We develop a model that integrates modern theories of labor market flows with nominal wage rigidities to study the consequences of inflation on the labor market. Nominal wage stickiness incentivizes workers to engage in job-to-job transitions after an unexpected increase in the price level. Such dynamics lead to a rise in aggregate vacancies associating a seemingly tight labor market with lower real wages—two facts observed during the recent inflation period. The calibrated model jointly matches aggregate and cross-sectional trends in worker flows and wages during the 2021–2024 period. Using historical data, we show that prior periods of high inflation were also associated with increasing vacancies and upward shifts in the Beveridge curve. Our results suggest that policy makers and academics should be cautious about viewing the rise in the vacancy-to-unemployment rate as a sign of a tight labor market during inflationary periods without holistically looking at other labor market indicators.

This paper analyzes differences in the likelihood that black and white families become homeowners. By following a sample of black and white renters over time, we are able to separately study racial differences in the likelihood of applying for a mortgage and in the likelihood that a mortgage application is accepted. Although its effect on the race gap in housing transitions is small, we find strong evidence that black applicants are almost twice as likely as comparable white households to be rejected, even when credit history proxies and measures of household wealth are accounted for. We show that the housing transition gap exists primarily because blacks are less likely to apply for mortgages in the first place. The analysis suggests that differences in income, family structure, and in the ability and willingness of parents to provide down-payment assistance are the primary reasons for this applications gap. We speculate that the portion of the gap that remains unexplained after controlling for income, demographics, and wealth may be the result of blacks anticipating a greater chance of rejection when they apply for mortgages.

In this paper, we find that the age-adjusted elasticity of child wealth with respect to parental wealth is 0.37 before the transfer of bequests. Lifetime income and asset ownership jointly explain nearly two-thirds of the wealth elasticity. Education, past parental transfers, and expected future bequests account for little of the remaining elasticity. Survey measures of risk correlate strongly between parents and children. However, they explain little of the intergenerational similarity in the propensity to own different assets, suggesting that children's savings propensities are determined by mimicking their parents' behavior, or the inheritance of preferences not related to risk tolerance. Our results imply that while parents do pass on human capital and saving propensities to their children, the level of intergenerational fluidity is much greater than that suggested by recent accounts in the popular press.

true Throughout most of the twentieth century, economic growth was associated with rising median real wages. However, since the early 1980s, measured median real hourly compensation has been stagnant despite robust productivity growth. To the extent that measured real wage growth has occurred, it has been concentrated disproportionately at the upper end of the wage distribution. Many view the lack of growth of median wages over this time period as evidence that the American middle class has not advanced and as a symptom of declining social mobility. The decoupling of measured median real wage growth and productivity growth has been viewed as a puzzle among both academics and policy makers. During this time period, there has also been a separation of wage growth and othermacroeconomic fundamentals. For instance, theUnited States has had record low levels of unemployment in the years prior to the global pandemic, yet during the prepandemic period there was little accompanying wage growth. This presents an apparent contradiction of the long-standing Phillips curve analysis that negatively relates unemployment towage growth. Researchers have begun to dig into this puzzle of late (see, e.g., Del Negro et al. 2020). Recent explanations involve the possibility that we have mismeasured the amount of slack in the economy (Krueger, Cramer, and Cho 2014; Abraham, Haltiwanger, and Rendell 2020) or that we have a flatter

A household’s vehicle purchases are among its largest expenditure outlays. Moreover, unlike housing purchases, which a typical household may make once or twice over a lifetime, a household may well buy several cars over the same interval. The magnitude and relative frequency of vehicle purchases suggest that differential treatment by race in the vehicle market may have important implications for differences in wealth and financial wellbeing by race. Yet, whereas a robust literature in economics has studied virtually all aspects of racial treatment in the housing market, corresponding work about vehicles has been relatively sparse, with most work focusing on racial differences in prices paid (Pinelopi Goldberg (1996) and Fiona Scott-Morton, Florian Zettelmeyer, and Jorge Silva-Risso (2003)). Very little previous attention has been paid to whether there is differential racial treatment in another important outcome in the vehicle market: the interest rates that households pay on the loans used to purchase vehicles.1 Calculations using data from the Survey of Consumer Finances indicate that loans for vehicle purchases are primarily obtained from one of two sources. Roughly two-thirds of vehicle loans originate from the traditional banking sector: commercial banks, savings institutions, or credit unions. Vehicle manufacturers finance the remaining one-third of auto

We use scanner data and time diaries to document how households substitute time for money through shopping and home production. We document substantial heterogeneity in prices paid for identical goods for the same area and time, with older households shopping the most and paying the lowest prices. Doubling shopping frequency lowers a good's price by 7 to 10 percent. We estimate the shopper's price of time and use this series to estimate an elasticity of substitution between time and goods in home production of roughly 1.8. The observed lifecycle time allocation implies a consumption series that differs markedly from expenditures.

We revisit two well-known facts regarding life cycle expenditures: the “hump”-shaped profile of nondurable expenditures and the increase in cross-household consumption inequality. We document that the behavior of total nondurables masks surprising heterogeneity in the life cycle profile of individual consumption subcomponents. We provide evidence that the categories driving life cycle consumption either are inputs into market work or are amenable to home production. Using a quantitative model, we document that the disaggregated life cycle consumption profiles imply a level of uninsurable permanent income risk that is substantially lower than that implied by a model using a composite consumption good.

Previous authors have documented a dramatic decline in food expenditures at the time of retirement. We show that this is matched by an equally dramatic rise in time spent shopping for and preparing meals. Using a novel data set that collects detailed food diaries for a large cross section of U.S. households, we show that neither the quality nor the quantity of food intake deteriorates with retirement status. We also show that unemployed households experience a decline in food expenditure and food consumption commensurate with the impact of job displacement on permanent income. These results highlight how direct measures of consumption distinguish between anticipated and unanticipated shocks to income whereas measures of expenditures obscure the distinction.

The propensity to become a business owner is a nonlinear function of wealth. The relationship between wealth and entry into entrepreneurship is essentially flat over the majority of the wealth distribution. It is only at the top of the wealth distributionafter the ninety-fifth percentilethat a positive relationship can be found. Segmenting businesses into industries with high and lowstarting capital requirements, we find no evidence that wealth matters more for businesses requiring higher initial capital. When using inheritances as an instrument for wealth, we find that both past and future inheritances predict current business entry, showing that inheritances capture more than simply liquidity. We further exploit the regional variation in house prices and find that households that lived in regions in which housing prices appreciated strongly were no more likely to start a business than households in other regions.

Regional shocks are an important feature of the US economy. Households' ability to self-insure against these shocks depends on how they affect local interest rates. In the United States, most borrowing occurs through the mortgage market and is influenced by the presence of government-sponsored enterprises (GSE). We establish that despite large regional variation in predictable default risk, GSE mortgage rates for otherwise identical loans do not vary spatially. In contrast, the private market does set interest rates which vary with local risk. We use a spatial model of collateralized borrowing to show that the national interest rate policy substantially affects welfare by redistributing resources across regions.