Minchul Yum

Assistant Professor of Economics


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

minchul.yum "at" uni-mannheim.de

Department Website
Google Scholar Page


I am an assistant professor at the University of Mannheim. I am a member of the Collaborative Research Center Transregio 224 (CRC TR 224), funded by the German Research Foundation (DFG). My main research fields are macroeconomics and family economics.

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Curriculum Vitae (PDF)

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Working Papers:

Lifestyle Behaviors and Wealth-Health Gaps over the Life Cycle
(with Lukas Mahler)
Significant gaps in health across the wealth distribution exist even in countries with universal healthcare systems and negligible out-of-pocket medical expenses. To investigate underlying sources of the empirical patterns that generate these wealth-health gaps, we build a rich 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 maintaining a good health status in the future. Good health, in turn, shapes future income, complements utility from consumption, and increases survival probabilities. Effort choices, or lifestyle behaviors, are subject to asymmetric stochastic adjustment costs to capture addiction and habit persistence in efforts such as smoking and exercise. Our calibrated model generates substantial wealth-health gaps as observed in German micro data. Counterfactual experiments show that good health is valued largely due to longevity benefits and that variations in individual health efforts account for a substantial portion of the observed wealth-health gaps. We further find that wealth gradients in effort choices play a substantial role in explaining the gaps among the young asset-poor.

[Paper (PDF)] (Prelim. draft available upon request)

Aggregate and Intergenerational Implications of School Closures: A Quantitative Assessment
(with Youngsoo Jang)
Covid Economics, Vetted and Real-Time Papers, 57, 46-93, November 2020
Revise & Resubmit, American Economic Journal: Macroeconomics
This paper quantitatively investigates the macroeconomic and distributional consequences of school closures through intergenerational channels in the medium- and long-term. 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 moderate long-lasting adverse effects on macroeconomic aggregates and reduce intergenerational mobility, especially among older children. Lower substitutability between public and parental investments induces larger damages in the aggregate economy and overall incomes of the affected children, while mitigating negative impacts on intergenerational mobility.

[Paper (PDF)] / [Covid Economics]

Nonlinear Occupations and Female Labor Supply Over Time
(with Youngsoo Jang)
Revise & Resubmit, Review of Economic Dynamics
Long hours worked for higher returns and higher returns for longer hours worked are common to many occupations, namely, nonlinear occupations (Goldin 2014). Over the last four decades, both the share and the relative wage premium of nonlinear occupations have been increasing. Females have been facing rising experience premiums, especially in nonlinear occupations. To quantitatively explore how these changes have affected the female labor supply over time, we build a quantitative, dynamic general equilibrium model of occupational choice and labor supply at both the extensive and intensive margins. A decomposition analysis finds that rising experience premiums, especially in nonlinear occupations, and technical change that is biased towards nonlinear occupations are important in explaining the intensive margin of female labor supply, which has continued to increase even in the recent period, during which female employment has stagnated. Finally, a counterfactual experiment suggests that if the barrier aspects of nonlinearities had gradually vanished, female employment would have been considerably higher at the expense of significantly lower labor supply at the intensive margin.

[Paper (PDF)]

Status Externalities and Low Birth Rates in Korea
(with Seongeun Kim and Michèle Tertilt)
East Asians, especially South Koreans, are apparently preoccupied with their children’s education – most children spend time in expensive private institutes and cram schools in the evening and on weekends. At the same time, South Korea currently has the lowest total fertility rate in the world. In this paper we propose a theory with status externality and endogenous fertility that connect these two facts. Using a quantitative heterogeneous-agent model with status externality calibrated to the recent Korean economy, we first find that fertility would be 16% higher in the absence of the status externality. We then explore how government interventions affect fertility and welfare from both positive and normative perspectives. The optimal policy maximizing the current generation’s welfare by addressing the externality-induced distortions is the mixture of an education investment tax rate of 12% and a moderate size of pro-natal transfers. We also highlight the importance of externality feedback in our optimal policy result and their repercussions for the future generations.

[Slides (PDF)] / Draft available soon

Heterogeneity, Transfer Progressivity, and Business Cycles
(with Youngsoo Jang and Takeki Sunakawa)
Revise & Resubmit, Quantitative Economics
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 (PDF)]

Parental Time Investment and Intergenerational Mobility
Reject & Resubmit, International Economic Review
This paper constructs a quantitative model of intergenerational mobility in which lifetime income mobility is shaped by various channels including parental time investments in children. The calibrated model delivers positive educational gradients in parental time investment, as observed in the data, and also successfully accounts for untargeted distributional aspects of income mobility, captured in the income quintile transition matrix. The model implies that removing the positive educational gradients in parental time investment during the whole childhood would reduce intergenerational income persistence nearly by 40 percent. Policy experiments suggest that subsidies to childhood investments that can diminish positive educational gradients in parental time investments would increase intergenerational mobility, and that there are better ways of subsidizing investments to achieve greater mobility in terms of aggregate output and welfare.

[Paper (PDF)]

Aggregate Fluctuations in a Model of Indivisible Labor Supply with Endogenous Workweek Length
This paper studies aggregate fluctuations in a simple extension of the classical indivisible labor supply model of Rogerson (1988) and Hansen (1985). The model allows a firm to choose hours as well as employment in the presence of a nonlinear mapping from hours worked to labor services and employment adjustment costs. Households take as given state-dependent hours per worker, which are optimally chosen by the firm, and make intertemporal labor supply decisions along the extensive margin. Although the model does not explicitly allow households to choose desired hours worked, the preference parameter governing the intensive margin Frisch elasticity of households shapes aggregate labor market fluctuations along both intensive and extensive margins, in contrast to pure indivisible labor models.

[Paper (PDF)]


General Equilibrium Feedback Regarding the Employment Effects of Labor Taxes
Macroeconomic Dynamics, 24(8), 2012-32, December 2020
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.

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

On the Distribution of Wealth and Employment
Review of Economic Dynamics, 30, 86-105, October 2018
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.

[Publisher] / [Working Paper Version]

Select Work in Progress:

Career, Information, and the Gender Gap over the Life Cycle
(with Daisoon Kim)

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)

Old Working Paper:

Model Selection for Panel Data Models with Fixed Effects: A Simulation Study
[Paper (PDF)]
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 parameters 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.