Showing how to identify models of earnings and employment dynamics from subjective expectations data, from Manuel Arellano, Orazio Attanasio, Margherita Borella, @mdenardi.bsky.social, and Gonzalo Paz-Pardo www.nber.org/papers/w35027
Bottom line: high observed earnings persistence does not necessarily mean highly persistent of individual-level productivity shocks. A large part reflects heterogeneity and employer transitions.
Reduced-form estimates can overstate persistence and volatility because they load on job transitions and sorting. Once we account for heterogeneity, volatility falls sharply and becomes much flatter across the earnings distribution.
Main result: we find less persistence and less volatility in individual productivity shocks than much of the earlier literature suggests, but more heterogeneity in ability and match quality.
Using the NY Fed Survey of Consumer Expectations, we observe expected earnings offers, the distribution of those offers, and the probability workers would accept them. That gives direct information on counterfactuals that realized outcomes alone do not.
How much of measured earnings risk is really individual-level productivity risk, and how much reflects sorting, job transitions, and heterogeneity?
We show that subjective expectations data help separate these forces.
The image displays a cover for a working paper from the Federal Reserve Bank of Minneapolis Opportunity & Inclusive Growth Institute. The title is "Why Do Households Save and Work?" and the authors are Margherita Borella, Johanna Torres Chain, Mariacristina De Nardi, and Fang Yang.
Over our lives, we face many risks and choices. Read new working paper from @mdenardi.bsky.social, @johanatch.bsky.social, Borella, & Yang for a life-cycle model w/ single and married individuals jointly choosing labor supply and savings from labor market entry until death
https://bit.ly/4anebZ5
Friends, I'll make @mdenardi.bsky.social 's words my own: Let's make the 19th PEJ Annual Meeting in Aveiro a great one. 3-5 July 2026. Submit your papers and please extend the invitation to all your relevant contacts. All relevant details and further updates here: www.ua.pt/en/pej2026
Over our lives, we face many risks and choices. Read new working paper from @mdenardi.bsky.social, @johanatch.bsky.social, Borella, & Yang for a life-cycle model w/ single and married individuals jointly choosing labor supply and savings from labor market entry until death . https://bit.ly/4anebZ5
Cover of a working paper titled "Why Do Households Save and Work?" by Margherita Borella, Johanna Torres Chain, Mariacristina De Nardi, and Fang Yang. The design features a split background with white, gold, and dark blue sections. The logo for the Opportunity & Inclusive Growth Institute at the Federal Reserve Bank of Minneapolis is prominently displayed on the right.
In new paper, Margherita Borella, @mdenardi.bsky.social, Fang Yang, and @johanatch.bsky.social use a life-cycle model with family structure, labor supply responses, and late-life risks to show bequest motives and medical expense risk are important drivers of aggregate wealth https://bit.ly/4anebZ5
Venetian-style tramezzini
General equilibrium behind the window. Strategic interaction on the windowsill.
The chickens are the recurring protagonists of my Intermediate Micro class. The Grinch dropped by for yesterday’s lecture.
Morning photo from my office at the University of Minnesota this morning. Outside temperature -22 degrees Celsius. Time: 6:35 am.
Please submit to this conference to help make it a great one! I will be there, together with Stéphane Bonhomme and Michèle Tertilt.
19th Annual Meeting of the Portuguese Economic Journal - Aveiro, 3-5 July 2026
Deadline: 15 March 2026
Website: lnkd.in/d6Dmdfx7
📍Back from a busy week at the #Fed’s #OIGI in #Minneapolis.
Productive time interacting w/ coauthors & researchers + v engaged seminar on workforce in large-scale home visiting.
Many thanks to Abigail Wozniak for the invite & to @mdenardi.bsky.social for hosting - had a great time! 🙏
Coercion and Monopsony in Modern American Manufacturing: Evidence from Alabama Prison Labor Susan Helper Suresh Naidu Akseli Palomaki Adam Reich Aaron Sojourner We study coercion and monopsony in contemporary U.S. manufacturing labor markets. We combine administrative data from the Alabama Department of Corrections work release program with a unique survey of workers in the Alabama auto supply chain where workers report their work-release status. We first present descriptive patterns of work-release labor, finding that the use of incarcerated (i.e., work-release) labor is concentrated in the auto supply industry, especially in the Montgomery area, where Hyundai’s assembly plant is located. In the survey, the share of plant-level workers who are incarcerated is negatively correlated with non-incarcerated wages. The survey also enables estimation of hypothetical quit elasticities separately among incarcerated and non-incarcerated workers. Incarcerated workers are estimated to have quit elasticities less than half that of non-incarcerated workers. Because Alabama law requires employers to pay the same wage to incarcerated and non-incarcerated workers in the same jobs, the additional monopsony power introduced by employer access to incarcerated workers creates an incentive and ability for employers to reduce plant-level wages to, and employment of, non-incarcerated workers. We build a quantitative model of firm-specific labor supply that, for incarcerated workers, distinguishes the roles of coercion (the risk of physical harm in prison from not working), wage garnishment that blunts the consumption effect of higher wages, and monopsony (limited mobility across employers). Using it, we estimate effects on free and incarcerated workers’ welfare from i) reforming prison conditions to eliminate violence, ii) eliminating prison labor wage garnishment, iii) imposing a $15 minimum wage, &iv) abolishing prison labor. Free worker welfare goes up in all scenarios...
How does employer access to prisoners’ labor through work release impact the well-being of those workers & of free workers?
New working paper by Sue Helper, Suresh Naidu, Akseli Palomaki, Adam Reich, + me provides evidence, focus on auto manufacturing in AL
#EconSky
papers.ssrn.com/sol3/papers....
His broader work combines structural and empirical approaches, including causal policy evaluation and applied macroeconometrics. He brings strong technical skills, clear economic insight, and a research agenda at the frontier of health, inequality, and policy design.
He finds that these reforms generated large welfare gains for low-income families, produced substantial crowd-out of private coverage, but had little effect on private premiums.
Francisco’s job-market paper develops a quantitative equilibrium model with rich household heterogeneity to study how U.S. Medicaid expansions affected private insurance markets and welfare.
I have a truly fantastic Econ PhD job market candidate on the market this year:
Francisco Bullano is a macroeconomist whose research bridges public economics and health.
His Web page: franciscobullano.com
Please look at his job market package very closely.
#EctJ published its Sept 2025 issue, with @mdenardi.bsky.social's 2024 Sargan Lecture on "Health inequality and health types", Chen Qiu's "Cross-fitted empirical likelihood on semiparametric models" as Editors' Choice of lead article, and 6 more fine contributions
academic.oup.com/ectj/issue/2...
Household saving and labour supply are shaped by many risks – wages, marriage, health, longevity – as well as bequest motives. This column develops a model that tracks individuals from age 26 through to retirement and death to show how these risks interact to drive economic behaviour. The findings highlight that incorporating risk, and how it differs by gender, marital status, and age, helps design policies that protect households from shocks without distorting work and saving incentives.
Household saving & labour supply are shaped by various risks throughout the lifespan. M Borella, @mdenardi.bsky.social @fang-yang-econ.bsky.social & @johanatch.bsky.social analyse how these risks interact to better design policy that protects households from shocks.
cepr.org/voxeu/column...
#EconSky
🇬🇧A month in London-a great time to reflect & recharge. B4 things ramp up again, a quick recap of May–June
1️⃣ @cesifo.org Area Conference Labor Economics
2️⃣ @kuleuvenuniversity.bsky.social Applied Workshops
3️⃣ @rfberlin.bsky.social Workshop Economics of Aging
4️⃣ Workshop Economics of Risky Behavior
Call for papers
I am grateful to Ed for his mentorship and to SAET for inviting me to give this lecture.
Thank you, Christian — to both you and Jerome Adda — for a fantastic conference and the honor of being a plenary speaker alongside Joseph Hotz. The event was both productive and enjoyable, and your Berlin initiative is truly inspiring!
We are kicking off the RFBerlin Workshop on the Economics of Aging with @mdenardi.bsky.social’s keynote lecture on “Health Inequality and Economic Disparities by Race, Ethnicity, and Gender”.
Exploring why households work and save. Bequest motives and risks in wages, medical expenses, and marital dynamics explain 56.9 percent of aggregate wealth and 2.7 percent of aggregate earnings, from Borella, @mdenardi.bsky.social, Yang, and Torres Chain https://www.nber.org/papers/w33874
