Essays on Macroeconomic Trends and Cycles

This dissertation describes two studies on macroeconomic trends and cycles. The first chapter studies the impact of Information Technology (IT) on the U.S. labor market. Over the past 30 years, employment and income shares of routine-intensive occupations have declined significantly relative to nonroutine occupations, and the overall U.S. labor income share has declined relative to capital. Furthermore, the decline of routine employment has been largely concentrated during recessions and ensuing recoveries. I build a model of unbalanced growth to assess the role of computerization and IT in driving these labor market trends and cycles. I augment a neoclassical growth model with exogenous IT progress as a form of Routine-Biased Technological Change (RBTC). I show analytically that RBTC causes the overall labor income share to follow a U-shaped time path, as the monotonic decline of routine labor share is increasingly offset by the monotonic rise of nonroutine labor share and the elasticity of substitution between the overall labor and capital declines under IT progress. Quantitatively, the model explains nearly all the divergence between routine and nonroutine labor in the period 1986-2014, as well as the mild decline of the overall labor share between 1986 and the early 2000s. However, the model with IT progress alone cannot explain the accelerated decline of labor income share after the early 2000s, suggesting that other factors, such as globalization, may have played a larger role in this period. Lastly, when nonconvex labor adjustment costs are present, the model generates a stepwise decline in routine labor hours, qualitatively consistent with the data. The timing of these trend adjustments can be significantly affected by aggregate productivity shocks and concentrated in recessions. The second chapter studies the implications of loss aversion on the business cycle dynamics of aggregate consumption and labor hours. Loss aversion refers to the fact that people are distinctively more sensitive to losses than to gains. Loss averse agents are very risk averse around the reference point and exhibit asymmetric responses to positive and negative income shocks. In an otherwise standard Real Business Cycle (RBC) model, I study loss aversion in both consumption alone and consumption-and-leisure together. My results indicate that how loss aversion affects business cycle dynamics depends critically on the nature of the reference point. If, for example, the reference point is status quo, loss aversion dramatically lowers the effective inter-temporal rate of substitution and induces excessive consumption smoothing. In contrast, if the reference point is fixed at a constant level, loss aversion generates a flat region in the decision rules and asymmetric impulse responses to technology shocks. Under a reasonable parametrization, loss aversion has the potential to generate asymmetric business cycles with deeper and more prolonged recessions.

Experimentally Testing the Effect of Parent-Adolescent Conflict on HIV Risk, and Investigation of a Neurobiological Moderator of This Effect

Human immunodeficiency virus (HIV) is a condition in which immune cells become destroyed such that the body may become unable to fight off infections. Engaging in risk-taking behaviors (e.g., substance use) puts people at heightened risk for HIV infection, with mid-to-late adolescents at increasing risk (Leigh & Stall, 1993). Environmental and neurological reasons have been suggested for increased risk-taking among adolescents. First, family-level precursors such as parent-adolescent conflict have been significantly associated with and may pose risk for engaging in substance use and risk-taking (Duncan, Duncan, Biglan, & Ary, 1998). Thus, parent-adolescent conflict may be an important proximal influence on HIV risk behaviors (Lester et al., 2010; Rowe, Wang, Greenbaum, & Liddle, 2008). Yet, the temporal relation between parent-adolescent conflict and adolescent HIV risk-taking behaviors is still unknown. Second, at-risk adolescents may carry a neurobiological predisposition for engaging in trait-like expressions of disinhibited behavior and other risk-taking behaviors (Iacono, Malone, & McGue, 2008). When exposed to interpersonally stressful situations, their likelihood of engagement in HIV risk behaviors may increase. To investigate the role of parent-adolescent conflict in adolescent HIV risk-taking behaviors, 49 adolescents ages 14-17 and their parent were randomly assigned to complete a standardized discussion task to discuss a control topic or a conflict topic. Immediately after the discussion, adolescents completed a laboratory risk-taking measure. In a follow-up visit, eligible adolescents underwent electrophysiological (EEG) recording while completing a task designed to assess the presence of a neurobiological marker for behavioral disinhibition which I hypothesized would moderate the links between conflict and risk-taking. First, findings indicated that during the discussion task, adolescents in the conflict condition evidenced a significantly greater psychophysiological stress response relative to adolescents in the control condition. Second, a neurobiological marker of behavioral disinhibition moderated the relation between discussion condition and adolescent risk-taking, such that adolescents evidencing relatively high levels of a neurobiological marker related to sensation-seeking evidenced greater levels of risk-taking following the conflict condition, relative to the control condition. Lastly, I observed no significant relation between parent-adolescent conflict, the neurobiological marker of behavioral disinhibition and adolescent engagement in real-world risk-taking behavior.