Minchul Yum

Assistant Professor of Economics

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Mailing address:
University of Mannheim
Department of Economics
L7, 3-5 Room P09
68165 Mannheim, Germany

E-mail:
minchul.yum "at" uni-mannheim.de

Links:
Department Website
Google Scholar Page
IDEAS/RePEc
ORCID

Welcome!

I am currently an Assistant Professor in the Department of Economics at the University of Mannheim, and a Research Affiliate (Macroeconomics and Growth) at the Centre for Economic Policy Research (CEPR). I will join the Department of Economics at the University of Southampton as Associate Professor in January 2023. My research interests lie primarily in macroeconomics, family economics, and public economics.


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Curriculum Vitae (PDF)


♦ Click title to see abstract.

Working Papers:

Status Externalities in Education and Low Birth Rates in Korea
(with Seongeun Kim and Michèle Tertilt)
Revise & Resubmit, American Economic Review
Abstract
East Asians, especially South Koreans, appear to be preoccupied with their offspring's education---most children spend time in expensive private institutes and in cram schools in the evenings and on weekends. At the same time, South Korea currently has the lowest total fertility rate in the world. Motivated by novel empirical evidence on spillovers in private education spending, we propose a theory with status externalities and endogenous fertility that connects these two facts. Using a quantitative heterogeneous-agent model calibrated to Korea, we find that fertility would be 15% higher in the absence of the status externality and that childlessness in the poorest quintile would fall from five to less than one percent. We further show that the externality amplifies the fertility decline over time. We then explore the effects of various government policies. A pro-natal transfer increases fertility and reduces education while an education tax reduces both education and fertility, with heterogeneous effects across the income distribution. The policy mix that maximizes the current generation's welfare consists of an education tax of 12% and moderate pro-natal transfers. This would raise average fertility by about 6% and decrease education spending by 16%. Although this policy increases the welfare of the current generation, it may not do the same for future generations as it lowers their human capital.

[Paper (2022/04)] / [CEPR DP] / [SSRN]


Lifestyle Behaviors and Wealth-Health Gaps in Germany
(with Lukas Mahler)
Reject & Resubmit, Econometrica
Abstract
We document significant gaps in wealth across health status over the life cycle in Germany---a country with a universal healthcare system and negligible out-of-pocket medical expenses. To investigate the underlying sources of the empirical patterns in wealth-health gaps, we build a heterogeneous-agent life-cycle model in which health and wealth evolve endogenously. In the model, agents exert efforts to lead a healthy lifestyle, which helps maintain good health status in the future. Effort choices, or lifestyle behaviors, are subject to adjustment costs to capture various aspects of micro-level effort adjustment behaviors in the data. We find that our calibrated model generates around half of the wealth gaps by health observed in the German micro data, and that variations in health-related lifetime outcomes are largely explained by uncertainty realizations over the life cycle, rather than initial conditions at age 25. Our counterfactual experiments indicate that variations in individual health efforts account for over half of the model-generated wealth gaps by health status. Their importance is due not only to the fact that they affect labor income and savings rates, both of which influence wealth accumulation, but also because they act as an amplification device since richer households exert relatively more efforts to maintain a healthy lifestyle.

[Paper (2022/02)] / [CEPR DP] / [SSRN]


Aggregate and Intergenerational Implications of School Closures: A Quantitative Assessment
(with Youngsoo Jang)
Revise & Resubmit, American Economic Journal: Macroeconomics
Abstract
This paper quantitatively investigates the medium- and long-term macroeconomic and distributional consequences of school closures through intergenerational channels. The model economy is a dynastic overlapping generations general equilibrium model in which schools, in the form of public education investments, complement parental investments in producing children's human capital. We find that unexpected school closure shocks have long-lasting adverse effects on macroeconomic aggregates and reduce intergenerational mobility, especially among older children. Higher substitutability between public and private investments induces smaller damages in the aggregate economy and the affected children's lifetime income, while exacerbating negative impacts on intergenerational mobility and inequality.

[Paper (2022/09)] / [SSRN]


Heterogeneity, Transfer Progressivity, and Business Cycles
(with Youngsoo Jang and Takeki Sunakawa)
Revise & Resubmit, Quantitative Economics
Abstract
This paper studies how transfer progressivity influences aggregate fluctuations when interacting with household heterogeneity. Using a simple static model of the extensive margin labor supply, we analytically characterize how transfer progressivity influences differential labor supply responses to aggregate conditions across heterogeneous households. We then build a quantitative dynamic general equilibrium model with both idiosyncratic and aggregate productivity shocks, and show that it delivers moderately procyclical average labor productivity and a large cyclical volatility of aggregate hours relative to output. Counterfactual exercises show that redistributive policies have very different implications for aggregate fluctuations, depending on whether tax progressivity or transfer progressivity is used. We provide empirical evidence on the heterogeneity of employment responses across the wage distribution, which supports the key mechanism of our model.

[Paper (2021/04)]


Frisch Elasticities in a Model of Indivisible Labor Supply with Endogenous Workweek Length
Revise & Resubmit, Scandinavian Journal of Economics
Abstract
This paper provides an extension of the classical indivisible labor supply model where a large macro Frisch elasticity is reconciled with a small micro counterpart. Households take as given state-dependent hours per worker, shaped by a nonlinear mapping from hours worked to labor services and employment frictions, and make intertemporal labor supply decisions. In contract to the standard indivisible labor supply model where aggregate fluctuations are independent of the individual preference parameter, my model connects the household preference parameter to aggregate fluctuations and the macro elasticity, with the size of the extensive margin elasticity being empirically reasonable.

[Paper (2022/06)]



Published and Forthcoming Papers:

Parental Time Investment and Intergenerational Mobility
International Economic Review, 2022
Abstract
This paper constructs an overlapping generations general equilibrium model to explore the extent to which heterogeneity in time investment shapes intergenerational mobility of lifetime income. The calibrated model successfully accounts for untargeted distributional aspects of income mobility, which are captured in the income quintile transition matrix. Counterfactual exercises show that removing heterogeneity in parental time investment reduces intergenerational persistence by around 7-8% for early childhood but only marginally in later childhood. Since parental time and monetary investments are poor substitutes for human capital development in early childhood, parental time investment during this period serves as a mechanism that amplifies the transmission of the parents' economic status to their children. Policy experiments find that an asset-tested subsidy for parental monetary investments in early childhood can raise intergenerational mobility in a cost-effective way, though it reduces mobility substantially if given to parents with older school-aged children.
DOI: https://doi.org/10.1111/iere.12602

[Publisher (Open Access)] / [Working Paper]


Nonlinear Occupations and Female Labor Supply Over Time
(with Youngsoo Jang)
Review of Economic Dynamics, 2022
Abstract
Long hours worked associated with higher hourly wages are common to many occupations, known as nonlinear occupations. Over the last four decades, both the share of workers in nonlinear occupations and their relative wage premium have been increasing. Females in particular have been facing rising experience premiums, especially in these types of occupations. We quantitatively explore how these changes have affected the female labor supply over time using a quantitative, dynamic general equilibrium model of occupational choice and labor supply at both the extensive and intensive margins. Our decomposition analysis finds that rising experience premiums are important in explaining the intensive margin of female labor supply, which has continued to increase even in the most recent period. Meanwhile, technical changes biased toward nonlinear occupations help to explain recent stagnating female employment rates. Finally, a counterfactual experiment suggests that, if the barrier aspects of nonlinearities had instead gradually vanished, female employment over this same time period would have been considerably higher at the expense of significantly lower labor supplies at the intensive margin.
DOI: https://doi.org/10.1016/j.red.2021.07.004

[Publisher] / [Working Paper] / [BibTex]


Model Selection for Panel Data Models with Fixed Effects: A Simulation Study
Applied Economics Letters, 2022
Abstract
This study considers model selection criteria, such as the Akaike's Information Criterion (AIC), the corrected Akaike's Information Criterion (AICc), and the Bayesian Information Criterion (BIC), for panel data models with fixed effects. Applying these information criteria to fixed effects panel models is not a trivial matter due to the incidental parameter problem that might adversely affect their practical performance, especially when it comes to short panel data. Monte Carlo experiments suggest that the information criteria are quite successful in selecting the true model. In particular, the AICc and the AIC operate successfully unless a time dimension is extremely small.
DOI: https://dx.doi.org/10.1080/13504851.2021.1962505

[Publisher] / [Working Paper] / [BibTex]


General Equilibrium Feedback Regarding the Employment Effects of Labor Taxes
Macroeconomic Dynamics, 2020
Abstract
A higher labor tax rate increases the equilibrium real interest rate and reduces the equilibrium wage in a heterogeneous-agent model with endogenous savings and indivisible labor supply decisions. I show that these general equilibrium (GE) adjustments, in particular of the real interest rate, reinforce the negative employment impact of higher labor taxes. However, the representative-agent version of the model, which generates similar aggregate employment responses to labor tax changes, implies that GE feedback is neutral. The cross-country panel data reveal that the negative association between labor tax rates and the extensive margin labor supply is significantly and robustly weaker in small open economies where the interest rate is less tightly linked to domestic circumstances. This empirical evidence supports the transmission mechanism of labor tax changes for employment in the heterogeneous-agent model.
DOI: https://doi.org/10.1017/S1365100519000087

[Publisher (Open Access)] / [Working Paper] / [BibTex]


On the Distribution of Wealth and Employment
Review of Economic Dynamics, 2018
Abstract
In the United States, the employment rate is nearly flat across wealth quintiles with the exception of the first quintile. Correlations between wealth and employment are close to zero or moderately positive. However, incomplete markets models with a standard utility function counterfactually generate a strongly negative relationship between wealth and employment. Using a fairly standard incomplete markets model calibrated to match the distribution of wealth, I find that government transfers and capital income taxation increase the (non-targeted) correlations between wealth and employment substantially, bringing the model closer to the data. As the model's fit with the distribution of wealth and employment improves, I find that the precautionary motive of labor supply is mitigated, thereby raising aggregate labor supply elasticities substantially.
DOI: https://doi.org/10.1016/j.red.2018.04.001

[Publisher] / [Working Paper] / [BibTex]



Work in Progress:

Efficient Parental Leave Policies with Joint Career Concerns
(with Daisoon Kim)

How Should Government Mitigate Adverse Consequences of School Closures?
(with Youngsoo Jang)

Intergenerational Mobility, Social Welfare and Optimal Policies
(with Hitoshi Tsujiyama)

Nonlinear Earnings and Aggregate Labor Market Fluctuations across Countries
(with Youngsoo Jang and Takeki Sunakawa)

Indivisible Labor and the Optimal Progressivity of Tax and Transfers
(with Dmitry Matveev)