Macroeconomics, Public Economics, Development, Quantitative Methods
Student Debt and Entrepreneurship: The Effect of Repayment Plans on Entrepreneurial Activity
Student debt has grown the most in the US among any other types of debt. While student debt can be viewed as a good investment because of the high returns on college education, it can also have distortionary behavioral effects. One such distortionary behavior is occupational choice. In this paper, I construct a model of occupational choice between being an entrepreneur and a wage earner and examine how occupational choice is affected by repayment plans available to students. In particular, there are two types of repayment plans available to the students - standard fixed repayment plan and an income-based repayment plan. I find that while repayment plans do not change the rate of entrepreneurship in the aggregate, there is substantial change in the composition.
In this paper, I provide estimates for the elasticity of taxable income with respect to marginal tax rates using the Current Population Survey (CPS). As is common in the literature, using the panel structure of the CPS I exploit tax reforms in the US and employ an instrumental variables approach to study how taxable income responds to tax change. I find that the elasticity of taxable income is 0.42 for married couples.
Credit Constrains and Structural Change
In this paper, I study the role of finance on structural change. Motivated by the fact that access to external finance tends to be a barrier in many of the developing countries, I construct a quantitative model to study the effects of credit constraints on structural change. I incorporate elements from the existing literature and augment the model with credit constraints I argue that these proposed channels are not fully operational and that relaxing the constraint in a calibrated model can generate labor share decline in the agriculture sector of up to 22%.