L. Rachel Ngai
Associate Professor, London School of Economics
Research Fellow, CEPR.
Department of Economics, LSE, Houghton Street, London WC2A 2AE, UK
Phone: +44 2079557017
Abstract: Low-skill workers are concentrated in sectors that experience fast productivity growth and yet their wages have been stagnating. We document evidence from U.S. states showing that a multisector perspective is crucial to understanding this divergence and stagnation. Key to our mechanism is the fall in the relative price of the low-skill sector caused by faster productivity growth. When outputs are complements across sectors, this leads to labor reallocation into the high-skill sector where the marginal product of low-skill workers is stagnant. It accounts for low-skill wage stagnation, its divergence from aggregate labor productivity, and the rise in wage inequality from 1980 to 2010.
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.
· 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
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.
· The decision to move house and aggregate housing-market dynamics (with Kevin Sheedy). (VoxEU Column ). Journal of the European Economic Association, Oct 2020, 18(5): 2487-2531.
Keywords: search and matching, endogenous moving, match quality investment, mismatch
· 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.
Keywords: Mobility barriers, China's Hukou system, land policy, location-based social subsidies, structural transformation, urbanization
2018 AEJ: Macroeconomics Best Paper Award
A nice video on the main idea of the paper produced by the American Economic Association.
Keywords: gender gaps, structural transformation, home production, rise in female market hours, fall in male market hours, rise in gender wage ratio
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).
Previous Title: "Trends in Labour Supply and Economic Growth"
Keywords: structural transformation, marketization, home production, trends in aggregate market hours, aggregate balanced growth path.
·Employment outcomes in the welfare state (with Chris Pissarides), Revue economique 59(3), 413-436.
Keywords: marketization, home production, social subsidies and taxes.
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)
Keywords: cross-country income differences, stagnation to growth, transitional dynamics.
Last update: October 2020