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Fertility and Family Labor Supply
Jakobsen, K., Jørgensen, T. H., & Low, H.
Forthcoming, American Economic Review, 2026
When wages of women increase, fertility declines; when wages of men increase,
fertility increases. These changes in fertility have implications over the life
cycle and for long-run gender wage gaps, because fertility changes labor supply
and human capital accumulation. There can be a trade-off between increasing the
number of children women have and closing the gender pay gap.
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Marriage, Labor Supply and the Dynamics of the Social Safety Net
Low, H., Meghir, C., Pistaferri, L., & Voena, A.
Forthcoming, Journal of Political Economy, 2026
Welfare reform in the 1990s led to declines in welfare use and rises in
participation. But this also damaged insurance against shocks. This reduced
insurance from the state led to lower divorce rates and a greater reliance on
family insurance and family formation.
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Outcome Tests and Screening Errors
Low, H. & Pistaferri, L.
Forthcoming, Journal of Political Economy Microeconomics, 2026
Screening errors can be classed as false rejections or false acceptances. We show
how this distinction undermines the use of outcome tests of discrimination. We show
what data and assumptions are needed to test for taste-based discrimination, and
apply this to the context of disability insurance.
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Joint Child Custody and Interstate Migration
Adams, A., Bayraktar, O., Jørgensen, T. H., Low, H., & Voena, A.
Forthcoming, Journal of Labor Economics, 2026
Mobility among men has fallen substantially in the US over the past 40 years. We
show that the most dramatic part of this fall is among divorced men, and that this
is due to a rise in joint custody of children.
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Durables and Lemons: Private Information and the Market for Cars
Blundell, R., Gu, J., Leth-Petersen, S., Low, H., & Meghir, C.
Quantitative Economics, 17(1): 38–91, 2026
Private information on car quality means the sale price reflects the average quality
of cars sold, which can be lower than the average quality in the population. This
difference is the lemons penalty imposed on holders of high-quality cars. We estimate
the evolution of the lemons penalty through an equilibrium model of car ownership with
private information using Danish linked registry data on car ownership, income, and
wealth. We examine the aggregate implications and distributional consequences of these
penalties. In the first year of ownership, we estimate that the lemons penalty is 12%
of the price. The penalty declines sharply with the length of ownership. It reduces the
self-insurance value of cars and leads to a large reduction in transaction volumes and
the rate of car turnover. The market does not collapse: income shocks induce households
to sell their cars, even if they are of good quality, and this helps mitigate the lemons
problem. The size of the lemons penalty declines when income uncertainty in the economy
increases and when the supply of credit decreases.
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Consumption and Income Inequality Across Generations
Gallipoli, G., Low, H., & Mitra, A.
Journal of Labor Economics, 44(3): 967–1008, 2026
This paper characterizes the joint evolution of income and consumption inequality across
generations. We estimate a model featuring intergenerational persistence and
family-independent idiosyncratic heterogeneity. We find that inequality in income and
consumption is predominantly driven by idiosyncratic factors rather than
intergenerational linkages. We show evidence of consumption insurance against
idiosyncratic lifetime income risk, particularly for the bottom and top quartiles of
income. Parental income is a significant source of this insurance only for the richest
quartile.
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Disability Insurance: Error Rates and Gender Differences
Low, H. & Pistaferri, L.
Journal of Political Economy, 133(9): 2962–3018, 2025
We show the extent of screening errors made in disability insurance awards using
matched survey-administrative data. False rejections are widespread, with large gender
differences. Work-disabled women are 12.8 percentage points more likely to be rejected
than work-disabled men, controlling for health conditions, occupation, and demographics.
Gender differences arise because women are assessed with more residual work capacity.
We model the Social Security Administration (SSA) decision-making process and estimate
that gender differences in screening errors originate from lower costs to the SSA from
incorrectly rejecting women. Noise in self-reported work limitation leads to overstating
screening errors, but the gender difference remains.
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House Price Rises and Borrowing to Invest
Crossley, T., Levell, P., & Low, H.
Journal of Economic Behavior & Organization, 223: 86–105, 2024
Household borrowing and spending rise with house prices, particularly for leveraged
households, but household spending is not consumption. We propose a borrow-to-invest
motive by which house price gains affect household spending on residential investment:
rational, leveraged households have an incentive to make additional residential
investments when house prices rise. Credit constraints then matter through reducing
access to leveraged returns and so reducing lifetime resources, rather than through
consumption smoothing. We test this motive by comparing responses in different
categories of spending across more and less leveraged households. We find strong
evidence of the borrow-to-invest motive in UK data.
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Labour Supply and the Cost of House Price Booms and Busts
Low, H. & Sanchez-Marcos, V.
Labour Economics, 90, 2024
Fluctuations in house prices generate substantial heterogeneity in the price of purchase
of similar dwellings depending on the time of purchase. These differences in the price
of purchase have large effects on income-net-of-housing-costs. We document these effects
using the large house price fluctuations during the recent housing boom-bust in Spain.
Households can mitigate these impacts through changing labour supply. Men work more
subsequent to paying higher house prices at purchase, whereas the correlation of house
prices and labour supply for women is driven by selection: households where women work
more buy more expensive houses.
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The Idiosyncratic Impact of an Aggregate Shock: The Distributional Consequences of COVID-19
Benzeval, M., Burton, J., Crossley, T. F., Fisher, P., Jäckle, A., Low, H., & Read, B.
Oxford Discussion Paper 911; IFS Working Paper W20/15, 2020
Using new data from the Understanding Society: COVID-19 survey collected in April 2020,
we show how the aggregate shock caused by the pandemic affects individuals across the
distribution. The survey collects data from existing members of the Understanding
Society panel survey who have been followed for up to 10 years. Understanding Society
is based on probability samples and the Understanding Society COVID-19 Survey is
carefully constructed to support valid population inferences. Further the panel allows
comparisons with a pre-pandemic baseline. We document how the shock of the pandemic
translates into different economic shocks for different types of worker: those with
less education and precarious employment face the biggest economic shocks. Some of
those affected are able to mitigate the impact of the economic shocks: universal credit
protects those in the bottom quintile, for example. We estimate the prevalence of the
different measures individuals and households take to mitigate the shocks. We show that
the opportunities for mitigation are most limited for those most in need.
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Using a Temporary Indirect Tax Cut as a Fiscal Stimulus: Evidence from the UK
Crossley, T. F., Low, H., O'Dea, C., & Sleeman, C.
IFS Working Paper W14/16
This paper evaluates a novel form of fiscal stimulus: a temporary cut in the rate of
Value Added Tax (VAT). In December 2008, the UK cut the standard rate of VAT by 2.5
percentage points for 13 months in an effort to stimulate spending. We estimate the
effect of the cut on prices and spending using alternative strategies for identifying
the counterfactual. Although firms initially passed through the VAT cut by lowering
their prices, at least part of the pass through of the VAT cut was reversed after only
a few months. Despite this early reversal, the cut raised the volume of retail sales by
around 1% which on its own generates a 0.4% increase in total expenditure. The cut
raised retail sales by encouraging consumers to bring forward their purchases and we
find a significant fall in sales after the VAT cut ended. Thus an indirect tax cut
stimulates significant intertemporal substitution in purchases.
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Saving on a Rainy Day, Borrowing for a Rainy Day
Alan, S., Crossley, T., & Low, H.
IFS and Cambridge Working Papers, 2015
The aim of this paper is to understand what a recession means for individual consumers,
and to model in a life-cycle framework how individuals respond to recessions. Our focus
is on the sharp increase in savings rates that have been observed in the current and
recent recessions. We show empirically that these saving spikes were short-lived and
common to all working age groups. We then study life-cycle models in which recessions
involve one or more of: (i) an aggregate permanent negative shock to individual income;
(ii) an increase in the variance of idiosyncratic permanent shocks; (iii) a tightening
of credit constraints; (iv) asset market crashes. In simulations and in the data we
aggregate explicitly from individual behavior. We model credit tightening as a
constraint on new borrowing and this generates an option value of borrowing in good
times. We show that the rise in the aggregate savings ratio is driven by increases in
uncertainty, rather than tightening of credit; temporary shocks to the supply of credit
generate increases in saving only among younger agents.
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Why Do Home Owners Work Longer Hours?
Bottazzi, R., Low, H., & Wakefield, M.
IFS Working Paper 07-10, 2009
This paper uses a structural model to address the question of why home-owners with
large mortgage debt work longer hours than those without such debt. We consider whether
this is due to lower net wealth or to capital market imperfections, including mortgage
constraints that depend on current earnings and, therefore, labour supply choices. We
show that the need to meet current mortgage commitments can generate the observed
correlation, and this impact of current commitments arises from the institutional
borrowing constraints. We also show that labour supply as a function of household debt
is highly nonlinear: those with greater debt are more likely to face binding borrowing
constraints and their labour supply is more variable.