Arnau
Valladares-Esteban
Assistant Professor/Lecturer
Department of Economics
Maynooth University
Fields
Macroeconomics, Labour Economics, Family Economics, and Household Finance
Working Papers
- Tax Incentives, Portfolio Choice, and Macroprudential Risks (with Janosch Brenzel-Weiss and Winfried Koeniger)
We calibrate a lifecycle portfolio-choice model of homeowners facing uninsurable income risk to show that tax deductions for mortgage interest payments and voluntary pension contributions have sizable effects on household portfolios and macroprudential risks. The deductions reduce the after-tax cost of debt and increase the after-tax return of pension savings so that the mortgage incidence increases and portfolios shift from home equity and liquid assets towards pension savings. Because the consumption responses to a house-price decline are heterogeneous, the distribution of household debt shapes the quantitative effect of the tax deductions on the homeowners' resilience after a house price bust.
@TechReport{Brenzel-Weiss_etal_2026, author = {Brenzel-Weiss, Janosch and Koeniger, Winfried and Valladares-Esteban, Arnau}, institution = {{CESifo}}, title = {{Tax Incentives, Portfolio Choice, and Macroprudential Risks}}, year = {2026}, month = jan, type = {{Working Paper}}, number = {12436}, } - On the Marriage Wage Premium (with Brendon McConnell)
We use a novel instrument to document the evolution of the effect of being married on hourly wages in the US. Despite the striking changes in the labor market, education levels, and the composition of families over the past decades, the premium for men is sizable and has only slightly diminished over time. In contrast, there has been a stark change for women: the effect of being married has evolved from a penalty into a premium. We present new evidence to uncover the mechanisms behind these patterns. The premium for men can be mainly rationalized as a byproduct of household specialization à la Becker (1985, 1993): within married couples, men tend to concentrate on market work, which leads them to supply more market hours than their single counterparts and earn higher wages. In the past, the penalty for women was also a consequence of household specialization, with married women working significantly fewer market hours than their single counterparts. The degree of specialization between spouses has decreased over time, allowing married women to work virtually as many hours as singles and leading to the disappearance of the penalty. The marriage wage premium for women in recent years is consistent with married women having higher reservation wages, which allows them to select better-paid job opportunities.
@Unpublished{McConnell_VE_2025, author = {McConnell, Brendon and Valladares-Esteban, Arnau}, title = {{On the Marriage Wage Premium}}, month = nov, year = {2025}, } - Do Employers Positively Discriminate Married Workers? (with Brendon McConnell)
In the US labor market, married men and women earn higher wages than their single counterparts. At the same time, individuals with higher cognitive and non-cognitive skills are more likely to be married. We extend the frameworks of Altonji and Pierret (2001) and Pinkston (2009) to the case of marriage and find no evidence that employers use marriage to statistically discriminate workers. Contrary to what statistical discrimination implies, the returns to being married increase with labor market experience. For women without experience being married is associated with a penalty. However, as experience increases, the relationship between wages and being married becomes positive. These findings are valuable in building a better understanding of the determinants of the marriage wage premium.
@TechReport{McConnell_VE_2023, author = {McConnell, Brendon and Valladares-Esteban, Arnau}, institution = {{Department of Economics, School of Economics and Political Science, University of St. Gallen}}, title = {{Do Employers Positively Discriminate Married Workers?}}, year = {2023}, month = jun, type = {{Discussion Paper}}, number = {2023-05}, }
Publications
- Does the Added Worker Effect Matter? (with Nezih Guner and Yuliya Kulikova)
Review of Economic Dynamics, 56, April 2025In the US, the likelihood of a married woman entering the labor force in a given month increases by 60% if her husband loses his job, known as the added worker effect. However, only 1.5% to 3.5% of married women entering the labor force in a given month can be added workers. This raises the question of whether the added worker effect can significantly impact aggregate labor market outcomes. Building on Shimer (2012), we introduce a new methodology to evaluate how joint transitions of married couples across labor market states affect aggregate participation, employment, and unemployment rates. Our results show that the added worker effect significantly impacts aggregate outcomes, increasing married women's participation and employment by 0.72 and 0.65 percentage points each month. Additionally, the added worker effect reduces the cyclicality of married women's participation and unemployment, lowering the correlation between GDP's cyclical components and participation by 4.5 percentage points and unemployment by 8 percentage points.
@Article{Guner_etal_2025, author = {Guner, Nezih and Kulikova, Yuliya A. and Valladares-Esteban, Arnau}, journal = {Review of Economic Dynamics}, title = {{Does the Added Worker Effect Matter?}}, year = {2025}, month = apr, volume = {56}, } - On the Black-White Gaps in Labor Supply and Earnings over the Lifecycle in the US (with Christopher Rauh)
Review of Economic Dynamics, 51:424–449, December 2023In the US economy, Black men, on average, receive lower wages than White men, and the difference increases over the working life. The employment rate and the number of hours worked are also lower for Blacks, but the gap is nearly constant. Together these facts suggest that on-the-job human capital accumulation might explain the diverging wages. However, the wage gap and its evolution over the lifecycle cannot be explained by differences in accumulated experience or educational attainment for the cohort we analyze. Instead, the combination of experience and test scores measured at ages 17-22 accounts for the wage gap and its growth. We propose an on-the-job human capital accumulation model with heterogeneity in the initial human capital endowment and the lifelong ability to accumulate human capital, and endogenous labor supply at the extensive and intensive margins to explain the evolution of the Black-White wage gap over the lifecycle. We discipline the distribution of the ability to accumulate human capital using the power of test scores to predict earnings growth in the data. We find that if the pre-market distributions were the same for Blacks and Whites, the racial gap in hourly earnings would be closed by 84%, with the remaining gap opening throughout life due to higher labor supply amongst White men. That is, the unequal conditions with which men in the two groups enter the labor market are likely to be the key determinant of the differences over the lifecycle.
@Article{Rauh_VE_2023, author = {Rauh, Christopher and Valladares-Esteban, Arnau}, journal = {Review of Economic Dynamics}, title = {{On the Black-White Gaps in Labor Supply and Earnings over the Lifecycle in the US}}, year = {2023}, month = dec, volume = {51}, pages = {424--449}, } - On the Measurement of the Elasticity of Labour (with Charles Gottlieb and Joern Onken)
European Economic Review, 139, October 2021We use a simple theoretical framework, a building block of many macroeconomic models, to study the prominently debated relationship between the model parametrisation of the Frisch elasticity and the reduced-form evidence on the elasticity of labour. Focusing on tax holidays, we show that the elasticity measured with a reduced-form approach is only equal to the Frisch-elasticity parameter if there are no income or general equilibrium effects. Furthermore, for a wide range of standard values of the Frisch-elasticity parameter, the response of labour generated by a tax holiday in the model is aligned with the reduced-form evidence.
@Article{Gottlieb_etal_2021, author = {Gottlieb, Charles and Onken, Joern and Valladares-Esteban, Arnau}, journal = {European Economic Review}, title = {{On the Measurement of the Elasticity of Labour}}, year = {2021}, month = oct, volume = {139}, } - On Households and Unemployment Insurance (with Sekyu Choi)
Quantitative Economics, 11(1):437–469, January 2020We study unemployment insurance in a framework where the main source of heterogeneity among agents is the type of household they live in: some agents live alone while others live with their spouses as a family. Our exercise is motivated by the fact that married individuals can rely on spousal income to smooth labor market shocks, while singles cannot. We extend a version of the standard incomplete-markets model to include two-agent households and calibrate it to the US economy with special emphasis on matching differences in labor market transitions across gender and marital status as well as aggregate wealth moments. Our central finding is that changes to the current unemployment insurance program are valued differently by married and single households. In particular, a more generous unemployment insurance reduces the welfare of married households significantly more than that of singles and vice-versa. We show that this result is driven by the amount of self-insurance existing in married households and, thus, we highlight the interplay between self- and government-provided insurance and its implication for policy.
@Article{Choi_VE_2020, author = {Choi, Sekyu and Valladares-Esteban, Arnau}, journal = {Quantitative Economics}, title = {{On Households and Unemployment Insurance}}, month = jan, year = {2020}, volume = {11}, number = {1}, pages = {437--469}, } - The Marriage Unemployment Gap (with Sekyu Choi)
B.E. Journal of Macroeconomics, 18(1), January 2018In this paper we document that married individuals face a lower unemployment rate than their single counterparts. We refer to this phenomenon as the marriage unemployment gap. Despite the dramatic demographic changes in the labor market over the last decades, this gap has been remarkably stable both for men and women. Using a flow-decomposition exercise, we assess which transition probabilities (across labor force states) are behind the marriage unemployment gap. We find that, for men, the higher attachment to employment of married males is the main driver of the gap. For females, we find that the participation margin plays a crucial role.
@Article{Choi_VE_2018, author = {Choi, Sekyu and Valladares-Esteban, Arnau}, title = {{The Marriage Unemployment Gap}}, journal = {B.E. Journal of Macroeconomics}, year = {2018}, month = jan, volume = {18}, number = {1}, }