Welcome to my research website! My research interests are in macroeconomics, labor economics, and household finance. Here’s my CV .


Marc Folch and Luca Mazzone (2022).
Go Big or Buy a Home: The Impact of Student Debt on Career and Housing Choices
Submitted, also available at SSRN
Featured: EEA Congress and LSE Business Review

Abstract. Student debt decreases post-bachelor school enrollment and earnings growth but does not delay first-time home ownership. We introduce a life-cycle human capital model with heterogeneous wealth and financial frictions and show that high debt balances distort career choices because returns to further education depend on current income. Student debt impacts home ownership in two ways. First, it deters ownership via the traditional wealth channel. Second, it increases ownership by discouraging further education in favor of early labor market entry. Finally, we show that the impact of student borrowing is partly due to the design of US student loans.

Luca Mazzone (2021).
On the Solution of High-Dimensional Macro Models with Distributional Channels
Submitted, also available at SSRN

Abstract. I propose a global solution method for the computation of infinite-horizon, heterogeneous agent macroeconomic models with aggregate uncertainty. Details of the algorithm are illustrated by presenting its application to a an example model of firm dynamics. In the model, aggregate dynamics depends explicitly on firm entry and exit, and individual choices are often constrained by a form of market incompleteness. Existing computational strategies are either unfeasible or provide inaccurate solutions to this class of models. Moreover, global solutions are computationally expensive because the minimal representation of the aggregate state space - and thus the aggregate law of motion - faces the curse of dimensionality. The proposed strategy combines adaptive sparse grids with a cross-sectional density approximation, and introduces a framework for solving the more general class of dynamic models with firm or household heterogeneity accurately.

Edoardo Acabbi, Andrea Alati, and Luca Mazzone (2022).
A Labor Market Sorting Model of Scarring and Hysteresis
Submitted, also available at SSRN

Abstract. Labor market sorting substantially changes across the business cycle, increasing inefficient mismatches. This paper proposes a new framework to analyze the interactions between labor market sorting and business cycle fluctuations. Using Italian administrative data, we estimate a tractable search equilibrium model that considers firm and worker heterogeneity, aggregate risk, and life-cycle dynamics. We jointly account for endogenous changes in match-dependent human capital accumulation and worker-firm assignment. We show that distortions in human capital accumulation and worker-firm sorting caused by aggregate fluctuations contribute significantly to the persistent effects of business cycles, resulting in economic hysteresis. Aggregate fluctuations have substantial welfare effects, with significant heterogeneity along the earnings, skill, and age distribution. We also find that features of the labor compensation distribution are key predictors of the severity of downturns. Finally, our model is able to account for the increased length of recessions in recent decades.

Sara Casella and Luca Mazzone (2022).
Parental Health, Aging, and the Labor Supply of Young Workers
In Progress (New Draft Soon), also available at SSRN

Abstract. To what extent are young workers affected by health shocks that happen to their parents? This paper studies the short and long-term spillover effects of parents' adverse health events on their adult children. We use the unique structure of the Panel Survey on Income Dynamics (PSID) to build family networks and construct a measure of sudden health changes. Exploiting news on parents' health status, we provide evidence of the existence of family insurance in the form of time and monetary transfers, and of the importance of family ties in shaping labor market outcomes. Following the deterioration of parents' health, time spent helping them goes up, while income and hours worked by children significantly decline.

Work in Progress

Luca Mazzone and Jason Sockin
The Labor Economics of Political Polarization

IMF and Policy Work

Fiscal Consolidation: Taking Stock of Success Factors, Impact, and Design
also available at IMF

Stand-by Arrangement and Arrangement under the Standby Credit Facility - Honduras
Third Review (2020) and Fourth Review (2021)