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on Investment |
| By: | Erik Brynjolfsson; J. Frank Li; Javier Miranda; Robert Seamans; Andrew J. Wang |
| Abstract: | This paper studies how minimum wage policy affects firms’ adoption of automation technologies. Using both state-level measures of robot exposure and novel plant-level data on industrial robot imports linked to U.S. Census microdata from 1992–2021, we show that increases in minimum wages raise the likelihood of robot adoption in manufacturing. Our preferred identification exploits discontinuities at state borders, comparing otherwise similar firms exposed to different wage floors. Across specifications, a 10 percent increase in the minimum wage increases robot adoption by roughly 8 percent relative to the mean. |
| JEL: | J38 O33 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34895 |
| By: | Guillen Sanchez, Jorge; Molina, Jose Alberto; Gimenez-Nadal, Jose Ignacio |
| Abstract: | Recent economic literature suggests that increases in the minimum wage can lead to parents spending more time in childcare through easing financial constraints such as the income effect. However, most evidence from past research does not analyse the disruptions of the COVID 19 pandemic. This research examines the impact of state-level minimum wage increases on parental childcare time in the United States during the mentioned period of 2019 to 2023. Through the use of microdata from the American Time Use Survey (ATUS), we analyse a sample of 4043 working age parents and find that, contrary to findings from the 2003 to 2019 period, there is no statistical-ly significant effect on childcare time across aggregate or subgroup specifications, including mothers, fathers and low education parents among others. This null result diverges from pre-2019 literature. We attribute this lack of significance to the unique structural rigidities of the post-pandemic labor market (2019–2023) and the erosion of real wages due to high inflation, which likely neutralized the behavioral incentives typically associated with wage floors. |
| Keywords: | Minimum Wage Time Allocation Childcare Labor Supply ATUS (American Time Use Survey) |
| JEL: | D1 D13 |
| Date: | 2026–01–19 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127777 |
| By: | Stefano Grassi |
| Abstract: | This paper develops a dynamical theory of adaptive coordination in multi-agent systems. Rather than analyzing coordination through equilibrium optimization or agent-centric learning alone, the framework models agents, incentives, and environment as a recursively closed feedback architecture. A persistent environment stores accumulated coordination signals, a distributed incentive field transmits those signals locally, and adaptive agents update in response. Coordination is thus treated as a structural property of coupled dynamics rather than as the solution to a centralized objective. The paper establishes three structural results. First, under dissipativity assumptions, the induced closed-loop system admits a bounded forward-invariant region, ensuring viability without requiring global optimality. Second, when incentive signals depend non-trivially on persistent environmental memory, the resulting dynamics generically cannot be reduced to a static global objective defined solely over the agent state space. Third, persistent environmental state induces history sensitivity unless the system is globally contracting. A minimal linear specification illustrates how coupling, persistence, and dissipation govern local stability and oscillatory regimes through spectral conditions on the Jacobian. The results establish structural conditions under which intelligent coordination dynamics emerge from incentive-mediated adaptive interaction within a persistent environment, without presuming welfare maximization, rational expectations, or centralized design. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.11560 |
| By: | Becker, Marco; Daube, Carl Heinz; Peskes, Markus; Reinking, Ernst; Semenischev, Corinna |
| Abstract: | In diesem fünften Teil der Artikelreihe wird ein umfassendes Scoring-Modell zur Beurteilung der Resilienz von Unternehmen entwickelt. Auf Basis von über unterschiedlichen 100 Kriterien soll die Resilienz von Unternehmen systematisch messbar macht werden. Die Kriterien sind dabei in mehrere zentrale Analysebereiche strukturiert, die strategische, organisationale, technologische und wirtschaftliche Aspekte unternehmerischer Resilienz abbilden. Das Ziel besteht darin, Resilienz analytisch und quantitativ zu erfassen, um daraus praxisnahe Erkenntnisse zu gewinnen. |
| Abstract: | In this fifth part of the article series, a comprehensive scoring model for assessing corporate resilience is developed. The resilience of companies is to be systematically measured on the basis of over 100 different criteria. The criteria are structured into several central areas of analysis that reflect the strategic, organizational, technological and economic aspects of corporate resilience. The aim is to record resilience analytically and quantitatively in order to gain practical insights. |
| Keywords: | Unternehmensresilienz, Digitale Transformation, Organisationale Anpassung, Geschäftsmodellgestaltung, Organisationale Resilienz, Risikomanagement, Kulturelle Resilienz |
| JEL: | L20 M10 L26 M15 O33 D81 M12 K24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:337860 |
| By: | Kishor, N. Kundan |
| Abstract: | This paper develops a framework to estimate U.S. housing market slack-the deviation of inventory from equilibrium levels needed for stability. We measure slack as a common cyclical component of existing and new home inventories that drives house prices through a housing Phillips curve. Results show a statistically significant inverse relationship between slack and price growth, with persistent negative slack since 2010 and extreme tightness during the pandemic. A shock to the estimated housing market slack generates substantial, lasting effects on house prices and rents, with rental impacts peaking 24 months after initial shocks. |
| Keywords: | Housing Market Slack, Housing Phillips Curve, Natural Level of Housing Inventory, State Space Model. |
| JEL: | E00 E31 E37 R21 R31 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127473 |
| By: | Karim, Danish; Ahmad, Khalil; Ali, Amjad |
| Abstract: | This research investigates how artificial intelligence is transforming accounting tasks and examines how practitioners adapt in professional environments that now demand strategic thinking, analytical skills, and digital proficiency. The findings indicate that artificial intelligence technologies, particularly robotic process automation and machine learning, are automating repetitive, process-based tasks in accounting, such as data entry, bank reconciliations, and tax calculations. In contrast, accounting professionals are increasingly responsible for higher-value activities, including data analysis, strategic advising, and planning that require advanced digital competencies, communication skills, and ethical judgment. Primary data were collected from a sample of 20 skilled accountants, equally divided between early-career and experienced professionals. The results reveal that the most substantial adoption of artificial intelligence occurs in corporate finance, while audit and public practice sectors have been slower to adopt due to regulatory barriers and resource constraints. The study also highlights a significant skills gap, particularly among senior staff and those in smaller firms, pointing to the urgent need for targeted reskilling initiatives and curricular revisions in accounting education. Concerns about algorithmic bias, data privacy, and transparency remain key barriers to artificial intelligence adoption, underscoring the necessity for comprehensive governance frameworks. Overall, the study concludes that artificial intelligence is redefining accounting roles rather than replacing them, emphasizing the importance of continuous workforce training, industry leadership, and support from educational institutions to meet evolving professional requirements. The research offers practical recommendations for policymakers, educators, and accountancy firms seeking to implement fair and sustainable artificial intelligence integration strategies that optimize the complementary strengths of human expertise and machine capability for improved business outcomes. |
| Keywords: | Artificial Intelligence, Accounting Profession, Workforce Skills, Digital Transformation |
| JEL: | O3 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127531 |
| By: | SAKAMOTO Manabu (Graduate School of Economics, Osaka University) |
| Abstract: | This study examined the mechanisms of the trigger event effect of cross-border learning, the development process of authentic leadership, and the contribution to organizational creativity, which have not been addressed in previous studies, through case analysis by two working leaders who have actually experienced cross-border organizational activities. The results of the analysis showed that cross-border experience develops authentic leadership in the person concerned, regardless of differences in country, culture or industry. The study suggests that authentic leadership can contribute to the emergence of organizational creativity, which is an important management issue for modern companies, and that cross-border learning can be a trigger event for the development of authentic leadership. |
| Keywords: | Cross-border learning，Authentic Leadership |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:osk:wpaper:2412 |
| By: | Hantsiak, Mykhailo |
| Abstract: | In Ukraine, the debt crisis has intensified, manifested in the growth of public liabilities, an expanding budget deficit, and increasing pressure on public finances. Limited domestic funding sources compel the state to actively borrow on the debt market, exceeding safe limits and heightening insolvency risks. Under these conditions, debt restructuring emerges as a key tool to prevent financial destabilization. Global experience provides insights into effective mechanisms that can be adapted to Ukraine’s realities to restore debt sustainability. The purpose of the study is to outline the key principles for implementing sovereign debt restructuring mechanisms, with a focus on global experience, to develop recommendations for their successful application in Ukraine. The study is based on official statistical data from Ukraine and international financial institutions, scientific publications, analytical reports, and examples of global debt restructuring cases. Methods of analysis and synthesis, comparative and statistical analysis, graphical methods, and the case study approach were employed to identify trends and assess the effectiveness of debt mechanisms. The necessity of restructuring as a key tool for stabilizing public finances has been substantiated. The effectiveness of restructuring mechanisms has been shown to depend on the depth of changes to debt conditions and coordination with creditors. Emphasis has been placed on the role of comprehensive reforms and fiscal consolidation. A comparison of global cases of successful and unsuccessful restructurings has been conducted. The main tools and approaches to their implementation have been systematized. The conclusion has been drawn on the advisability of adapting the best international practices to Ukraine’s conditions. Sovereign debt restructuring is a crucial tool for reducing debt burden and restoring financial stability, but its effectiveness depends on a comprehensive approach, coordination with creditors, and accompanying economic reforms. Global experience highlights the advisability of combining various mechanisms and implementing innovative tools. For Ukraine, the key lies in adapting the best international practices to national conditions and maintaining systematic dialogue with creditors to enhance debt sustainability. |
| Keywords: | restructuring, sovereign debt, financial instruments, government borrowings, debt sustainability, debt security, debt crisis |
| JEL: | E62 F30 F34 G38 H63 |
| Date: | 2025–09–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127547 |
| By: | van Asselt, Joanna; Ei Win, Hnin; Aung, Zin Wai |
| Abstract: | This report presents key findings on the impacts of the earthquake that hit Myanmar on March 28, 2025, along with insights into the ongoing recovery, based on the ninth round of the Myanmar Household Welfare Survey (MHWS), a nationally and regionally representative phone survey. This survey was conducted between July and October 2025, with a recall period covering April to October. |
| Keywords: | households; earthquakes; natural disasters; economic impact; social protection; Myanmar; Asia; South-eastern Asia |
| Date: | 2026–01–08 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:prnote:179543 |
| By: | Yihang Luo; Robert S. MacKay; Nick Chater |
| Abstract: | The theory of thermal macroeconomics (TM) analyses economic phenomena within the mathematical framework of classical thermodynamics, using a set of axioms that apply to the purely macroscopic aspects of an economy [CM]. The theory shows that the possible macro-behaviours are governed by an entropy function. In simple idealised cases, the entropy function can be calculated from the rules governing the interactions of individual agents. But where this is not possible, TM predicts that the entropy can nonetheless be measured empirically through an economic analogue of calorimetry in physics. We show using computer simulations the in-principle feasibility of this approach: an entropy function can successfully be measured for a range of simulated economies that we tested. In cases where entropy can be calculated analytically from microfoundational assumptions, the measured entropy agrees well. In more complex cases, where microfoundational analysis is infeasible, our method of measuring entropy still applies and is validated by demonstrations that entropy is a state function of an economic system, i.e., exhibits path independence. This appears to hold even for some systems to which we don't have a proof that the Axioms of TM apply. Furthermore, in all cases tested, entropy is concave, as predicted by TM. As shown in [CM], once the entropy function is established for a simulated exchange economy, it is possible to derive prices, the value of money and various other quantities, and make predictions about the effects of putting two or more economies in contact. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.10155 |
| By: | Lena Best (Kiel University); Benjamin Born (University of Bonn); Manuel Menkhoff (University of Copenhagen) |
| Abstract: | We study how firms’ investment responds to interest rate changes based on a German firm survey, combining hypothetical vignettes, open-ended questions, and rich firm data. We estimate a 7 percent semi-elasticity of investment to loan rates—about half the total corporate investment response to monetary policy shocks. Adjustment is heterogeneous: many firms do not react, citing cash buffers or a lack of opportunities, while adjusters revise sharply. Managers’ narratives about monetary policy transmission to investment emphasize direct borrowing-cost effects and rarely mention general-equilibrium channels. Local projections show this direct channel is central to output dynamics after monetary policy shocks. |
| Keywords: | Interest rates, firm investment, survey experiment, monetary policy, narratives, hurdle rates, aggregate investment |
| JEL: | D25 E43 E52 G31 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:394 |
| By: | Changaya, Frederick; Comstock, Andrew; De Weerdt, Joachim; Duchoslav, Jan; Jamali, Andrew; Kamanga, Frank; Kumchulesi, Grace; Pauw, Karl |
| Abstract: | The current exchange rate regime in Malawi is untenable. It results in multiple effective parallel rates, which impose significant costs on the economy and the daily lives of citizens. A key concern underpinning the existence of the regime is that its removal would trigger rampant inflation and worsen livelihoods. However, the widespread importation of both food and nonfood products at informal exchange rates means that the average citizen derives little real benefit from the maintenance of the official rate. After two major fuel price hikes in recent months, pump prices have nearly converged with the cost that would prevail at market-determined exchange rates. Drawing on a combination of price multiplier and food demand simulations, this policy note shows that an exchange rate regime rationalization – through devaluing the official exchange rate to eliminate the informal premium and allowing the Malawi kwacha to trade at market-clearing levels – would not lead to runaway inflation or harm household welfare. Recent fuel price increases – in October 2025 and January this year – have pre-emptively absorbed much of the inflationary impact that would have been associated with exchange rate reform. Our analysis documents the direct, short-run effects of exchange rate unification on domestic prices and finds them to be relatively modest. Longer-term economic growth and sustained price stability will hinge on the effective execution of a coherent set of complementary reforms. Exchange rate unification is a necessary component of this package, but it is not sufficient. Implemented in isolation or treated as a one-off devaluation followed by business as usual, it will bring little relief. It must be accompanied by sound fiscal and monetary policy and sustained export growth to restore macroeconomic stability. We do not discuss the trade-offs inherent to these accompanying measures, as they have been addressed at length in AfDB et al. (2025) and Engel et al. (2025). Critically, there must be a credible and durable switch toward a more flexible and transparent exchange rate regime. It will take time for exports and growth to pick up after a devaluation, and whether they do will depend on economic actors believing that macroeconomic conditions will remain stable over the lifetime of their investments. It will require careful preparation to get the cocktail right. Politically, the current administration might just have one shot at this: failure will make future reform attempts much harder. |
| Keywords: | exchange rate; prices; controlled prices; price policies; Malawi; Africa; Sub-Saharan Africa; Eastern Africa |
| Date: | 2026–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:impass:181860 |
| By: | Andrés Lorente-de-las-Casas (Universidad de La Laguna, CEDESOG e Instituto Universitario de la Empresa); Gustavo A. Marrero-Díaz (Universidad de La Laguna y CEDESOG); Jesús Rodríguez-López (Universidad Pablo de Olavide e Ivie) |
| Abstract: | To meet the target of reducing greenhouse gas (GHG) emissions by 55% by 2030, net emissions in Spain would still need to decrease by an additional 43%. This paper analyzes the evolution of net emissions flow between 1990 and 2023 and the factors that have influenced it: energy intensity, carbon intensity, and economic activity. Eventually, we conclude the following. First, since 2005 there has been a continuous reduction in emissions, as a consequence of (i) the moderation in energy intensity, (ii) the economic slowdown between 2008 and 2014, and (iii) the composition effect, whereby the gross value added (GVA) of the services sector has increased to over 70% of the total, while its emissions account only 3% for total emissions. Second, the transport sector presents a significant obstacle to achieving these objectives: although its energy intensity has decreased, its carbon intensity has remained flat over the three decades analyzed, indicating a lack of alternative energy sources. Energy and environmental policies, as well as fiscal measures aimed at reducing these emissions, should address this issue. |
| Keywords: | CO2 emissions, energy intensity, carbon intensity |
| JEL: | C23 Q2 Q43 Q54 E13 H22 R40 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pab:wpaper:26.02 |
| By: | Victor Lavy; Moses Shayo |
| Abstract: | We study how teachers' rule violations in grading affect students' ethical behavior. Using administrative data from high-stakes exams, combining teacher-assigned internal scores with externally graded national exam scores, we track teacher grading violations and subsequent student cheating. We explore three potential mechanisms: imitation (learning that rules can be broken), positive reciprocity (responding favorably to favorable treatment), and negative reciprocity (retaliating against unfavorable treatment). Exploiting within-student variation in exposure to different teachers, we find students are significantly more likely to cheat when teachers break the rules to their detriment (systematically undergrading), consistent with both imitation and negative reciprocity. However, when teachers systematically overgrade, responses vary by community structure. In heterogeneous communities, overgrading increases student cheating, suggesting imitation dominates. In homogeneous communities, students respond by cheating less, consistent with positive reciprocity dominating. This pattern holds across multiple homogeneity measures, including surname concentration and residential clustering. Survey measures of mutual respect and support between students and teachers confirm this pattern. |
| JEL: | I20 J00 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34931 |
| By: | Schuurmans, Jitse; De Brabandere, Laura; Castelli, Michele; Wimmer, Sarbina; Denis, Jean-Louis |
| Abstract: | Private investment in residential long-term care has surged around the world. Growing evidence shows that this is changing the institutional logic and the inner workings of the sector, prioritising the financial interests of asset holders above those of other stakeholders (eg. clients, care professionals and regulators). We know little about how policy makers and regulators are responding to private investment and profit-making in the long-term care sector. This paper addresses that gap by analysing policies prompting the growth of private investment and profit-making in residential long-term care, the emerging power struggles in some cases between asset holders and other stakeholders in long-term care, the controversies that have arisen and the concomitant responses of regulators and policy makers in Ontario (Canada), Lombardy (Italy), the Netherlands and England (United Kingdom). We show that the institutional context (eg. legal frameworks, policies and regulations) shapes controversies concerning quality, accessibility and affordability of care, and argue that regulators and policymakers in the constituencies we studied are responding reactively to such controversies rather than proactively anticipating and preventing unwanted effects. Our analysis provides policymakers with valuable insights regarding the regulation and governance of private investment and profit-making in the residential long-term care sector. |
| Keywords: | controversies; policy comparison; residential long-term care; financialisation; regulation |
| JEL: | F3 G3 |
| Date: | 2026–03–03 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137554 |
| By: | Engelbert Stockhammer |
| Abstract: | Blecker and Setterfield’s outstanding Heterodox Macroeconomics book covers, as its subtitle suggests, a lot of ground on “models of demand, distribution and growth”, but issues of finance are largely absent. This is symptomatic of the state of heterodox macroeconomics, which has a developed common framework for the analysis of distribution and growth, but not for finance. The paper takes this as a starting point for some reflections on the role of finance in post-Keynesian (PK) and Marxist approaches. In PKE, financial factors play a constitutive role and determine the equilibrium values of key macroeconomic variables. Hyman Minsky’s work puts finance at the heart of PK business cycle theory. Marxist macroeconomics often treats finance as subordinate to real (productive) processes or not at all. We consider three episodes of how PK-Marxist debates played out: the Woytinsky-Hilferding debate of the 1930s, the debate on heterodox explanations of business cycles and the debate on financialisation. In these, the relation between PK and Marxism was confrontational, largely non-interactive and productive, respectively. The paper concludes that heterodox macroeconomics lacks an effective framework for a productive articulation of the different views on the role of finance. |
| Keywords: | finance, macroeconomics, post-Keynesian economics, Marxian economics |
| JEL: | B50 E60 G01 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2607 |
| By: | Liu, Xinwei |
| Abstract: | This policy insight explores China’s role in promoting the implementation of the Kunming-Montreal Global Biodiversity Framework (GBF). While the nation’s domestic policies and progress in biodiversity conservation, as well as its influence in global climate action, have been widely explored, its potential for supporting global efforts in the fight against biodiversity loss has so far been neglected. With the trend towards biodiversity loss and its impacts intensifying, at the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity (Biodiversity COP15) in Montreal, Canada, in 2022, the international community reached consensus on halting and reversing nature loss by 2030 under the GBF. However, national commitments and actions since then have fallen far short of halting the crisis, and growing geopolitical fragmentation, weakening multilateral cooperation and recent setbacks in international environmental governance have further widened this gap. Within this global landscape, China is emerging as a ‘great power’ in biodiversity. With its vast territory, China houses a rich array of species and ecosystems. Through its overseas infrastructure projects and investments, as well as its large demand for natural resources from abroad, China’s influence on biodiversity reaches far beyond its borders. Since adopting the GBF, China has actively translated the global commitments into national action and has achieved outstanding tangible outcomes. As the presidency of Biodiversity COP15 and subsequently, China has demonstrated a strong capacity in shaping global environmental politics, from initiating agendas and coordinating efforts to building consensus and promoting action. As the world fears another decade of failure on biodiversity and urgently seeks leadership to advance the GBF, China stands in a position to take a lead on and further enhance its influence in international environmental governance. |
| Keywords: | belt and road initiative; biodiversity; biodiversity conservatiaon; China; GBF; green BFI; green finance; green technology; innovation; Kunming-Montreal Global Biodiversity Framework COP16; nature loss |
| JEL: | N0 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137521 |
| By: | Chun Pang Chow; Hiroyuki Kasahara; Yoichi Sugita |
| Abstract: | We establish nonparametric identification of production functions, total factor productivity (TFP), price markups, and firms' output prices and quantities, as well as consumer demand, using firm-level revenue data, without observing output quantity, in a monopolistically competitive environment with a fully nonparametric demand system. This result overturns the widely held view -- formalized by Bond, Hashemi, Kaplan, and Zoch (2021) -- that output elasticities and markups are not nonparametrically identifiable from revenue data without quantity information. Under the additional restriction that demand satisfies the homothetic single-aggregator (HSA) structure of Matsuyama and Ushchev (2017), we further nonparametrically identify the representative consumer's utility function from firm-level revenue data. This new identification result enables counterfactual welfare analysis without parametric assumptions on preferences. We propose a semiparametric estimator that is feasible for standard firm-level datasets under a Cobb--Douglas production specification. Monte Carlo simulations show that the estimator performs well, while treating revenue as output induces substantial bias. Applying the estimator to Chilean manufacturing data, we reject the CES specification in favor of HSA, and find that market power reduces welfare by approximately 3%--6% of industry revenue in the three largest manufacturing industries in 1996. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.01492 |
| By: | Karbownik, Krzysztof (Emory University); Svaleryd, Helena (Uppsala University); Vlachos, Jonas (Stockholm University); Wang, Xuemeng (Uppsala University) |
| Abstract: | Work-related burnout and stress-related sickness absence have become increasingly prevalent, but evidence on which workplace features shape workers’ mental health remains limited. Using population-level Swedish register data covering all lower- and upper-secondary teachers from 2006–2024, we show that schools serving more disadvantaged students exhibit substantially higher rates of sickness absence, particularly for stress-related diagnoses. Exploiting within-teacher variation across student cohorts, we separate sorting from exposure and find that a one standard deviation increase in student disadvantage raises overall and stress-related sick leave by 3.6% and 8.7%, respectively. Survey evidence indicates that these effects operate through classroom conditions rather than workload or organizational differences. The findings establish client composition as a distinct and policy-relevant determinant of worker health in contact-intensive occupations. |
| Keywords: | student composition, mental health, contact-intensive occupations |
| JEL: | I10 I21 J63 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18404 |
| By: | John C. Williams |
| Abstract: | Remarks at the America’s Credit Unions Governmental Affairs Conference 2026, Washington. |
| Keywords: | U.S. economic outlook; U.S. monetary policy; U.S. labor market |
| Date: | 2026–03–03 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsp:102874 |
| By: | Ursula Berresheim; David Koll |
| Abstract: | In the United States, 35–40% of all marriages end in divorce. Yet, we provide survey evidence that, on average, married respondents expect a divorce likelihood of 15%, with most respondents significantly underestimating their predicted divorce risk. Our survey reveals that individuals with more overoptimistic divorce expectations exhibit higher within-couple inequality in market hours and earnings and accumulate significantly less wealth than their rational counterparts. Building on this evidence, we incorporate overoptimistic divorce expectations into a household life-cycle model with endogenous accumulation of human capital, assets, and ex-ante heterogeneity in spouses’ wages. Couples jointly choose their market hours, home production, and joint savings. We quantify the model using U.S. microdata and show that overoptimism leads to (1) higher within-couple specialization and (2) lower savings, as overoptimistic lower-wage spouses fail to internalize the insurance value of human capital and assets in the event of divorce. Overoptimism during marriage persists beyond divorce through lower assets and human capital upon divorce, with particularly adverse consequences for the lower-wage spouse. The model thus provides a novel explanation for the high poverty rates observed among divorced mothers. Finally, we show that joint taxation of married couples amplifies specialization among overoptimistic couples. |
| Keywords: | Intra-household decisions, Divorce, Subjective Expectations, Human Capital, Savings, Gender Equality, Taxation |
| JEL: | D10 D84 E24 J12 J18 J22 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_734 |