“We offer weekly pay”: Paycheck frequency and the need for liquidity of American workers [Draft]
Earlier circulated as "Paycheck frequencies, wages, and the need for liquidity of workers in the U.S."
February 2024
Abstract
American workers who receive weekly paychecks tend to earn lower hourly wages and have less liquid wealth than those who earn every two weeks. I
explain these stylized facts by showing, through a labor search model incorporating workers’ liquid assets with potentially binding constraints, that paycheck
frequency serves as a job amenity that comes with a compensating wage differential. Even though they might earn lower wages, workers with less liquidity
are willing to accept jobs that pay more frequently because they help smooth consumption between weeks in a month without the need to resort to expensive
loans. The distribution of liquidity in equilibrium plays a key role in underpinning the wage distributions conditional on pay frequency.
Working papers
Unemployment benefits and consumption smoothing: Cross-state study from the U.S. [Draft]
January 2024
Abstract
Unemployment insurance programs have three common parameters: weekly benefit amount, potential benefit duration, and payment frequency. Exploiting
variations in these dimensions across American states over time as well as deterministic kinks in the policy schedule, I study their effects on the ability of
unemployed workers to smooth their consumption relative to that in employment periods. Using quarterly micro data, I find that weekly benefit amount
plays the most important role in helping unemployed workers smooth consumption, namely in food and nondurables. Payment frequency also has a modest
smoothing effect, while potential benefit duration rarely plays a significant role.
Work in Progress
Trade Liberalization and the Supply of Productive Skills
Pre-PhD Research
The Cost Channel Effect of Monetary Transmission: How Effective Is the ECB's Low Interest Rate Policy for Increasing Inflation?
with Dorothea Schäfer and Andreas Stephan
Discussion Paper 1654, DIW Berlin, 2017
Determinants of Net Interest Margin of Commercial Banks in Vietnam
with Vu Thi Dan Tra
Journal of Economics and Development, 17(2), 2015