Latest drafts of my research papers:
Work in Progress:
Shift-Share Instruments and the Impact of Immigration (preliminary)
Measurement Errors and Rank Correlations
The Dynamics of Local Fiscal Multipliers: Evidence from Germany
with Ines Helm
Occupational Choice and Family Background: the Role of Borrowing Constraints
with Salvatore Lo Bello
Published and Working Papers:
The Impact of Immigration: Why Do Studies Reach Such Different Results?
with Christian Dustmann and Uta Schönberg
Published in the Journal of Economic Perspectives, Vol. 30(4), Fall 2016
We classify the empirical literature on the wage impact of immigration into three groups, where studies in the first two estimate different relative effects, and the third the total effect of immigration on wages. We interpret the estimates obtained from the different approaches through the lens of the canonical model to demonstrate that they are not comparable. We then relax two key assumptions in this literature, allowing for inelastic and heterogeneous labor supply elasticities of natives and the downgrading of immigrants. Heterogeneous labor supply elasticities, if ignored, may complicate the interpretation of wage estimates, in particular of relative wage effects. Moreover, downgrading may lead to biased estimates in those approaches that estimate relative effects of immigration, but not in approaches that estimate total effects. We conclude that empirical models that estimate total effects not only answer important policy questions, but are also more robust to alternative assumptions than models that estimate relative effects.
Labor Supply Shocks, Native Wages, and the Adjustment of Local Employment
By exploiting a commuting policy that led to a sharp and unexpected inflow of Czech workers to areas along the German-Czech border, we examine the impact of an exogenous immigration-induced labor supply shock on local wages and employment of natives. On average, the supply shock leads to a moderate decline in local native wages and a sharp decline in local native employment. These average effects mask considerable heterogeneity across groups: while younger natives experience larger wage effects, employment responses are particularly pronounced for older natives. This pattern is inconsistent with standard models of immigration but can be accounted for by a model that allows for a larger labor supply elasticity or a higher degree of wage rigidity for older than for young workers. We further show that the employment response is almost entirely driven by diminished inflows of natives into work rather than outflows into other areas or non-employment, suggesting that “outsiders” shield “insiders” from the increased competition.
Interpreting Trends in Intergenerational Mobility
download PDF (new version), with Martin Nybom
Previous version published as SOFI Working Paper 3/2014.
Revise and Resubmit (2nd round) at the Journal of Political Economy
Discussed at the Brookings Institution Blog
We show that events in previous generations can explain contemporaneous shifts in intergenerational mobility. We first study the dynamic response of income mobility to structural changes in a model of intergenerational transmission. Mobility today depends on past policies and institutions, such that major reforms may generate long-lasting mobility trends over multiple generations. These trends are often non-monotonic, as mobility tends to be highest when a structural change occurs. Times of change are thus times of high mobility, while declining mobility today may reflect past gains rather than a recent deterioration of “equality of opportunity”. We then exploit data over three generations and a compulsory school reform in Sweden to test the dynamic implications of our model. The reform had a large, long-lasting, and non-monotonic effect: it reduced the transmission of disparities in income and education from parents to their offspring in the directly affected generation, but increased intergenerational persistence in the next.
This paper shows that across multiple generations, the persistence of occupational and educational attainment in Germany is larger than estimates from two generations suggest. We consider two recent interpretations. First, we assess Gregory Clark’s hypotheses that the true rate of intergenerational persistence is higher than the observed rate, as high as 0.75, and time-invariant. Our evidence supports the first but not the other two hypotheses. Second, we test for independent effects of grandparents. We show that the coefficient on grandparent status is positive in a wide class of Markovian models, and present evidence against its causal interpretation.
Biases in Standard Measures of Intergenerational Income Dependence
Estimates of the most common mobility measure, the intergenerational elasticity, can be severely biased if snapshots are used to approximate lifetime income. However, little is known about biases in other popular dependence measures. We use long Swedish income series to provide such evidence for log-linear and rank correlations, and rank-based transition probabilities. Attenuation bias is considerably weaker in rank-based measures. Life-cycle bias is strongest in the elasticity; moderate in the log-linear correlation; and small in rank-based measures. However, with important exceptions: persistence in the tails of the distribution is considerably higher, and long-distance downward mobility considerably lower, than estimates from short-run income suggest.
Mobility Across Multiple Generations: The Iterated Regression Fallacy
Empirical evidence on the degree of long-run mobility across multiple generations is scarce. Predictions are instead routinely derived by exponentiation of intergenerational measures, implying high long-run mobility even when intergenerational mobility is low. Such extrapolations however presume that regression implies iterated regression, a statistical fallacy whose prevalence I briefly discuss. I then examine how elements of the transmission process affect the relation between intergenerational and multigenerational mobility. Considering direct and indirect transmission, the multiplicity of skills, and the role of grandparents I conclude that long-run mobility will likely be lower, possibly much lower, than predictions from intergenerational evidence suggest. I support these theoretical predictions with evidence from Swedish registries that cover three generations.
Previous version available as IZA Discussion Paper No. 7072
Heterogeneous Income Profiles and Life-Cycle Bias
in Intergenerational Mobility Estimation
download PDF, with Martin Nybom
Published in the Journal of Human Resources, Volume 51(1), Winter 2016
Using short snapshots of income in intergenerational mobility estimation causes “lifecycle bias” if the snapshots cannot mimic lifetime outcomes. We use uniquely long series of Swedish income data to show that this bias is large and to examine current strategies to reduce it. We confirm that lifecycle bias is smallest when incomes are measured around midlife, a central implication from a widely adopted generalization of the classical errors-in-variables model. However, the model cannot predict the ideal age of measurement or eliminate lifecycle bias at other ages. We illustrate how extensions of this model can reduce the bias further.
Previous version available as IZA Discussion Paper No. 5988