policies in a life-cycle economy with risky human capital accumulation. The agents are ex-ante heterogeneous in their initial human capital and in their ability level. Ex-post, they also differ in their realization of shocks to human capital. The model...

We study optimal tax policies in a life-cycle economy with risky human capital and permanent ability differences. The optimal policies balance redistribution across agents, insurance against human capital shocks, and incentives to learn and work. In the optimum, i) if utility is separable in...

The business startup rate in the United States has exhibited a large secular decline in recent decades. The reasons behind the decline are not well understood. This paper hypothesizes that the startup rate declined in large part because corporate taxes raised the opportunity cost of...

How does corporate taxation affect the life cycle of firms? A change in profit-tax rates affects the life cycle of firms through wages and through firm selection. We quantify these effects by looking at the average size of young and mature US firms 30 years after the Reagan Tax Cuts. We...

The Nelder-Mead simplex method is an optimization routine that works well with irregular objective functions. For a function of <InlineEquation ID="IEq1"> <EquationSource Format="TEX">$$n$$</EquationSource> </InlineEquation> parameters, it compares the objective function at the <InlineEquation ID="IEq2"> <EquationSource Format="TEX">$$n+1$$</EquationSource> </InlineEquation> vertices of a simplex and updates the worst vertex through simplex search steps. However, a...</equationsource></inlineequation></equationsource></inlineequation>

The US economy has undergone a number of puzzling changes in recent decades. Large firms now account for a greater share of economic activity, new firms are being created at a slower rate, and workers are getting paid a smaller share of GDP. This paper shows that changes in population growth...

The Nelder-Mead simplex method is an optimization routine that works well with irregular objective functions. For a function of n parameters, it compares the objective function at the n 1 vertices of a simplex and updates the worst vertex through simplex search steps. However, a standard serial...