Working Papers
“Racial Differences in the Marginal Propensity to Consume: New Survey Evidence and Theory” Link
Abstract
The racial wealth gap is large. An explanation for the persistence of this gap is that people spend their resources differently. Estimating the marginal propensity to consume (MPC) by race is crucial in understanding the wealth gap. I draw on survey data I collected to estimate MPCs by race. MPCs are considerably higher among black than white respondents, even after adjusting for characteristics such as age, education, and income. In the Consumer Expenditure Survey, black households consume a higher share of visible goods out of overall consumption to signal status than white households. However, black consumers have more of a need to signal status to compensate for perceptions of them having lower incomes. To match these facts, I introduce status compensation motives into a standard life-cycle model and show that this mechanism can account for 36% of the racial difference in MPCs. Models that include racial heterogeneity in earnings volatility, unemployment shocks, and expenses, but exclude status motives, do not match the data showing that black people's spending on visible goods increases with wealth. I use my model to show how understanding status spending motives can be used to address the racial wealth gap by estimating the size of a new policy to eliminate racial differences in wealth.
“Monetary Policy Transmission to Consumption: Inequalities by Gender and Race”
Abstract
This paper finds evidence that contractionary monetary policy shocks increase consumption inequality by gender and race, along with increasing unemployment and income inequality. Following a 25 basis point contractionary shock, spending on durable goods falls by 7.5% for households headed by black women, while only 5% for households headed by white men. Contractionary shocks also lead households to substitute expenditures on essential non-durable goods and services for non-essentials and durable goods. Household characteristics such as education, debt, income, or composition do not explain all gender and racial differences in consumption responses. I estimate the marginal propensity to consume following monetary policy shocks and find that it is larger for durable goods than non-durable goods and services. Lastly, I find that contractionary, rather than expansionary, shocks drive overall household consumption responses.
“Unpaid Elderly Care Work and Women’s Labor Force Participation: The Case of South Korea,” with Selin Seçil Akın, Sung Ah Bahk, Lídia Brun, Ignacio González
Abstract
This study investigates the impact of Korea's universal long-term care insurance (LTCI) system, implemented in 2008, on the labor market outcomes of family caregivers. We exploit multiple discontinuities in LTCI benefits to estimate their effect on caregivers' employment. Analyzing data from a nationally representative survey, we find a significant increase in labor force participation among women attributable to LTCI benefits, while no corresponding effect is observed for men. Additionally, the benefits reduce the likelihood of women engaging in family caregiving as their primary activity, underscoring the gender-differentiated impact of Korea's LTCI. These findings highlight the crucial role of LTC policies in shaping labor market outcomes for caregivers, with notable implications for female labor supply dynamics.
Policy Papers
“Raising Capital Gains Taxes Would Reduce Inequality Without Economic Costs,” with Juan Montecino, Mary Hansen, and Ignacio González (Link) Inequality.org (2025).
“Monetary Policy and Labor Market Gender Gaps,” with Valentina Flamini, Diego B. P. Gomes, Bihong Huang, Lisa Kolovich, Aleksandra Zdzienicka (Link) IMF Working Paper No. 23/211, International Monetary Fund (2023).
“The Unequal Effect of Interest Rates by Race, Gender,” (Link) Federal Reserve Bank of San Francisco, Economic Letter 2022-19 (2022).
Works in Progress
“Consumer Responses to Fed Communications: Prior Beliefs, Consumption, Demographics”