Sargent Reading Group Notes

The goal of this paper is to supply a theory that can shed light on what determines both the actual degree of tax progressivity in the US economy as well as a theoretical optimal level of tax progressivity. Tax function The tax function used in this paper comes from Benabou (2002) and is log linear in income. That is taxes collected gross income, minus λ times gross income to the 1 − τ.

The goal of this paper is to quantify the welfare implications of opening to trade in a setting where trade increases aggregate income, but also increases income inequality. Furthermore, redistribution happens through distorting income taxes. Closed economy model Discrete time, infinite horizon. A continuum of consumers, each with GHH preferences over an aggregate consumption good and labor. Individuals are indexed by their ability to produce a certain variety or task (unique to each consumer).

Here Ljungqvist and Sargent explain both sides of a long debated issue regarding labor supply elasticity (percent change in labor supply divided by percent change in wages) and then describe a relatively new idea that has the potential to reconcile the opposing views. The main argument from the micro-and-labor-economics camp is that the labor supply elasticity is quite low for individuals in the work force. On the other hand, macroeconomists typically say that the aggregate labor supply elasticity is large.

Empirical paper that tries to determine labor market response to China trade shock at the individual level. It is a complement to the authors’ China Syndrome paper that answers similar questions at the regional level. Stylized facts To prompt their research, the authors list a number of recent stylized facts concerning China’s impact on US labor markets. They are that greater import exposure results in Higher rates of plant exit and more rapid declines in plant employment Larger decreases in manufacturing employment Increases in unemployment and labor force non-participation rates These facts have been verified or reproduced at the industry and regional level, but the gap that this paper seeks to fill is what are the associated facts at the individual level.

This is a purely empirical paper that tries to determine the degree to which there was worker relocation across regions in the US in response to the Chinese trade shock. Many recent papers have documented negative regional labor market consequences in regions that specialize in industries that are more exposed to Chinese trade competition. Among these results are higher unemployment, lower wages, and lower labor force participation rates. Furthermore, evidence has been presented showing that there was little to no contemporaneous worker migration out of exposed regions.

This paper develops a model that allows the authors to assess the aggregate gains from trade and the distribution of the gains from trade across groups of workers. The motivation for the paper came from a recognition that most empirical work focuses on the losses accrued on the import side from increased competition. The general equilibrium setup in this paper captures both import and export effects of trade shocks, which they use to paint a more complete picture of the distribution of welfare responses to trade exposure.

Review paper that summarizes the main points of the story behind China’s fantastic growth in export markets in the lats 30 years and how it has impacted labor markets of developed countries. This paper covers a width breadth of material in relatively little depth, so I will pick and choose from the main points they tried to make. The story Mao Zedong founded People’s republic of China and governed it as the chairman of the communist part of China from 1949 until his death in 1976.

This paper builds a model that treats consumers as a form of non-productive capital in an attempt to resolve a few outstanding puzzles in the international macro literature. Puzzles The puzzles are: In the standard theory (like BKK), the price of exported goods co-moves negatively with the price of imported goods. In their sample o2 12 OECD countries, the authors find that the correlation is always positive and covers a range from 0.

Empirical paper that tries to quantify the effect of import competition on the composition of the balance sheet of individuals between 2000 and 2007. The main finding is that consumers in regions with higher exposure to import competition had debt growth of 20 percentage points more than consumers in regions with low import competition exposure. Data New york FRB consumer credit panel: 5% of all US individuals with a credit record and social security number.

The main contribution of this paper is to provide a model where technology adoption and innovation interact to determine the equilibrium characteristics of the economy. They end up using a model where adoption an the rate of innovation are both choice variables for the firm, but describe the main mechanisms and intuitions where only adoption is a control variable and innovation is stochastic. The qualitative results from both models are the same, so I to will use the simpler model with exogenous innovation.