Maxwell Rong

Stanford University
Department of Economics
579 Jane Stanford Way
Stanford, CA 94305

I am on the 2022-2023 academic job market.

Curriculum Vitae

Labor Economics, Applied Microeconomics, Household Finance

Expected Graduation Date:
June, 2023

Dissertation Committee:

Luigi Pistaferri (Primary)

Isaac Sorkin

Alessandra Voena

Job Market Paper

Income Dynamics and Rent Sharing of Coworking Couples

There has been a large empirical literature documenting rent sharing between workers and firms: firms pass through shocks to their performance to the earnings of their employees, a fact inconsistent with perfectly competitive models of the labor market. This fact has motivated monopsonistic models of labor markets where firm market power arises from imperfect worker mobility. An as-of-yet untested implication of these models is that firms should use the information available to them to infer differences in mobility for their workers and treat these workers differently. In this paper I provide novel evidence for this prediction by studying coworking couples: married couples who share an employer. Using Norwegian administrative data, I find that coworking couples face lower average income growth and higher income risk, implying substantial differences in welfare. I explore the role of the pass-through of idiosyncratic firm shocks in explaining these differences, and find that women in coworking couples experience less generous rent sharing: at any given level of firm performance, they have lower income growth than their non-coworking counterparts. Firms exploit the fact that coworking couples are less mobile in order to engage in less generous rent sharing agreements with them. These differences in rent sharing explain a substantial fraction of the observed difference in income growth and risk. I show that a simple model of on-the-job search with costly mobility can replicate these patterns, providing evidence that firms take advantage of observable differences in mobility when setting wages.

Work In Progress

Savings Liquidity and Consumption Insurance: Evidence from IRA Early Withdrawal Penalties (Slides)

I study the importance of liquid savings for smoothing consumption in the face of income shocks. I take advantage of a unique institutional feature of certain US retirement accounts, including Individual Retirement Accounts (IRAs): prior to the age of 59.5, withdrawals from these accounts are subject to an additional 10% tax penalty to discourage early withdrawal. Thus, IRAs undergo a sharp and predictable change in liquidity at age 59.5, becoming 10% more liquid. Using survey data from the Health and Retirement Study (HRS), I document 3 facts. First, annual withdrawals from IRAs increase sharply by $1,500 on average after age 59.5. Second, households with low liquid wealth in the form of checking and savings deposits have the largest proportional increases in withdrawals. Finally, IRA withdrawals increase in response to falls in income, but only for those with low liquid wealth. Using consumption data from the CAMS supplement to the HRS, I estimate a model of consumption insurance to quantify how the increased liquidity of IRA wealth after age 59.5 helps households insure consumption against income shocks.

"Man-Cessions" and the Decline of Labor Unions

Using historical Current Population Survey data, I document a novel fact: after 1979, male unemployment became significantly more cyclical than female. A one percentage point increase in state unemployment rates increases the probability that a man is unemployed by 0.14 percentage points more after 1979 relative to before. I hypothesize that the reason for this increase is the drastic decline in male unionization rates from the 1980s to the present. I leverage the passage of right-to-work laws in 7 states that weakened the power of unions to test this hypothesis, and find mixed results. However, I also take advantage of the limited panel dimension of the CPS to directly compare the unemployment cyclicality of unionized and non-unionized workers. I show that due to the drastic decrease in male unionization relative to female, even a small difference in union cyclicality can explain a great deal of the gender unemployment cyclicality gap.