L. Rachel Ngai

    Working Papers

·        Welfare Policy and the Sectoral Distribution of Employment (with Chris Pissarides). Under review, revised version coming soon.

Abstract: We examine the distribution of hours of work across industrial sectors in OECD countries. We find large disparities when sectors are disaggregated into those that produce goods without home substitutes, those that produce goods with home substitutes and health and social work. We attribute the disparities to tax and transfer policies in the presence of home production. High taxation reduces hours in sectors with close home substitutes by more than elsewhere. Health and social subsidies increase hours in that sector. We quantify these effects using sectoral data and time use surveys 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)

 

·        Accounting for Research and Productivity Growth Across Industries (with Roberto Samaniego), September 2009, CEP DP 914.      

Abstract: What factors underlie industry differences in research intensity and productivity growth? We develop a multi-sector endogenous growth model allowing for industry-specific parameters in the production functions for output and knowledge, and in consumer preferences. We find that long run industry differences in both productivity growth and R&D intensity mainly reflect differences in "technological opportunities", interpreted as the parameters of knowledge production. These include the capital intensity of R&D, knowledge spillovers, and diminishing returns to R&D. To investigate the quantitative importance of these factors, we calibrate the model using US industry data. We find that the observed variation in the capital intensity of research cannot account for industry differences in productivity growth rates, and that variation in intertemporal knowledge spillovers has counterfactual predictions for R&D intensity when it is an important factor behind differences in productivity growth rates. This suggests that diminishing returns to research activity is the dominant factor.

 

    Published Papers

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

Issue: The mapping between a multi-sector model and a reduced-form value-added model, especially on linking relative prices to relative productivity growth, e.g. the well-known investment-specific technical change (ISTC).  Idea: the composition of intermediate goods and the distinction between the productivity indices for value added and for gross output.  

·        Employment Outcomes in the Welfare States (with Chris Pissarides), Revue Economique, May 2008, Volume 59, No. 3, Pages. 413-436.   

Issue: Implications of tax and subsidy policies for employment in the US, UK, France, Italy and Sweden. Idea: taxes discourage all market activities but different subsidy policies (e.g. cash and subsidies in kind) affect social services (e.g. child care, elderly care) and other services differently.

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

Issue: Reallocation of hours worked from agriculture to manufacturing then to services (structural transformation), and from home to market (marketization) over the last century. The interaction of structural transformation and marketization generates a non-monotonic trend in the aggregate market hours of work. Idea: these trends 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).

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

Issue: Rise in the European unemployment from the 1970s to the 1990s. Idea: risk-averse workers can search for jobs in public or private sector, and the public sector is more able to insure its employees against earning instability ("economic 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".

Issue: Coexistence of sectoral labour reallocation (structural change) and balanced aggregate growth. Idea: structure change is induced 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.

Issue: Large cross-country income differences. Idea: The transition process from stagnation to modern growth (a sustained growth in per capita income) is different across countries. The income ratio between the early and late developers first increases before it converges to a steady state ratio that corresponds to the ratio in a standard neoclassical growth model.