Paula Roth is a PhD student at the Department of Economics. Her main interests are micro and macro-economic theory and consumer finance. Her most recent project concerns the effects of income inequality on the behavior of low and middle-income households.
Keywords: inequality public economics household finances microeconomics
Also available at
- PhD student in Economics, Uppsala University, August 2013 -
- PhD student in Economics, New York University, September 2015-December 2015
- MSc in Economics, Stockholm School of Economics, August 2010-January 2013
- BSc in Economics and Management, Stockholm School of Economics, August 2007-June 2010
- Teaching Assistant, Intermediate Micro, Uppsala University, 2014-2015
WORK IN PROGRESS
Job Market Paper: Inequality, Relative Deprivation and Financial Distress - Evidence from Swedish Register Data
Abstract: Several studies have linked rising financial insolvency rates in the Western world to increasing inequality and many argue that this might be explained by individuals' desire to "Keep up with the Joneses". Using unique administrative register data on individual insolvencies in Sweden, I study the relationship between inequality in one's reference group, the income distances relative to peers, and the probability to become insolvent. Identification relies on access to individual panel data, different definitions of reference groups, area fixed effects and a large battery of background characteristics. The results suggest that it is not inequality per se that drives insolvency, but instead that it is the relative deprivation with respect to peers in the locality that increases an individual’s probability to become insolvent.
Risk Sharing and Entrepreneurship
Joint with Matilda Kilström
Abstract: In this paper, we study the role of risk-sharing in facilitating innovation. Studying entrepreneurship and innovation entails modelling an occupational choice and an effort choice. Risk-sharing may increase the number of individuals who become entrepreneurs by limiting the downside risk. The effort of entrepreneurs may, however, be hampered by high risk-sharing if this limits the returns faced by successful entrepreneurs relative to unsuccessful entrepreneurs. We construct a theoretical model where risk-sharing may be private or public, i.e., provided through the welfare state by means of taxation. We show that the level of risk-sharing matters for the characteristics of entrepreneurs. Moreover, high taxes, which imply high equilibrium benefits paid out to unsuccessful entrepreneurs, encourage entrepreneurship but discourage effort.
First Impressions Last - Does Inequality Increase Status Consumption and Household Debt?
Joint with Elin Molin.
Abstract: Recent decades have seen a simultaneous increase in income inequality and household debtto-GDP for low and middle-income households in many countries. Several empirical papers have suggested that income inequality spurs borrowing among non-rich households through their preference to "Keep up with the Joneses". In this paper, we make several contributions. First, we show that standard Keeping up with the Joneses utility functions cannot generate this relationship unless one imposes the assumption that the rich are more impatient than the non-rich. Second, we present an extended version of the Keeping up with the Joneses utility function that generates outcomes that are consistent with data, where the main assumption is that status is built up over the life-cycle.
Top Incomes and Consumption of the Non-rich - Is there a Swedish trickle-down effect?
Joint with Elin Molin.
Abstract: A recent empirical study by Bertrand and Morse (2016) finds that the surge in US income inequality has led to higher consumption among non-rich households. Their evidence suggest that this is driven by a preference for maintaining status. Sweden is the country within the OECD where inequality has increased the most during the last decades, but so far no one has investigated if this relationship exist in Sweden. In this paper we use Swedish micro data to show that consumption among non-rich households is positively affected by higher top-incomes at the municipality level. We follow the procedure by Bertrand and Morse (2016) and show that an extension with age-specific reference groups performs better. Neither permanent income, precautionary savings or wealth effects can explain our finding. We provide suggestive evidence that this relationship can be explained by a status-maintaining motive.
Please contact the directory administrator for the organization (department or similar) to correct possible errors in the information.