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Matthias Kredler's Homepage
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Job-Market Paper: "Experience vs. Obsolescence: A Vintage-Human-Capital Model" 1-page summary Slides The premium on experience in the labor market has risen in recent decades in industrialized countries, and so have dispersion and turbulence of earnings. This paper documents these facts in a data set of German workers. To explain the observed changes, I combine an infinite-horizon version of Ben-Porath's (1967) model of human-capital accumulation with a vintage structure as in Chari and Hopenhayn (1991). In this model, vintage-specific human capital is accumulated endogenously and is lost when the technology is phased out by an endogenous firm decision. I show that returns to skill are highest in young vintages. Accelerated technological change shortens the life cycle of a technology and speeds up obsolescence; the experience premium rises because more workers are concentrated in young technologies with high skill premia. A numerical algorithm is proposed and implemented to solve the (non-standard) system of partial differential equations governing the equilibrium. A calibration exercise comparing two steady states shows that the model quantitatively accounts for the changes in the experience premium, dispersion and turbulence in the German data. Working Paper: "Bayesian Estimation of a Dynamic Partial-Equilibrium Model for Investment" This paper revisits the question of whether the user cost of capital plays an important role for investment decisions using Bayesian estimation techniques. These methods offer advantages over classical econometric tools in this area. In particular, prior distributions offer a convincing way to confine the support of model parameters, and confidence intervals are more reliable when model parameters approach the bounds of their support. I use aggregate investment data from six industrial sectors in the UK to estimate a parsimonious partial-equilibrium model. The Kalman filter is used to evaluate the likelihood and Markov-Chain-Monte-Carlo methods are employed to draw from the posterior distribution. The main finding is that the real interest rate accounts for less than 10 percent of the variance in investment under the 99-percent confidence level. This result is robust across sectors. Work in progress (with Daniel Barczyk): Long-term care: Macroeconomic implications and optimal policy Ageing populations and increasing health-care costs will lead to an explosion in costs from long-term care (LTC) for permanently disabled elderly citizens. Governments are considering and implementing different kinds of policy responses, among them government-provided minimal care combined with reliance on private insurance markets (e.g. in the U.S.) and tax-financed insurance schemes that include subsidies for informal care givers (e.g. in Germany). We plan to study the welfare consequences of such policies in a general-equilibrium incomplete-markets setting with heterogeneous agents. We intend to estimate key parameters, such as families' preference for providing informal care themselves (as opposed to sending their relatives to nursing homes) from the National Long Term Care Survey, a representative longitudinal data set from the U.S. When personal care is valued by families, GDP-maximizing policies may not be welfare-optimizing, a point that is often implicitly made in the public debate. |
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