My primary research interests are in the fields of labor and housing. In labor, my recent papers focus on job tasks and human capital. My current work on housing uses equilibrium models to study tax policy.
(with Ralph Stinebrickner and Todd Stinebrickner )
This paper provides new evidence on the labor market mechanisms generating the beauty wage premium. We find that the beauty premium varies widely across jobs with different task requirements. Specifically, in jobs where existing research has posited that attractiveness is plausibly a productivity enhancing attribute - those that require substantial amounts of interpersonal interaction - a large beauty premium exists. In contrast, in jobs where attractiveness seems unlikely to truly enhance productivity - jobs that require working with information and data - there is no beauty premium. This stark variation in the beauty premium across jobs is inconsistent with the employer-based discrimination explanation for the beauty premium, because this theory predicts that all jobs will favor attractive workers.
(with Ralph Stinebrickner and Todd Stinebrickner )
We study wage determination using the first longitudinal dataset containing job level task information for individual workers. New quantitative task measures take advantage of unique survey questions that ask respondents to detail the amount of time spent performing job tasks at different skill levels. A model of comparative advantage highlights the benefits of the unique data features, and guides the specification and interpretation of empirical models. We provide new findings about the effect of current and past tasks on wages. First, current job tasks are quantitatively important, with high skilled tasks being paid substantially more than low skilled tasks. Second, there is no evidence of learning-by-doing (i.e., effects of past tasks) for low skilled tasks, but strong evidence for high skilled tasks. Current and past high skilled information tasks are particularly valuable, although high skilled interpersonal tasks also play a significant role.
(with Kamila Sommer )
American Economic Review, 108(2), February 2018. [Journal version: complementary access]
This paper studies the impact of the mortgage interest tax deduction on equilibrium house prices, rents, homeownership, and welfare. We build a dynamic model of the housing market that features a realistic progressive tax system in which owner-occupied housing services are tax-exempt, and mortgage interest payments are tax deductible. We simulate the effect of tax reform on the housing market. Eliminating the mortgage interest deduction causes house prices to decline, increases homeownership, decreases mortgage debt, and improves welfare. Our findings challenge the widely held view that repealing the preferential tax treatment of mortgages would depress homeownership.
(with Ted To )
This paper quantifies the importance of nonwage job characteristics to workers by estimating a structural on-the-job search model. The model generalizes the standard search framework by allowing workers to search for jobs based on both wages and job-specific nonwage utility flows. Within the structure of the search model, data on accepted wages and wage changes at job transitions identify the importance of nonwage utility through revealed preference. The estimates reveal that utility from nonwage job characteristics plays an important role in determining job mobility, the value of jobs to workers, and the gains from job search.
(with Kamila Sommer and Randal Verbrugge)
We study the joint dynamics of real house prices and rents during the 1995-2006 U.S. housing market boom using a dynamic equilibrium model of the housing market that features endogenous house prices and rents. Lower interest rates, relaxed lending standards, and higher incomes account for about one-half of the increase in the U.S. house price-rent ratio between 1995 and 2006, and also generate the patterns of rapidly growing house prices, sluggish rents, increasing homeownership, and rising household indebtedness observed in the data. The model highlights the importance of accounting for equilibrium interactions between the markets for owned and rented property when analyzing the effect of changes in fundamentals on housing market.
This paper presents instrumental variables estimates of the effects of firm tenure, occupation specific work experience, industry specific work experience, and general work experience on wages. The estimates indicate that both occupation and industry specific human capital are key determinants of wages, and the importance of various types of human capital varies widely across one-digit occupations.
This paper examines career choices using a dynamic structural model that nests a job search model within a human capital model of occupational and educational choices. Wage growth occurs in the model because workers move between firms and occupations as they search for suitable job matches and because workers endogenously accumulate firm and occupation specific human capital. Simulations performed using the estimated model reveal that both self‐selection in occupational choices and mobility between firms account for a much larger share of total earnings and utility than the combined effects of firm and occupation specific human capital.
I develop an empirical occupational choice model that corrects for misclassification in occupational choices and measurement error in occupation-specific work experience. The model is used to estimate the extent of measurement error in occupation data and quantify the bias that results from ignoring measurement error in occupation codes when studying the determinants of occupational choices and estimating the effects of occupation-specific human capital on wages. Ignoring misclassification leads to biases that affect the conclusions drawn from empirical occupational choice models.
(with Kamila Sommer) [pdf] (under review)
The Tax Cuts and Jobs Act of 2017 (TCJA) reduced the incentive for households to claim itemized deductions that subsidize homeownership and simultaneously lowered income tax rates. We use an equilibrium model to quantify the effects of the TCJA on house prices, homeownership, and welfare. The reform removes the tax subsidy to owner-occupied housing for most households, who now choose to claim the standard deduction. However, over-consumption of tax subsidized housing by the remaining wealthy itemizers persists. Wealthy households benefit the most from this large tax cut, so the TCJA is a regressive policy that increases welfare inequality.
Why do the wages of male and female college graduates diverge over the career? In this paper, we use novel data from the Berea Panel Study (BPS) to examine the contribution of gender differences in (1) current job tasks and (2) cumulative experience performing job tasks. We begin by providing new evidence that men and women tend to perform different job tasks, using the first longitudinal job-level measures of time spent on job tasks. Taking advantage of unique time allocation information, we find that men are 33 percent more likely than women to specialize in high skilled information tasks, such as using data analysis to make decisions. Women are 40 percent more likely than men to specialize in low skilled interpersonal tasks, such as serving customers. Over time, the variation in tasks between men and women leads to substantial gender differences in accumulated experience performing different job tasks. We find that controlling for both current tasks and experience performing tasks reduces the estimated gender wage gap by 45 percent. Disparities in the cumulative amount of time spent performing high-skilled information tasks are of particular importance for understanding the substantial widening of the wage gap over the career. Approximately one-third of the gender gap in experience performing high-skilled information tasks can be attributed to sorting into job tasks based on comparative advantage in mathematical and verbal ability. This finding that gender differences in tasks cannot be attributed entirely to discrimination bolsters the cautionary message from our paper---that obtaining accurate conclusions about issues such as the quantitative role of discrimination in determining the gender wage gap requires a careful attention to the measurement of gender differences in tasks, which is difficult without the type of unique longitudinal task data we exploit here.
The empirical literature searching for evidence of compensating wage differentials has a mixed history. While there have been some successes, much of this research finds weak support for the theory of equalizing differences. We argue that this weak support is the result of bias due to dispersion in total job values, or "job dispersion.'' We quantify this bias by estimating a structural on-the-job search model that allows jobs to be differentiated by both wages and job-specific non-wage utility. The model incorporates three primary mechanisms that threaten the validity of traditional hedonic wage regressions: (1) search frictions, (2) dispersion in the value of job offers, (3) unobserved heterogeneity in worker ability. Estimating simple hedonic wage regressions using simulated data from the model reveals that estimates of the marginal willingness-to-pay (MWP) for non-wage job characteristics are severely attenuated. While worker heterogeneity and search frictions are important sources of bias, a significant proportion can only be explained by randomness in job offers.