My Research
In my research, I bring together tools from economic modelling, applied microeconometrics and data science to answer policy-relevant questions. My particular interest lies in the role that human capital plays in creating economic opportunities as well as inequalities. But I also have a range of further projects and interests covering topics like health and inequalities, corporate finance and local institutions. In all my projects, I try and emphasise the benefits that economic modelling can bring to data analysis. You can find my research statement here.
Job Market Paper
Skills, Tasks and Degrees (submitted)
An increasing number of young university graduates are not entering professional occupations, raising concerns about a decline in their skills compared to earlier cohorts. This perspective may overlook evolving occupational returns to skill and job amenities. I develop an economic model featuring heterogeneous skill supply, differentiated returns to skill across occupations, and changing preferences over non-wage job characteristics. Estimating the model using UK data from 2001–2019, I find a significant decline in average graduate skill levels – about 42% of a standard deviation – which explains the majority of reduced professional employment. Additionally, changes in amenity values push graduates into routine occupations, while lower returns to skill in service occupations create growing demand from low-skilled graduates.
Publications
An extended period of elevated influenza mortality risk follows the main waves of influenza pandemics, with Spyridon Lazarakis, Rebecca Mancy & Konstantinos Angelopoulos; Social Science & Medicine 2023.
Understanding the extent and evolution of pandemic-induced mortality risk is critical given its wide-ranging impacts on population health and socioeconomic outcomes. We examine empirically the persistence and scale of influenza mortality risk following the main waves of influenza pandemics, an analysis which is missing from existing research despite its importance for understanding the true scale of pandemic-induced risk. We provide evidence from municipal public health records that multiple recurrent outbreaks followed the main waves of the 1918-19 pandemic in eight large cities in the UK, a pattern we confirm using data for the same period in the US and data for multiple influenza pandemics during the period 1838–2000 in England and Wales. To estimate the persistence and scale of latent post-pandemic influenza mortality risk, we model the stochastic process of mortality rates as a sequence of bounded Pareto distributions whose tail indexes evolves over time. Consistently across pandemics and locations, we find that influenza mortality risk remains elevated for around two decades after the main pandemic waves before more rapid convergence to background influenza mortality, amplifying the impact of pandemics. Despite the commonality in duration, there is heterogeneity in the persistence and scale of risk across the cities, suggesting effects of both immunity and socioeconomic conditions.
Working Papers
We propose a new approach to identify firm-level financial constraints by applying artificial intelligence to text of 10-K filings by U.S. public firms from 1993 to 2021. Leveraging transformer-based natural language processing, our model captures contextual and semantic nuances often missed by traditional text classification techniques, enabling more accurate detection of financial constraints. A key contribution is to differentiate between constraints that affect firms presently and those anticipated in the future. These two types of constraints are associated with distinctly different financial profiles: while firms expecting future constraints tend to accumulate cash preemptively, currently constrained firms exhibit reduced liquidity and higher leverage. We show that only firms anticipating financial constraints exhibit significant cash flow sensitivity of cash, whereas currently constrained and unconstrained firms do not. This calls for a narrower interpretation of this widely used cash-based constraints measure, as it may conflate distinct firm types – unconstrained and currently constrained – and fail to capture all financially constrained firms. Our findings underscore the critical role of constraint timing in shaping corporate financial behaviour.
What’s the Melting Pot Worth? Multiculturalism and House Prices
Is there a multicultural neighborhood price premium? We exploit plausibly exogenous variation in British colonization patterns in Northern Ireland during the early 1600s which created neighborhoods of varying religious composition that persists until today. These religious groups are culturally distinct, but are observationally equivalent ethnically and socioeconomically. A standard deviation increase neighborhood-level multiculturalism raises house prices by 9.6%. Multiculturalism raises property prices by increasing asset liquidity and housing demand as a wider spectrum of society demand houses in these areas. The findings and mechanism contrast sharply with prior evidence showing negative relationships due to homophily, social networks, and identification challenges.
Media Coverage: BBC News, BBC Radio Ulster, Economics Observatory, NIESR Economic Outlook
Pandemic-induced wealth and health inequality and risk exposure, with Konstantinos Angelopoulos, Spyridon Lazarakis & Rebecca Mancy
The main waves of a pandemic and subsequent disease outbreaks in the following years influence the evolution of the distributions of health and wealth, leading to differences in the ability to mitigate future income shocks. We study consumption smoothing and precautionary behaviour associated with the main pandemic waves and recurrent outbreak risk in a model in which health and wealth are jointly determined under income and health risk that are related to disease outbreak risk. We calibrate the model to the UK and find that the impact shock of COVID-19 and recurrent outbreak risk amplify existing inequalities in wealth and health, implying persistent increases in wealth inequality that are characterised by increases in wealth for households in higher income groups and/or with higher initial wealth, and decreases for those in lower income groups and/or with lower wealth. These changes lead to inequality in exposure to post-pandemic income risk and, in particular,
an increase in the vulnerability of those already with very little wealth prior to
the pandemic. We assess public insurance policy to mitigate income losses for those with low wealth and find that, by disincentivising wealth accumulation and incentivising investment in health for those with low wealth and health, it reduces health inequality and, in the short run, the probability of low consumption, but increases wealth inequality and, in the medium run, the probability of low consumption.
Work in Progress
Wealth and human capital are strongly intertwined. But what effect does the distribution of one have on the other? In this paper, I develop a general equilibrium heterogeneous agent incomplete market model with endogenous wealth and human capital to analyse the interactions between these two factors. I calibrate the model to the UK economy in the pre-Covid19 period and analyse the interaction of wealth and human capital in the stationary equilibrium. I find that there are important non-linearities in human capital investments, with workers with low levels of wealth investing considerably less in accumulating human capital than their counterparts with more wealth. I then analyse the economic dynamics of the distribution of human capital in the aftermath of an unexpected economic shock, showing that wealth poorer households are more exposed to these shocks, implying that the distribution of wealth matters for the recovery of the economy following recessions.
Finally, I assess the impact of the Covid19 pandemic and associated support measures in the UK. The model predicts that the UK economy will likely suffer a significant reduction in human capital in the aftermath of the Covid19 pandemic, but targeted policy action has helped to reduce the impact of the crisis particularly for low wealth households.
Cognitive Skill Biased Technological Change, Income & Wealth Inequality in the UK
This paper proposes a model to study the effect of differentiated, cognitive skill biased, technological change on income and wealth inequality. It is one of the first attempts to combine elements of the “Task-Skill” literature with a heterogenous agent incomplete market model. The model includes a structural production environment that accounts for differentiated skill demand on the firm side and multidimensional skill supply on the workers side. Using measures of cognitive and non-cognitive skills from a comprehensive panel dataset for the UK (Understanding Society), I calibrate the model with appropriate micro-estimates. The calibrated model manages to capture many of the features of the income process observed in the data and provides additional features beyond other, more commonly used approximation techniques. I then use the model to assess the impact of cognitive task biased technological (CBTC) change due to increased Computer usage in the UK over the period 1980 – 2016. The model suggests that CBTC can account for the bulk of increases in labour income inequality observed over that period, and is generally consistent with stylized facts about changes to wealth inequality.
The Time Sensitivity of Aspirational Interventions:Evidence from a Role-Modeling Rct
This paper investigates the short-run effects of an aspiration-raising intervention delivered via a randomized controlled trial among postgraduate students at a UK university during the Covid-19 pandemic. A video-based role-modelling intervention led to an immediate increase in aspirations and a delayed increase in self-reported effort. However, both effects dissipated within a few weeks. Employing a simple behavioral model that incorporates time-varying psychological cost of deviating from aspirations, we argue that aspirations may exert greater influence on effort when the goal is closer in time. Our findings suggest that timing and reinforcement are important considerations for the sustained effectiveness of aspiration-building strategies.
Policy Briefings and Reports
Angelopoulos, Konstantinos, Spyridon Lazarakis, Rebecca Mancy, and Max Schroeder. “Briefing Note: Medium-run wealth inequality following COVID-19.” (2021).
Angelopoulos, Konstantinos, Spyridon Lazarakis, Rebecca Mancy, and Max Schroeder. “Briefing Note: Post-pandemic mortality dynamics: historical city-level evidence.” (2020).
Other
Max Schroeder “Mythical Measures: The Problem of Objective Inequality Measurement in Economics and the Social Sciences“, in Groundings, Glasgow University Dialectic Society, (2015).
Contributions
Mauritius – Productivity Study : MU (P173238) Productivity Study Report – Final Draft 7-01-2021 (English). Washington, D.C. : World Bank Group (2021).
“Not ready, Still waiting – Governments have a long way to go in preparing to address gender inequality and the SDGs“, Action Aid Report, (2016).
Max Schroeder 