Projects

Working papers

Effects of minimum wage on reservation wages (JMP, latest version)

In this paper I use quasi-experimental methods to identify the effects of minimum wage increases on the reservation wages of the unemployed. Using state level variation in the minimum wage from late 2003 to late 2021, I find that for low wage workers, the increase in minimum wages is associated with a 5.1 to 7.5 percent increase in reservation wages. Competing income and substitution effects of minimum wage increases make theoretical predictions of reservation wages ambiguous. My paper addresses this concern empirically. These results suggest that reservation wages rise in response to minimum wage increases, and therefore affect the labour supply of unemployed workers.

Effects of UI generosity on unemployment

I use job openings data from Burning Glass Technologies (BGT) in an extended Diamond-Mortensen-Pissarides (DMP) model of job search, first developed in Gallant et al., 2020, to study the effects of making unemployment insurance (UI) more generous on job search behavior. I find that states that terminated the generous Federal UI schemes briefly saw a rise in aggregate search effort; aggregate search effort is measured as a weighted sum of the number of non-employed workers with different durations of unemployment spells.

Effects of university tuition hikes on human capital investment decisions: Evidence from the UK with Jay Kang

In 2012, the Conservative-Lib Dem government increased the university tuition fees from £3000 per year to £9000 per year. In this paper we examine the effects of this fee increase on the college enrollment decision of British households using the Understanding Society data from the UK. Economic intuition suggests that rising fees should be associated with a fall in enrollment rates. This study exploits a quasi-experimental setting to test the hypothesis quantitatively.

Work in progress

Labour supply response to minimum wage shocks

In this paper, I study the effect of a minimum wage increase on spell duration using a partial equilibrium model. Minimum wage increases lead to longer unemployment spells in this model, however they may be welfare improving due to a number of contemporaneous changes in the labour market. Identification of this model’s parameters is done using a little-known data source from the Department of Labor which reports the size of unemployment insurance transfers, and reservation wages. By further augmenting this data with vacancy information, I am able to derive credible estimates of spell duration elasticity with respect to the minimum wages. Furthermore, I use this model to simulate the equilibrium effects of a $15 minimum wage.

Human capital investment decisions in the face of idiosyncratic shocks

I compute an overlapping generations model to study human capital investment decisions in an environment with uninsurable idiosyncratic risk. In the model, households transfer wealth from one generation to the next, and invest in their children’s human capital, as well as their own. Each generation is altruistic and cares about the utility of the next generation. Thus parents allocate resources towards bequests and children’s human capital optimally. Even if all households begin with the same level of wealth, a one-time shock introduces persistent wealth and human capital inequality. Low-wealth households struggle to invest in their children and as a result inequality between the haves and have-nots widens over time.