Published and Accepted Papers
A Pareto-Improving Minimum Wage (with Leif Danziger)
Latest version
Published in Economica 2015
This paper shows that a graduated minimum wage, in contrast to a constant minimum wage, can provide a
strict Pareto improvement over what can be achieved with an optimal income tax. The reason is that a
graduated minimum wage requires high-productivity workers to work more to earn the same income as
low-productivity workers, which makes it more difficult for the former to mimic the latter. In effect, a
graduated minimum wage allows the low-productivity workers to benefit from second-degree pice
discrimination, which increases their income.
Published in Economica 2015
This paper shows that a graduated minimum wage, in contrast to a constant minimum wage, can provide a
strict Pareto improvement over what can be achieved with an optimal income tax. The reason is that a
graduated minimum wage requires high-productivity workers to work more to earn the same income as
low-productivity workers, which makes it more difficult for the former to mimic the latter. In effect, a
graduated minimum wage allows the low-productivity workers to benefit from second-degree pice
discrimination, which increases their income.
SKILL ACQUISITION AND THE DYNAMICS OF TRADE-INDUCED INEQUALITY
Published in Journal of International Economics 2017
Latest version
I develop and calibrate a dynamic general-equilibrium trade model with endogenous skill demand and supply. Simulations show that removing US trade barriers would lead to aggregate gains in the United States of 4.5%. Individual workers’ gains, however, depend on their education, age and birth cohort. The biggest winners, the oldest educated workers alive during trade liberalization, gain 6.7%, while their uneducated peers gain the least, only 1.1%. A major finding is that ignoring either the endogeneity of the skill supply or the post-liberalization dynamics, as the existing literature does, leads to a substantial bias in the quantitative assessment of trade liberalization.
Latest version
I develop and calibrate a dynamic general-equilibrium trade model with endogenous skill demand and supply. Simulations show that removing US trade barriers would lead to aggregate gains in the United States of 4.5%. Individual workers’ gains, however, depend on their education, age and birth cohort. The biggest winners, the oldest educated workers alive during trade liberalization, gain 6.7%, while their uneducated peers gain the least, only 1.1%. A major finding is that ignoring either the endogeneity of the skill supply or the post-liberalization dynamics, as the existing literature does, leads to a substantial bias in the quantitative assessment of trade liberalization.