What might the increasing labor market risk imply for fertility and the timing of births?
And what were the contributions of financial innovations and low interest rates to the run up in
U.S. housing prices in the decade prior to the global financial crisis? This dissertation uses
quantitative macroeconomic tools to answer these questions.
Chapter 1 studies the changes in the U.S. fertility patterns over the last several decades.
This chapter offers the first quantitative theoretical exploration of the link between earnings risk
and fertility patterns. Empirically, I combine the estimates of occupational risk with the
Decennial Census data to document the negative relationship between labor market risk and
household fertility. Next, I develop a calibrated structural model of household fertility,
consumption, and savings, and show that realistic increases in the persistent labor market risk
generate quantitatively large increases in the mean age at the first and second births, and are
associated a decline in the total number of births.
Chapter 2 studies the joint dynamics of real house prices and rents over the past decade.
In this chapter, which is a joint work with Paul Sullivan and Randal Verbrugge, we build a
dynamic general equilibrium stochastic life cycle model of housing tenure choice with a fully
specified rental market and a market for homeownership, and endogenous house prices and rents.
Lower interest rates, relaxed lending standards, and higher incomes are shown to account for
roughly 50 percent of the increase in the U.S. house price-rent ratio between 1995 and 2005, and
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generate the observed pattern of rapidly growing house prices, sluggish rents, and increasing
homeownership and household indebtedness.