Work, wealth, and well-being : Essays in macroeconomics

Structural transformation of the labor market and the aggregate economy Women's increased involvement in the economy has been the most significant change in labor markets during the past century. In this paper, I account for this period of structural change of the labor market in a macroeconomic model, and study how the increase in female labor force participation has affected the economy's response to aggregate shocks. I explicitly model heterogeneity in gender and household composition as well as the historical decrease of the gender wage gap. The model captures the salient features of historical data, including a strong increase in employment among married women, low crowding-out of married men, and relatively stable employment over time for single women. I then study how the changing labor force composition affects the economy's aggregate employment dynamics. The underlying trend in employment, driven by growth in female labor force participation, contributed to the perceived quick employment recovery after recessions before 1990. In general, incorporating both one- and two-person households matters for employment dynamics, with single households reacting more strongly to shocks and employment responses by subgroups changing over time. Labor supply in a quantitative heterogeneous-agent model Since long, the labor-supply channel has played a central role in macroeconomic analysis. Nevertheless, it has almost exclusively focused on representative-agent behavior. The aim of this paper is to examine frameworks that are significantly richer in terms of heterogeneity and uncertainty, and assess whether the predictions yielded by the starker frameworks are robust to these extensions. Subjective life expectancies, time preference heterogeneity and wealth inequality There is substantial heterogeneity in statistical and perceived life expectancy in the population. In this paper we document a systematic bias in survival beliefs: individuals with low survival probability relative to their peers underestimate their life expectancies, while individuals with high survival probability overestimate. To gauge the effect of heterogeneity in life expectancy on savings rates and ultimately wealth inequality, we introduce shocks to survival beliefs into an otherwise standard overlapping-generations model. We show that such a model exhibits counter-factual savings behavior as individuals increase their savings when their life expectancy drops. Nevertheless, overall wealth inequality in the economy is virtually unaffected by heterogeneity in survival beliefs, contrary to previous literature. Health dynamics and heterogeneous life expectancies In this paper, we provide improved estimates for age-dependent health transitions and survival probabilities for different subsamples of the US population. The estimated yearly transition matrices can be used in any life-cycle model where health and survival dynamics is of interest. The results show substantial heterogeneity in life expectancy in the population. For a 70-year-old man in excellent health, the probability of reaching his 80th birthday is around 75%, while the corresponding probability for a man in poor health is just below 40%.