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Research

Working Papers

Jacob Wright education economics canada united states college quality spending

While the United States and Canada share many similarities, there are stark differences in their levels of income inequality and intergenerational earnings persistence. This paper investigates college quality distributions, tuition subsidies, student loan systems, and tax policies as possible sources of these differences. A heterogeneous agent model is developed where human capital investments occur over the lifecycle and across generations. The model is calibrated to the U.S. economy and is able to match key moments on intergenerational mobility, lifetime inequality, and higher education. The benchmark counterfactual exercise finds that the system of higher education accounts for approximately 22% of the differences in income inequality and 11% of the differences in intergenerational mobility between the U.S. and Canada. The distribution of college qualities accounts for the majority of differences in inequality, whereas its net effect on intergenerational mobility is small.

Jacob Wright economics growth and capital flows growth allocaiton puzzle

This paper documents novel stylized facts and illustrates a simple mechanism explaining patterns of net public foreign assets across countries and time. Previous literature found an unexpected negative correlation between growth and net public foreign assets from 1980 to the mid-2000s. Analyzing data up to 2019 we find that this result no longer holds. We document a significant reversal since 2004, with the correlation now zero or weakly positive. Empirically, we attribute this shift to a substantial substitution from public debt towards international reserves, particularly for slower-growing countries. Simultaneously, low-growth countries experienced heightened productivity volatility. Augmenting an open economy neoclassical growth model to include uncertainty, we demonstrate that this increased risk faced by low-growth economies explains 46% of the change in correlation.

Jacob Wright economics education inequality spatial sorting neighborhoods

Across all education levels, policymakers are using the re-sorting of students to diversify the socioeconomic composition of student bodies. We study how these integration policies interact, using a heterogeneous agent overlapping generations model featuring multiple periods of human capital development. Households sort into public schools through housing location, and into college via a competitive admissions process. Quality of schools and colleges are endogenous through peer effects. Key parameters linking college admissions to parent-child investments are identified using causal moments from the data. At the public school level, we simulate an integration policy that randomly shifts students across schools. For college, we consider an income-based affirmative action policy. Public school integration weakens the link between residential location and school quality, increasing intergenerational mobility by 2.5%. On the other hand, the college  policy decreases intergenerational mobility by 0.7%: when the high-quality college reserves seats for low-income students, it makes college more competitive, which increases sorting at the public school level. In fact, an integration policy that combines public school re-sorting and college affirmative action leads to minimal changes in upwards mobility.

Jacob Wright economics decline in teen employment

Teen employment in the United States has fallen by more than 50% over the last 30 years. We provide causal evidence attributing the majority of this decline to crowding out of teen labor by adults. To determine the macroeconomic consequences of this decline, we begin by causally estimating the returns to teen employment. We find significantly higher wages and lower unemployment rates later in life for teens who worked while in high school and did not attend university. Next, we develop a general equilibrium model and calibrate it to match our causal estimates. The model features adolescents choosing between accumulating human capital on-the-job or in school, and adults choosing teen vs. non-teen occupations. Using this quantitative framework, we simulate a shock to adult occupations that leads to the displacement of teen workers. We find that teens crowded out by adults experience significant welfare losses, partly due to a loss of work experience. We show that education policies, such as optional vocation training, are effective at reducing adverse effects for teens who have been crowded out of the labor market. 

On the Spatial Distribution of Colleges

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In the United States, college quality, seat availability, and government subsidization, vary widely across and within states. Additionally, the physical locations of public state colleges were largely determined over 100 years ago, often with near randomness in location choice or placement far from modern economic activity. In this paper, I ask: “What is the optimal distribution of college quality and seats across space?” To answer this question, I develop a heterogeneous agents lifecycle model, embedded within a quantitative spatial framework. Key features of the model include an endogenous distribution of university quality across locations, migration of workers and students, and firm productivity that depends on local university quality and the density of university graduates in a given location. I calibrate key parameters governing these productivity spillovers using causal, reduced-form evidence. The social planner’s solution shows that both state and federal governments can improve aggregate welfare by altering the spatial distribution of colleges, even without the presence of spillovers or agglomeration externalities.

Work in Progress

Appropriate Management with Alex Wurdinger 

Default and Growth with Juliana Gamboa-Arbelaez 

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