We develop a perfect foresight, overlapping generations model with intragenerational inequality and endogenous human and physical capital investment, and we calculate welfare costs for marginal reforms of taxation and public spending. Welfare costs are uniformly lower than in the equivalent...

This paper provides empirical evidence about the effect of unearned income on earnings, consumption, and savings. Using an original survey of people playing the lottery in Massachusetts in the mid-1980s, we analyze the effects of the magnitude of lottery prizes on economic behavior. The critical...

We construct an overlapping generations model for an open economy where hours worked, human capital accumulation, income and welfare are all endogenous. Within each generation we distinguish individuals with high, medium or low innate ability. These differences in ability explain inequality in...

This paper examines whether investment in a risky asset depends on future circumstances. We conduct a laboratory experiment where subjects have the opportunity to invest earned income in a risky asset and, depending on randomly assigned treatment states, have the opportunity to respond to the...

This paper studies the formation and persistence of gender identity in a sample of U.S. immigrants. We show that gender roles are acquired early in life, and once established, persist regardless of how long an individual has lived in the U.S. We use a novel approach relying on linguistic...

How students’ non-school inputs respond to ability grouping may explain the currently mixed findings in the literature about the impacts of tracking. Using data from South Korea, where students are randomized into middle schools under the country's equalization policy, but sorted into...

This paper studies hours worked volatility and the cyclicality of human capital investments by embedding a Ben-Porath life-cycle model of human capital accumulation into an RBC setting. Agents differ across two dimensions: age and productivity in learning. Our results show that individuals...

Based on administrative register data from Norway, we examine the impact of hours of daylight on sick-leave absences among workers. Our preferred estimates imply that an additional hour of daylight increases the daily entry rate to absenteeism by 0.5 percent and the corresponding recovery rate...

Currently, microeconomic theory is only of very limited use to understand price levels in the service sector. After a brief review of the literature on service pricing, this paper claims that price levels in the service sector are not only dependent on qualification levels, but also on the...

Prior to the Affordable Care Act, the majority of states in the U.S. had already implemented state laws that extended the age that young adults could enroll as dependents on their parent's employer-based health insurance plans. Because of the fundamental link between health insurance and...