Research
Unemployment and Forward-Looking Congressmen
(JMP) - Draft
Abstract: Members of the US House of Representatives serve nearly four terms on average. Because their political positions are costly to change, candidates anticipate future elections and weigh how today’s position choices shape their future prospects. A political stance that helps win the current election may turn into a liability in the next one. To study this intertemporal trade-off, I develop a dynamic model of electoral competition in which two candidates compete for a seat in the House. A candidate’s electoral prospects depend on the position of the median voter in his district and the state of the district's economy. Both variables evolve over time, and candidates anticipate future ideological shifts and economic changes when choosing their current positions. I calibrate the model using district-level data and focus on unemployment as a proxy for economic conditions. Higher unemployment affects electoral competition by reducing incumbents’ chances of reelection, incentivizing them to move toward the median voter. Through the lens of my model, I find that economic conditions were three times more important than ideological shifts in explaining the 2010 Republican wave. Absent the Great Recession, Democrats would have lost only eight seats.
Household Time Allocation Decisions: Evidence from Germany's Introduction of the Minimum Wage
With Javiera Garcia - Draft
Abstract: This paper examines how income, preferences, and productivity influence household time allocation decisions, with a focus on the effects of Germany’s 2015 minimum wage introduction. Using data from the German Socio-Economic Panel (SOEP), we perform a difference-in-differences analysis followed by an event study to assess the reform’s impact on time spent on childcare, housework, and paid labor. We find that the minimum wage reduced household time spent on home production between 30-60 minutes per day, primarily by decreasing the time women allocate to childcare. This shift is sustained over time, suggesting a re-optimization of household time allocation. We then propose a structural model where spouses receive wage offers and jointly allocate time to supplying labor market hours and to producing a public good. We estimate the model and find that men have a higher preference for leisure and women are more productive in providing the public good. Differences in wage offers largely explain disparities in paid working hours, while preferences and productivity account for most variation in home production hours. Finally, our estimated model suggests that a minimum wage of €10 would have increased women’s labor participation by 14%, which is 4 percentage points higher than observed with the actual minimum wage. These results suggest that, in the absence of other frictions, minimum wage policies can help reduce the gender wage gap.
Correlated Innovations and Biased Decision-Makers: A Tale of Policy Take-Up in the States
With Javiera Garcia
Abstract: We present a model of policy adoptions across US states, where the value of those policies is correlated. Our model consists of districts with potentially biased decision makers who care about re-elections and households that vote for these decision makers. We show that introducing correlation makes decision makers behave more frequently as if they were unbiased. This happens because there is more public information about the signal and thus it is more costly for the biased decision maker to pick their favorite action. The model allows for learning among districts while relaxing strict assumptions that the literature has made so far. We then show motivating evidence of this mechanism with US data.