L. Rachel Ngai

    Working Papers

·        Welfare Policy and the Distribution of Hours of Work (with Chris Pissarides), November 2009. CEP DP962

Abstract: We examine the distribution of hours of work across industrial sectors in OECD countries. We find large disparities when sectors are divided into three groups: one that produces goods without home substitutes, and two others that have home substitutes -- health and social work, and all others. We attribute the disparities to the countries' tax and subsidy policies. High taxation substantially reduces hours in sectors that have close home substitutes but less so in other sectors. Health and social care subsidies increase hours in that sector. We compute these effects for nineteen OECD countries.

·        Hot and Cold Seasons in the Housing Market (with Silvana Tenreyro). July 2009, CEP DP 922.

Abstract: Every year during the second and third quarters (the "hot season") housing markets in the UK and the US experience systematic above-trend increases in both prices and transactions. During the fourth and first quarters (the "cold season"), house prices and transactions fall below trend. We propose a search-and-matching framework that sheds new light on the mechanisms governing housing market fluctuations. The model has a "thick-market" effect that can generate substantial differences in the volume of transactions and prices across seasons, with the extent of seasonality in prices depending crucially on the bargaining power of sellers. The model can quantitatively mimic the seasonal fluctuations in transactions and prices observed in the UK and the US.

- Featured in Financial Times - FT Weekend Magazine (pdf)

 

    Published Papers

·        Accounting for Research and Productivity Growth Across Industries (with Roberto Samaniego), Review of Economic Dynamics, forthcoming.      

What factors can jointly account for differences in research intensities and productivity growth across industries in a multi-sector endogenous growth model? They are the "technological opportunities": capital intensity of R&D, knowledge spillovers, and diminishing returns to R&D. US industry data implies that diminishing returns to R&D is the dominant factor quantitatively.

·        Mapping Prices into Productivity in Multisector Growth Models (with Roberto Samaniego), Journal of Economic Growth, September 2009, Volume 14, Pages.183-204.    

The composition of intermediate goods and the distinction between the productivity indices for value added and for gross output are important when mapping relative prices to relative productivity, and mapping multi-sector model and a reduced-form value-added model. One well-known example is the investment-specific technical change (ISTC).

·        Trends in Hours and Economic Growth (with Chris Pissarides), Review of Economic Dynamics, April 2008, Volume 11, Pages 239-256. 

Two important transformations over the last century: reallocation of hours worked from agriculture to manufacturing then to services (structural transformation), and from home to market (marketization). They are caused by uneven productivity growth across "market and home production" (that produce good substitutes), and across "three types of consumption goods" (which are poor substitutes). The interaction of structural transformation and marketization generates a non-monotonic trend in the aggregate market hours of work

·        Public Enterprises and Labour Market Performance (with Johannes Hörner and Claudia Olivetti), International Economic Review, May 2007, Volume 48, No. 2, Pages 363-384.

One possible mechanism of the rise in the European unemployment during 1970s to the 1990s is the presence of public sector employment in Europe: risk-averse workers can search for jobs in public or private sector, the public sector is more able to insure its employees against earning instability ("economic turbulence"). Aggregate unemployment increases as a result of rising turbulence.

·        Structural Change in a Multisector Model of Growth (with Chris Pissarides), American Economic Review, March 2007, Volume 97, No. 1, Pages 429-443.

A longer working paper version: CEPR DP 4763. Previous title: "Balanced Growth with Structural Change".

There are substantial labour reallocation across sectors (structural change/transformation, Kuznets' fact) while aggregate variables appear to be on a balanced growth path (Kaldor's fact). Structural change is explained by non-unitary elasticity of substitution across goods while unitary elasticity of substitution across time can preserve balanced aggregate growth in a multisector model with sector-specific productivity growth.  

·        Barriers and the Transition to Modern Growth, Journal of Monetary Economics, October 2004, Volume 51, Issue 7, Pages 1353-1383.

Cross-country income differences are large: the income ratio between top 5% and bottom 5% increases from less than 2 to over 30 for the last two centuries. The key observation is that the transition from stagnation to modern growth (a sustained growth in per capita income) is different across countries. By allowing for such endogenous process in a two-sector model, the predicted income ratio between the early and late developers first increases before it decreases and converges to a steady state ratio that corresponds to the ratio in a standard one-sector growth model.