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Abstract:

In this paper we estimate an intergenerational dynamic discrete choice model with labor supply, fertility and investment decisions using the estimation framework developed by Gayle, Golan and Soytas (2010). Our model consist of finitely lived agents whose maximize expected lifetime utility. In each period the agents take actions in order to maximize discounted sum of utility over their remaining lifetime. Agents care about the future generations since they can increase their utility by increasing the utility of future generations. Moreover the timing of actions they take in their lifecycle also affects the utility value of future generations. We use data from PSID to estimate the model. The estimated parameters are used to simulate different outcomes from the model in order to conduct policy experiments. The reduced form estimates suggest college educated women have an advantage in producing highly educated children if they choose to spend time with them while the children are young. This hypothesized claim that females with college education has an advantage in educating their children is incorporated into the model by an intergenerational transfer function which is affected by the lifecycle time with children decision and labor supply decision of females. The magnitude of the utility is affected both by the cost of investing and at the same time by the discounted utilities from the invested generation. Therefore the final effect will depend on the parameters of the model. The lifecycle simulations for females with different education levels can reveal the different utility responses to the same set of choices. If the returns from the invested generation are high enough to compensate the loss due to not participating in the labor market, a college educated female may increase utility by spending more time with the children by decreasing the labor hours supplied to the market. In this case, these phenomena can explain the slowdown in the convergence of gender gap in participation.

“An Intergenerational Model of Labor Supply and Fertility” (joint with George-Levi Gayle and Limor Golan)

Work in Progress

DEPARTMENT OF ECONOMICS

Abstract:

The literature on college major choices and the first jobs after graduation shows that the college major determines not only the initial labor market returns for the female but also gives indication of the lifecycle earnings. The close link between the initial employment and the possible employment path is investigated by many authors. The choice of major is followed by a choice of occupation after the graduation and the current model captures the job choice as a subcategory under the possible occupations available to a college graduate individual. There are different returns to different jobs, both immediately and also in the lifecycle (the age experience profile of each job differs as well as the periodic payments). There is limited switching between occupations but the switching becomes more costly as age increases, and specific human capital on a particular job is accumulated. Therefore a job choice for a college educated female is not a choice with immediate returns but a choice which has consequences in the lifecycle. In fact this is true not only for female individuals but also for males. However what makes it different for females compared to males is the observation that female and males are not equally represented in the occupations that are available to a college graduate. This point is discussed by many authors from the perspective of labor market discrimination against women. The evidence suggests that the discrimination argument is less valid now then it was 3-4 decades ago. The other view supports the idea that women in fact are sorted into some occupations which are historically known as female friendly jobs  Following this second line of view, a dynamic discrete choice model starting with an occupation choice in first period can be used to identify and estimate the returns to different occupations from choices and observed characteristics.. For instance the cost of having a child can be different for two females with same observed demographics but different occupations.

“Occupation Choice and Returns to Family versus Career Aspirations”

Econometric Modeling of US Scrap Steel Prices (joint with Jean-Francois Richard and Frank Giarratani)

 

Abstract:

In this paper we study the determinants of the U.S scrap steel prices and construct a model that will allow price predictions. The particular interest in scrap steel prices comes from the observation that the price series for scrap steel in US are more sensitive to the change in the world steel production (especially China's production) after 2002. In the paper, an excess demand function is constructed for steel scrap industry which passes a battery of specification tests. The final estimation is conducted using a cubic reaction function of the price to excess demand as in Hendry (1984) and extension of it to capture the stochastic factors in excess demand as in Richard and Zhang (1996). We plan to use the model for forecasting purposes in the final step.