Research

Job Market Paper

My job market paper focuses on the impact of intergenerational transfers and the implications of estate tax reforms for wealth concentration.

Title: Estate Taxation, Inherited Wealth and Rising Wealth Inequality

Abstract: What are the effects of changes in estate taxation on wealth distribution? Has the recent relaxation of estate tax policy contributed to rising wealth inequality in the U.S? To address these questions, I develop a quantitative general equilibrium life-cycle model that incorporates generation-skipping transfers from grandparents. In the model, where return heterogeneity is the main source of wealth inequality, substantial transfers from parents and grandparents help young heirs accumulate wealth faster by securing excess returns, even without drawing high productivity. Calibrated to the U.S. economy, I find that relaxing estate taxes (with a 2 percentage-point decrease in the estate tax rate and a doubling of the exemption threshold from the benchmark) leads to a 1.2 percentage-point increase in the share held by the top 1 percent in the model. I also show that the grandparents-grandchild link (G-G link) is important for wealth accumulation, particularly for those at the top of the distribution. Shutting down the G-G link reduces wealth holdings by the top 5 percent by 1.2 percentage points and, also weakens the distributional effects of estate taxes.

Works in progress

Title: Demographics and Real Interest Rates: The Role of Intergenerational Transfers

Abstract: This paper attempts to study how demographic changes affect real interest rates. An aging population has been considered as a natural candidate for the downward trend in real interest rates around the world. Survey data indicates that older households have strong bequest motives, and younger households anticipate these bequests. When calibrated to the U.S. data, I find that the decline in real rates since 1990 due to aging has been much weaker than expected. While an aging population does put downward pressure on real rates, the results suggest that this effect is not as severe as previously thought.

Title: Population Aging and House Prices