Current Research
Should I Stay or Should I Go? An Equilibrium Search Model of Education, Labor Supply, and Living Arrangement Choices (with Min Qiang Zhao)
AbstractMillennials are much more likely to be living with their parents when compared to Generation X and Baby Boomers. We propose an equilibrium search model where individuals make choices about education, labor supply, marriage, and living arrangement at different stages in their life. We calibrate our model to match key data moments for young adults in each of the three generations. Using our calibrated model we quantify the importance differences in economic conditions and preferences in accounting for the rising cohort trend in the proportion of young adults living with parents in the U.S. We find that rent-wage ratio, marriage probability, and utility gains from living with parents are all important drivers of generational differences in the propensity to live with parents. Economic turbulence, on the other hand, is not quantitatively important in explaining the cohort trend. We also find substantial heterogeneity in the relative importance of these factors across groups identified by education and employment status.
Introducing Moral Virtue Ethics into Normative Economics for Models with Endogenous Preferences (with Masao Ogaki)
AbstractAn important role of normative economics is to provide an analytical framework to evaluate social states. Such an evaluation is based on value judgments derived from moral views of the members of the society. There exist three major approaches in normative ethics, which formalize many people's moral views. These are consequentialism that focuses on consequences of actions; deontology that focuses on moral duties, and virtue ethics has two important aspects: acquiring virtues and human flourishing that can be achieved by using virtues and abilities. Among these, formal analytical frameworks have been developed for important aspects of consequentialism, deontology, and the flourishing aspect of virtue ethics. However, normative economics does not have a formal analytical framework for the learning aspect of virtue ethics. In this paper we develop such a framework for models with endogenous preferences. We apply this framework to a rational addiction model and an intergenerational altruism model. We find that introduction of virtue ethics can lead to very different policy recommendations than those based solely on welfarism where emphasis is on maximizing social welfare functions. Importantly, in contrast to the commonly held view, we find that incorporating virtue ethics into normative economic analysis may not always lead to greater government interventions.
Old Working papers
No Discounting as a Moral Virtue in Intertemporal Choice Models
Global Integration of India's Money Market: Interest Rate Parity in India (with Arvind Virmani).