Working Papers & Work in Progress
Abstract: This paper develops a heterogeneous-agent overlapping generations model to study the macroeconomic consequences of family policies. The model integrates the quantity-quality trade-off, a multi-period demographic structure, and childcare choices. I calibrate the model to U.S. data and estimate the fertility elasticities using the Alaska Permanent Fund Dividend (APFD). I find that raising aggregate fertility to the replacement level requires a $30,000 cash reward for childbirth, but such a policy reduces average human capital and intergenerational mobility. Nevertheless, average well-being rises by 1.6% in the long run as the old-age dependency ratio drops, requiring lower taxes to sustain retirement benefits. Compared with cash rewards, in-kind benefits are less cost-effective in raising fertility but have other advantages: subsidized childcare encourages parents to work, while expansions of public education improve children's human capital and intergenerational mobility.
Abstract: Does the demographic structure of a country affect the fluctuations of its aggregate consumption over business cycles? In this paper, we document that young households have more volatile consumption expenditures over business cycles than prime-aged ones. Then, we identify large effects of demographic composition on cyclical volatility of consumption using variations coming from demographic transitions for 30 countries covering 1951 to 2016. To decompose the source contributing to the age profile of consumption volatility, we build a simple RBC model with differences in credit market access and exposure to shocks by age. Calibrated to match the U.S. data, the model indicates that the lack of credit access in business cycles explains roughly 60 percent of the differences in cyclical consumption responses between young and old households, while different degrees of exposure to cyclical shocks explain the remaining 40 percent.
Fertility and Technology Adoption: The Role of Family Policies
Who Reaps the Demographic Dividend?