David Weiss

Financial Risk and Unemployment

There is a strong correlation between the corporate interest rate (BAA rated), and its spread relative to Treasuries, and the unemployment rate. We model how interest rates and potential default rates impact equilibrium unemployment in a Diamond-Mortesen-Pissarides model. We calibrate the model using US data without targeting business cycle statistics. Volatility in the corporate interest rate can explain about 80% of the volatility of unemployment, vacancies, and market tightness. Simulating the Great Recession shows the model can account for much of the rise in unemployment. Without Fed action, unemployment would have been 6% higher.

'Why Not Settle Down Already?' A Quantitative Analysis of the Delay in Marriage

A striking change in American society in the last 40 years has been the decline and delay in marriage. The fraction of young adults who have never been married increased significantly between 1970 and 2000. Idiosyncratic labor income volatility also rose. We establish a quantitatively important link between these facts. If marriage involves consumption commitments, then a rise in income volatility delays marriage. We quantitatively assess this hypothesis vis‐a‐vis others in the literature. Increased volatility accounts for about 20% of the observed delay in marriage and is strong relative to other mechanisms.

MINING SURPLUS: MODELING JAMES A. SCHMITZ'S LINK BETWEEN COMPETITION AND PRODUCTIVITY: MINING SURPLUS

James A. Schmitz (2005) documents, in a well-known case study, a dramatic rise in productivity in the U.S. and Canadian iron-ore industry following an increase in competition from Brazil. Prior to the increased competition, the industry was not competitive. Surplus in profits was divided between business and unions. Schmitz attributes the increase in productivity to a change in work practices in the industry, as old negotiated union work rules were abandoned or modified. This research formalizes a mechanism through which a rise in competition can lead to increased productivity in the iron-ore industry.

Why did Rich Families Increase their Fertility? Inequality and Marketization of Child Care

A negative relationship between income and fertility has persisted for so long that its existence is often taken for granted. One economic theory builds on this relationship and argues that rising inequality leads to greater differential fertility between rich and poor. We show that the relationship between income and fertility has flattened between 1980 and 2010 in the US, a time of increasing inequality, as high income families increased their fertility. These facts challenge the standard theory. We propose that marketization of parental time costs can explain the changing relationship between income and fertility. We show this result both theoretically and quantitatively, after disciplining the model on US data. We explore implications of changing differential fertility for aggregate human capital. Additionally, policies, such as the minimum wage, that affect the cost of marketization, have a negative effect on the fertility and labor supply of high income women. We end by discussing the insights of this theory to the economics of marital sorting.

Effect of the MER tubercle bacillus fraction on the responsiveness of mice to T-independent antigens.

The effect of treatment with the methanol extraction residue (MER) mycobacterial fraction on the immunological responsiveness of BALB/c mice to the T-independent antigens pneumococcal polysaccharide type III (SIIII) and trinitrophenyl-lipopolysaccharide conjugate (TNP-LPS) was ascertained. Pretreatment with MER prevented the establishment of immunological paralysis by threshold doses (10 or 15 microgram) of SIII and by a paralyzing dose of 100 microgram TNP-LPS. The induction of immunological paralysis by SIII was unaffected by treatment with the bacterial adjuvant Corynebacterium parvum and with the B cell mitogens PPD, LPS (Escherichia coli lipopolysaccharide), and dextran sulfate.