L. Rachel Ngai




Associate Professor, London School of Economics

Research Fellow, CEPR.

Member, CFM



Department of Economics, LSE, Houghton Street, London WC2A 2AE, UK

Email: L.Ngai"at"lse.ac.uk

Phone: +44 2079557017

Working Papers

·      A Multisector Perspective on Wage Stagnation  (with Orhun Sevinc), June 2020. CEPR DP 14855

Abstract: Low-skill workers are concentrated in sectors that experience fast productivity growth and yet their wages have been stagnating. A multisector perspective is crucial to understand this stagnation as it is not due to an overall stagnation in the marginal product of low-skill workers but a labour reallocation into sectors with slower growth. We show this in a two-sector model where the faster productivity growth causes a fall in the relative price of the low-skill intensive output, which consists of capital and a consumption good that is a complement to the high-skill intensive output. When calibrated to the U.S., the model accounts for a substantial part of the low-skill wage stagnation and its divergence from aggregate productivity during 1980-2010.

·      Ins and Outs of Selling Houses: Understanding Housing-Market Volatility  (with Kevin Sheedy), January 2020. CEPR DP 14331

Abstract: This paper documents the cyclical properties of housing-market variables, which are shown to be volatile, persistent, and highly correlated with each other. Is the observed volatility in these variables due to changes in the speed at which houses are sold or changes in the number of houses that are put up for sale? An inflow-outflow decomposition shows that the inflow rate accounts for almost all of the fluctuations in sales volume. The paper then shows that a search-and-matching model with endogenous moving subject to housing demand shocks performs well in explaining fluctuations in housing-market variables. A housing demand shock induces more moving and increases the supply of houses on the market, thus one housing demand shock replicates three correlated reduced-form shocks that would be needed to match the relative volatilities and correlations among key housing-market variables.

·      Taxes, Subsidies and Gender Gaps in Hours and Wages (with Robert Duval-Hernandez and Lei Fang) May 2019.


        Online Appendix -- Proofs and calibration procedures


        Previous versions: CEPR DP12292. CFM 2018-04 (VoxEU Column). SOEP paper No 962 


Abstract: Using micro data from 17 OECD countries, this paper documents a negative correlation between gender gaps in hours and wages. Using a multi-sector model with home production and leisure, taxes and family care subsidies are shown to be important in accounting for the cross-country differences in the two gender gaps. Higher taxes induce substitution away from market production, especially for women. This fall in women’s relative market hours is accompanied by a rise in women’s relative wage. Higher family care subsidies induce marketization of home production, reconciling the high taxes and low gender hour gap in the Nordic counties.


·      Rising inequality and trends in leisure (with Timo Boppart). April 2019. CEPR DP 12325


Abstract: This paper develops a model that generates rising average leisure time and increasing leisure inequality along a path of balanced growth. Households derive utility from three sources: market goods, home goods and leisure. Home production and leisure are both activities that require time and capital. Households allocate time and capital to these non-market activities, work and rent capital out to the market place. The dynamics are driven by activity-specific TFP growth and a spread in the distribution of household-specific labor market efficiencies. When the spread is set to match the increase in wage inequality across education groups, the model can account for the observed average time series and cross-sectional dynamics of leisure time in the U.S. over the last five decades.



·      The decision to move house and aggregate housing-market dynamics (with Kevin Sheedy). May 2019.  (VoxEU Column ). Forthcoming, Journal of the European Economic Association.


Previous title "Moving House". January 2015. CEPR DP10346. CFM 2016-21

Abstract: Using data on house sales and inventories, this paper shows that housing transactions are driven mainly by listings and less so by transaction speed, thus the decision to move house is
key to understanding the housing market. The paper builds a model where moving house is essentially an investment in match quality, implying that moving depends on macroeconomic
developments and housing-market conditions. The number of transactions has implications for welfare because each transaction reduces mismatch for homeowners. The quantitative
importance of the decision to move house is shown in understanding the U.S. housing-market boom during 1995-2003.


·      China's mobility barriers and employment allocations (with Chris Pissarides and Jin Wang). (VoxChina Column) Journal of the European Economic Association, Oct 2019, 17(5): 1617-53.


        Previous version:  CEPR DP11657

Abstract: Chinas hukou system imposes two main barriers to population movements. Agricultural workers get land to cultivate but are unable to trade it in a frictionless market. Social transfers (education, health, etc.) are conditional on holding a local hukou. We show that the land policy leads to over-employment in agriculture and it is the more important barrier to industrialization. Effective land tenure guarantees and a perfect competitive rental market would correct this inefficiency. The local restrictions on social transfers also act as disincentives to migration with bigger impact on urban migrations than to job moves to rural enterprises.


·      Gender Gaps and the Rise of the Service Economy (with Barbara Petrongolo). American Economic Journal -- Macroeconomics, October 2017, 9(4): 1-44.


        2018 AEJ: Macroeconomics Best Paper Award


        A nice video on the main idea of the paper produced by the American Economic Association.


       Previous title "Structural Transformation, Marketization and Female Employment".  CEP DP1204.  CEPR DP 9970.

Keywords: gender gaps, structural transformation, home production, rise in female market hours, fall in male market hours, rise in gender wage ratio


·          Hot and Cold Seasons in the Housing Market (with Silvana Tenreyro). (Web Appendix), American Economic Review, December 2014, 104(12): 3991-4026.

Keywords: seasonality, the U.K. and the U.S. housing markets, match-specific quality, thick-market effect.

·      Taxes, Social Subsidies and the Allocation of Work Time  (with Chris Pissarides), American Economic Journal - Macroeconomics, October 2011, 3(4): 1-26.

   Previous title: "Welfare Policy and the Sectoral Distribution of hours of Work".

Keywords: time allocation, home production, welfare policy (taxes and subsidies), 19 OECD countries


·        Accounting for Research and Productivity Growth Across Industries (with Roberto Samaniego), Review of Economic Dynamics, July 2011, Volume 14, p. 475-495.        

Keywords: cross-industry productivity growth, endogenous growth model, R&D.


·        Mapping Prices into Productivity in Multisector Growth Models (with Roberto Samaniego), Journal of Economic Growth, September 2009, Volume 14, p.183-204.    

Keywords: input-output table, intermediate goods, investment-specific technical change (ISTC).


·        Trends in Hours and Economic Growth (with Chris Pissarides), Review of Economic Dynamics, April 2008, Volume 11, p. 239-256. 

Previous Title: "Trends in Labour Supply and Economic Growth"

Keywords: structural transformation, marketization, home production, trends in aggregate market hours, aggregate balanced growth path.


·         Public Enterprises and Labour Market Performance (with Johannes Hörner and Claudia Olivetti), International Economic Review, May 2007, Volume 48, No. 2, p. 363-384.

Keywords: Unemployment, public sector employment, economic turbulence


·         Structural Change in a Multisector Model of Growth (with Chris Pissarides), American Economic Review, March 2007, Volume 97, No. 1, p. 429-443.

A longer working paper version: CEPR DP 4763. Previous title: "Balanced Growth with Structural Change".

Keywords: multi-sector growth model, structural change (Kuznets' facts), aggregate balanced growth path (Kaldor's facts)  


·         Barriers and the Transition to Modern Growth, Journal of Monetary Economics, October 2004, Volume 51, Issue 7, p. 1353-1383.

Keywords: cross-country income differences, stagnation to growth, transitional dynamics.


Last update: January 2020