Welcome to my research website! My research interests are in macroeconomics, labor economics, and household finance. Here’s my CV .
Research
Marc Folch and Luca Mazzone (2022).
Go Big or Buy a Home: The Student Debt Overhang
Submitted, also available at SSRN
Featured: EEA Congress and LSE Business Review
Abstract.
Exploiting supply-side variations in college grants, we document that student debt decreases post-bachelor school enrollment and earnings growth, but does not delay first-time home ownership. This is consistent with the implications of a life-cycle human capital model with student debt overhang. 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 it via the traditional wealth channel. Second, it might increase it if it induces giving up further education and early labor market entry. Finally, we show that the impact of student borrowing on graduates’ choices is due in part 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
In Progress (New Draft Soon), also available at SSRN
Abstract.
This paper contributes a new framework to account for the interactions between labor misallocation and its interactions with business cycle fluctuations. We propose a tractable search equilibrium model of the labor market with aggregate risk, firm and worker heterogeneity, life-cycle dynamics and endogenous human capital accumulation. We show that sorting of workers to firms is a key factor in increasing the persistence of fluctuations, directly relating labor reallocation to economic hysteresis. We estimate the model on Italian administrative matched employer-employee data. Our estimates highlight the long term supply-side hysteresis effects of business cycles.
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
Policy Work
Stand-by Arrangement and Arrangement under the Standby Credit Facility - Honduras
Third Review (2020) and Fourth Review (2021)
