This dissertation studies households' housing decision in the presence of income risks, and its implication on within-cohort income/consumption inequality and the nature of income risks facing households. It is composed of three chapters. The first chapter presents evidence from Panel Study of Income Dynamics (PSID) and Consumer Expenditure Survey (PSID) that housing consumption and housing investment are negatively affected by income risks. Within a household portfolio choice model, the negative effect can be attributed to the illiquidity of housing investment and the positive correlation between house price and income. The second chapter provides empirical evidence that the secular rise of income and consumption inequalities in the United States is age-dependent. It is more significant among younger households. With this feature, biasedness arises from the traditional methodology of decomposing inequality into age effect, year effect and cohort effect. A simple but effective remedy for the problem is proposed. The third chapter of the dissertation studies the age-profile of within-cohort income/consumption inequality, using the methodology proposed in the second chapter. It documents the age-profile of housing consumption inequality which is almost flat. This stands in contrast to the well-documented fact that within-cohort nonhousing consumption inequality rises with age, which has been argued to be evidence for persistent, uninsurable income shocks to households. This argument is challenged by the finding that housing consumption inequality has a flat age-profile. Within the framework of standard lifecycle model, the coexistence of rising nonhousing consumption inequality and flat housing consumption inequality constitutes a puzzle. A potential resolution lies in the negative effect of income uncertainty on housing decision which diminishes with age, as shown in the first chapter of the dissertation. / text

<p> The overall theme of my dissertation is applying frontier econometric models to interesting economic problems. The first chapter analyzes how individual consumption responds to permanent and transitory income shocks is limited by model misspecification and availability of data. The misspecification arises from ignoring unemployment risk while estimating income shocks. I employ the Heckman two step regression model to consistently estimate income shocks. Moreover, to deal with data sparsity, I propose identifying the partial consumption insurance and income and consumption volatility heterogeneities at the household level using Least Absolute Shrinkage and Selection Operator (LASSO). Using PSID data, I estimate partial consumption insurance against permanent shock of 63% and 49% for white and black household heads, respectively; the white and black household heads self-insure against 100% and 90% of the transitory income shocks, respectively. Moreover, I find income and consumption volatilities and partial consumption insurance parameters vary across time. In the second chapter I recast smooth structural break test proposed by Chen and Hong (2012), in a predictive regression setting. The regressors are characterized using the local to non-stationarity framework. I conduct a Monte Carlo experiment to evaluate the finite sample performance of the test statistic and examine an empirical example to demonstrate its practical application. The Monte Carlo simulations show that the test statistic has better power and size compared to the popular SupF and LM. Empirically, compared to SupF and LM, the test statistic rejects the null hypothesis of no structural break more frequently when there actually is a structural break present in the data. The third chapter is a collaboration with James Reeder III. We study the effects of using promotions to drive public policy diffusion in regions with polarized political beliefs. We estimate a model that allows for heterogeneous effects at the county-level based upon state-level promotional offerings to drive vaccine adoption during COVID-19. Central to our empirical application is accounting for the endogenous action of state-level agents in generating promotional schemes. To address this challenge, we synthesize various sources of data at the county-level and leverage advances in both the Bass Diffusion model and 10 machine learning. Studying the vaccine rates at the county-level within the United States, we find evidence that the use of promotions actually reduced the overall rates of adoption in obtaining vaccination, a stark difference from other studies examining more localized vaccine rates. The negative average effect is driven primarily by the large number of counties that are described as republican leaning based upon their voting record in the 2020 election. Even directly accounting for the population’s vaccine hesitancy, this result still stands. Thus, our analysis suggests that in the polarized setting of the United States electorate, more localized policies on contentious topics may yield better outcomes than broad, state-level dictates. </p>

[pt] Esta tese é composta por três ensaios. Os dois primeiros investigam a relação entre a renda per capita das famílias e as frações dos gastos setoriais, tanto em séries temporais quanto em cross-section nos EUA do pós-guerra. O primeiro usa uma abordagem parcial para estimar o aumento da dispersão do consumo (renda) e os efeitos de renda nos EUA de 1980 a 2010. Mostramos que os efeitos da renda são heterogêneos entre as famílias agrupadas por quintis de renda e, em seguida, a dispersão do consumo é correlacionada com as duas principais forças de transformação estrutural (efeitos de preço e renda) na contabilização da magnitude de transformação estrutural nas partes das despesas de consumo nos EUA durante esse período. O segundo estende um modelo canônico de Bewley-Aiyagari em tempo contínuo incorporado a um ambiente de dois setores para representar quantitativamente três regularidades empíricas nos EUA do pós-guerra (o preço relativo dos bens cai e a parcela de gastos dos produtos cai sistematicamente com a renda per capita, tanto em séries temporais quanto no cross-section) sem se afastar das preferências padrão Stone-Geary. Avaliamos a importância de mudanças na renda e nos preços relativos para mudanças estruturais nas parcelas dos gastos de consumo nos EUA do pós-guerra e concluímos que são forças equivalentes. Reforçamos que a conciliação dessas três principais regularidades empíricas nos EUA do pós-guerra exige uma teoria do crescimento que acomode a demanda de longo prazo e forneça fatores de mudança estrutural. Finalmente, o terceiro ensaio usa um conjunto de dados de painel exclusivo com registros administrativos em nível individual de transações de crédito, benefícios do programa, demografia individual e características de contratos de trabalho para estudar como os consumidores respondem a um choque de liquidez decorrente de liberações de saques de contas inativas do Fundo de Garantia por tempo de serviço (FGTS) no Brasil em 2017. Usando um design de identificação de diferenças entre diferenças, encontramos um aumento no consumo e uma dívida total diminuída após o anúncio: durante até doze meses subsequentes, para cada USD 1 de benefício do programa, os consumidores a média aumentaram os gastos de consumo em USD 0,53 - 25 porcento dos quais ocorrem durante a janela de anúncio - e a dívida total diminuiu em USD 0,07, especialmente em dívidas de folha de pagamento. A resposta ao consumo ocorreu principalmente por meio de gastos com cartão de crédito, mas também foram encontradas evidências de bens duráveis financiados por dívida. Os consumidores endividados usaram liquidez de curto prazo nas modalidades de dívida (cheque especial e dívida com cartão de crédito), além dos gastos com cartão de crédito para suavizar consumo. Consumidores restritos, medidos como jovens ou idosos, mostraram respostas mais fortes ao consumo. / [en] This thesis is comprised of three essays. The first two investigate the relationship between households per capita income and sectoral expenditure shares both in times series and in cross-section in the postwar US. The first uses a partial approach to estimate the rise of consumption (income) dispersion and income effects in the US from 1980 to 2010. We show that income effects are heterogeneous across households grouped by income quintiles and then consumption dispersion correlates the two main driving forces of structural change (price and income effects) in accounting for the magnitude of structural change in the shares of consumption expenditure in the US over this period. The second extends a canonical Bewley-Aiyagari model in continuous time embedded with a two-sector environment to depict quantitatively three empirical regularities in the postwar US (relative price of goods falls and expenditure shares of goods falls systematically with per capita income, both in times series and in cross-section) without departing from benchmark Stone-Geary preferences. We assess the importance of changes in income and relative prices for structural change in the shares of consumption expenditure in the postwar US and conclude they are nearly equivalent forces. We reinforce that reconciling these three main empirical regularities in the postwar US calls for a growth theory that accommodates long-run demand and supply drivers of structural change. Finally, the third essay uses a unique panel dataset with individual-level administrative records of credit transactions, program benefits, individual demographics and features of labor contracts to study how consumers respond to a liquidity shock arising from withdrawals releases from inactive accounts of the Guarantee Fund for Time of Service (FGTS) in Brazil in 2017. Using a difference-in-differences identification design, we find consumption rose and total debt declined after the announcement: during up to twelve subsequent months, for each USD 1 of program benefit, consumers on average increased consumption spending by USD 0.53 - 25 percent of which occurs during the announcement window - and total debt declined by USD 0.07, specially in payroll debt. Consumption response occurred mostly via credit card spending, but evidence of debt-financed durables was also found. Indebted consumers used short-term liquidity in debt modalities (overdraft debt and credit card debt) in addition to credit card spending to smooth consumption. Constrained consumers, measured as young or old, showed stronger consumption responses.