Dynamic general equilibrium models of the family, fertility, and health

Abstract

My dissertation studies how policies affect the macroeconomy, with a particular focus on the inequality among different groups.

Chapter 2 studies the sources of gender imbalance in a fully dynamic general equilibrium model with marriage markets and endogenous fertility. We show that the most standard explanation for gender imbalances, preferences for sons, fails to simultaneously explain another stylized fact: that sons also inherit most of the land. Our findings reveal that the stylized facts can be explained by a model with imperfect screening technology, where parents compensate for fewer boys by bequeathing more to them. Welfare analysis manifests that a balanced sex ratio in such an economy is not Pareto-efficient.

Chapter 3 investigates the policy impact of migration restrictions preventing rural migrant parents from relocating with their children to urban cities. This is accomplished within a dynamic general equilibrium model featuring endogenous migration, fertility decisions, and population dynamics. Our model encompasses two sectors of countryside and urban cities in which agents can accumulate human capital. Our analysis reveals that under full migration, both urban and rural agents achieve equal levels of welfare. However, when focusing on migration with friction (Hukou system)– the main focus of our study – urban agents remain unaffected, whereas their rural counterparts fare worse. In summary, our research shows that policies restricting rural migrant parents from moving with their children to urban areas artificially create disparities. These disparities not only result in the disadvantage of rural children but also impede the overall development of the rural sector.

Chapter 4 examines the policy impact of health shocks on savings, focusing on the prepayment of medical expenses among heterogeneous agents with an endogenous mortality rate. Our findings reveal that affluent agents remain unaffected by prepayment, while the saving behaviors of impoverished agents undergo significant changes. By utilizing the Assets and Health Dynamics Among the Oldest Old (AHEAD) dataset and conducting a counterfactual experiment, we found that the savings of the less affluent group are almost four times higher in scenarios involving prepayment. Overall, total savings are projected to increase by over 13%. This not only provides insights into savings trends in China, suggesting that lower-income individuals may save more to account for prepayment and mitigate mortality risks, but also establishes a lower threshold for Chinese savings in light of a comparatively larger fraction of economically disadvantaged individuals compared to the United States.