※ 2019年10月3日

※ 特に表記のない限りセミナー発表は英語で行われます（Unless otherwise mentioned, presentations are in ENGLISH）。

日時	October 10, 2019 （木　Thursday） 16:50-18:35 主催：Tokyo Workshop on International and Development Economics (TWID)
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Raphaël Frank (Hebrew University of Jerusalem) Labor Scarcity and the Adoption of Labor Saving Technologies (joint with Oded Galor)
Abstract

日時	October 24, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	YiLi Chien (Federal Reserve Bank of St Louis) The Determination of Optimal Public Debt under both Aggregate and Idiosyncratic Uncertainties
Abstract

日時	October 31, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Thomas A. Lubik　 (Federal Reserve Bank of Richmond) TBA
Abstract

日時	November 28, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	高山直樹 (Naoki Takahashi) (Hitotsubashi University） TBA
Abstract

日時	December 12, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Xavier Ragot (Sciences-Po) TBA
Abstract

日時	December 26, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Kai Jackie Zhao (University of Connecticut) TBA
Abstract

日時	January 15, 2020 （水　Wednesday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Francesco Zanetti (Unversity of Oxford) TBA
Abstract

<以下本年度終了分＞

日時	May 9, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	川上 圭 (Kei Kawakami) (Aoyama Gaukin University) Sorting, Selection, and Announcement Returns in Takeover Markets [paper1] [paper2]
Abstract

日時	April 4, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	小林 照義 (Teruyoshi Kobayashi) (Kobe University) Uncovering the network dynamics in financial markets
Abstract

日時	April 18, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Francesco Zanetti (University of Oxford) Search Complementarities, Aggregate Fluctuations, and Fiscal Policy
Abstract	We develop a quantitative business cycle model with search complementarities in the inter-firm matching process that entails a multiplicity of equilibria. An active equilibrium with strong joint venture formation, large output, and low unemployment coexists with a passive equilibrium with low joint venture formation, low output, and high unemployment. Changes in fundamentals move the system between the two equilibria, generating large and persistent business cycle fluctuations. The volatility of shocks is important for the selection and duration of each equilibrium. Sufficiently adverse shocks in periods of low macroeconomic volatility trigger severe and protracted downturns. The magnitude of government intervention is critical to foster economic recovery in the passive equilibrium, while it plays a limited role in the active equilibrium.

日時	April 25, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Francisco Ruge-Murcia (McGill University) Asset Prices in a Small Production Network [paper]
Abstract	This paper constructs an asset-pricing model where firms in heterogeneous sectors interact with each other in a network as producers and consumers of materials and investment goods. Idiosyncratic sectoral shocks are transmitted through the network with the dynamics being affected by the heterogeneity in production functions and capital adjustment costs. The model is estimated using sectoral and aggregate U.S. data. Results show that 1) shocks to the primary sector account for a substantial part of the equity premium in all sectors because their volatility is much higher than that of shocks to the other sectors, and 2) the model endogenously generates volatility clusters despite the fact that shocks are conditional homoskedatic. These results depend crucially on the presence of network effects.

日時	May 16, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	矢野誠 (Makoto Yano) (Research Institute of Economy, Trade and Industry (RIETI) ) Two-Dimensional Chaosand Industrial Revolution Cycles1 (joint with Yuichi Furukawa) [paper]
Abstract	Many issues in cycles and fluctuations cannot be explained without multiple state variables. Time needed for innovation is one such issue. This study uncovers, and provides a new characterization for, ergodic chaos with two state variables and builds a model of innovation highlighting time in innovation and intellectual property protection. We demonstrate that the explosive industrial takeoffs and Kondratieff's long waves over the past two centuries and a half may be explained as a single equilibrium phenomenon. Time in innovation tends to stabilize chaotic innovation dynamics. Intellectual property protection is a necessary condition for chaotic takeoffs from the no-innovation phase.

日時	May 23, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	脇 雄一郎 (Yuichiro Waki) (Aoyama Gakuin University) Fiscal Forward Guidance: A Case for Selective Transparency (joint withIppei Fujiwara) [paper]
Abstract	Should the fiscal authority use forward guidance to reduce future policy uncertainty perceived by private agents? Using dynamic general equilibrium models, we examine the welfare effects of announcing future fiscal policy shocks and show that selective transparency is desirable — announcing future policy shocks that are distortionary can be detrimental to ex ante social welfare, whereas announcing non-distortionary shocks generally improves welfare. Sizable welfare gains are found with constructive ambiguity regarding the timing of a tax increase in a realistic fiscal consolidation scenario. However, being secretive about distortionary shocks is time inconsistent, and welfare loss from communication may be unavoidable.

日時	May 29, 2019 （水　Wednesday） 10:25-12:10 主催：Tokyo Workshop on International and Development Economics (TWID) 共催：ミクロ経済学ワークショップ ※日時・場所に注意
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）2階 小島コンファレンスルーム in Kojima Conference Room on the 2nd floor of the Economics Research Annex (Kojima Hall) [Map]
報告	松山公紀 (Kiminori Matsuyama) (Northwestern University) "Reconsidering the Market Size Effect in Innovation and Growth"
Abstract	In the standard R&D-based endogenous growth model, a larger country innovates more and grows faster. Because of the homotheticity of preferences, however, it does not matter whether the large market size is due to a large population size or a high per-capita expenditure. In this paper, we develop a balanced growth model of innovation with nonhomothetic preferences, containing the standard model as a limit case. We show, among others, that, holding the aggregate market size fixed, a country with higher per capita expenditure and a smaller population size innovates more and grows faster under the empirically relevant cases.

日時	May 30, 2019 （木　Thursday） 16:50-18:30 ※　Time and Venue has been changed/ 日時・会場が変更いたしました。
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）2階 小島コンファレンスルーム in Kojima Conference Room on the 2nd floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Francesco Bianchi (Duke University) The Origins and Effects of Macroeconomic Uncertainty (joint with Howard Kung and Mikhail Tirskikh) [paper]
Abstract	We construct and estimate a dynamic stochastic general equilibrium model that features demand- and supply-side uncertainty. Using term structure and macroeconomic data, we find sizable effects of uncertainty on risk premia and business cycle fluctuations. Both demand-side and supply-side uncertainty imply large contractions in real activity and an increase in term premia, but supply-side uncertainty has larger effects on inflation and investment. We introduce a novel analytical decomposition to illustrate how multiple distinct risk propagation channels account for these differences. Supply and demand uncertainty are strongly correlated in the beginning of our sample, but decouple in the aftermath of the Great Recession.

日時	May 31 2019 （金　Friday）9:00-10:30 　※日時に注意
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Giancarlo Corsetti (Cambridge University) The Elusive Gains from Nationally-Oriented Monetary Policy (joint with Martin Bodestein and Luca Guerrieri)
Abstract	The consensus in recent macro literature is that gains from international monetary cooperation are likely to be small. While this irrelevance result holds for economies which are close to “internal” and “external balance,” we show that the welfare costs and incentives to move away from cooperation can be very large when assessed conditionally on empirically-relevant dynamic developments of the economy. Using the workhorse two-country, two-good monetary model with nominal rigidities, we find that, in bond economies, the temptation to pursue non-cooperative, nationally-oriented policies is primarily driven by the emergence of global imbalances, i.e. large net foreign assets positions. Under complete markets, the temptation to deviate from cooperation is increasing in the trade-offs between inflation and unemployment, as is the case when price and wage rigidities translate into large and divergent real wage distortions. Quantitatively, the conditional costs of nationally-oriented policies can climb to several times the costs associated with business cycle fluctuations. We also show that flexible inflation targeting comes close to replicating the cooperative policies, and thus it is just as fragile.

日時	May 31 2019 （金　Friday） 10:30-12:10 　※日時に注意
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Bin Wei (Federal Reserve Bank of Atlanta) The Two-Pillar Policy for the RMB (joint with Urban J. Jermann, and Vivian Z. Yue) [paper]
Abstract	We document stylized facts about China’s recent exchange rate policy for its currency, the renminbi (RMB). Our empirical findings suggest that a “two-pillar policy” is in place, aiming to balance RMB index stability and exchange rate flexibility. We then develop a tractable no-arbitrage model of the RMB under the two-pillar policy. Using derivatives data on the RMB and the U.S. dollar index, we estimate the model to assess financial markets’ views about the fundamental exchange rate and sustainability of the policy. Our model is able to predict the modification of the two-pillar policy in May 2017, when a discretion-based “countercyclical factor” was introduced for the first time. We also examine the model’s ability to forecast RMB movements.

日時	June 6, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Daniel Barczyk (McGill University) Save, Spend or Give? A Model of Housing, Family Insurance, and Savings in Old Age (joint with Sean Fahle Matthias Kredler) [paper]
Abstract	We propose that interactions among old-age risks, housing, and family insurance are key for understanding the economic behavior of the elderly. Empirically, we find that homeownership reduces dis-saving while increasing the likelihood and persistence of informal care from children, which in turn protects bequests by preventing nursing home entry. Nonetheless, elderly parents and the childless display strikingly similar savings and bequests. Additionally, we calculate that one-fourth of transfers from retired parents to children flow before death. We build a dynamic model featuring strategic interactions between imperfectly-altruistic parent and child households, a housing choice, and long-term-care risk. The model successfully rationalizes our empirical findings. Homes are valuable for inducing care from children, accounting for 10% of ownership. Although the childless have no altruistic motive for saving, they resemble parents because they lack family insurance and thus have a stronger precautionary motive. Parents withhold most transfers until death for strategic reasons.

日時	June 13, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Mi Luo (Emory University) Evolution of Wealth Distribution and Social Mobility in the U.S. (joint with Jess Benhabib and Alberto Bisin)
Abstract	We extend the framework in Benhabib, Bisin and Luo (2019) to a nonstationary setup to understand mechanisms driving the rapid increase in wealth inequality and relatively stable intergenerational mobility of wealth in the U.S. We consider four factors driving the changes: heterogeneous labor income, heterogeneous returns, increasing saving rates with wealth, as well as different paths in taxes for labor income versus capital income. We highlight the different effects of labor and capital income taxes on the changes on wealth inequality.

日時	June 20, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Nathaniel A. Throckmorton (William & Mary) The Zero Lower Bound and Estimation Accuracy (joint with Tyler Atkinson and Alexander W. Richter) [paper]
Abstract	During the Great Recession, many central banks lowered their policy rate to its zero lower bound (ZLB), creating a kink in the policy rule and calling into question linear estimation methods. There are two promising alternatives: estimate a fully nonlinear model that accounts for precautionary savings effects of the ZLB or a piecewise linear model that is much faster but ignores the precautionary savings effects. This paper compares the accuracy of the two methods using artificial datasets. We find the predictions of the nonlinear model are typically more accurate than the piecewise linear model, but the differences are usually small. There are far larger gains in accuracy from estimating a richer, less misspecified piecewise linear model.

日時	June 26, 2019 （水　Wednesday） 16:50-18:35 　※日時に注意 主催：Tokyo Workshop on International and Development Economics (TWID) 共催：ミクロ経済学ワークショップ
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Samuel Kortum (Yale University) "Firm-to-Firm Trade: Imports, Exports, and the Labor Market” (joint with Jonathan Eaton and Francis Kramarz)
Abstract

日時	June 27, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Saleem Bahaj (Bank of England) Central Bank Swap Lines: Evidence on the Effects of the Lender of Last Resort (joint with Ricardo Reis) [paper]
Abstract	Theory claims that central-bank lending programs put ceilings on private lending rates, reduce ex post funding risk, and encourage ex ante investment. Testing for these effects is challenging. Most programs either have long precedents or were introduced in response to large shocks with multiple effects. Swap lines between advanced-economy central banks are a significant new policy through which a source central bank provides source-currency credit to recipient-country banks using the recipient central bank as the monitor and as the bearer of the credit risk. This paper shows that, in theory, the swap lines should put a ceiling on deviations from covered interest parity, lower average market funding costs, and increase in ows from recipient-country banks into assets denominated in the source-country's currency. Empirically, these are tested using dierence-in-dierence strategies that exploit variation in the terms of the swap line over time, variation in the central banks that have access to the swap line, variation in the exposure of dierent securities to foreign funding, and variation in banks' exposure to dollar funding risk. The evidence suggests that the lender of last resort is very eective.

※Master's Thesis Presentations ※ We can print your thesis paper to be distributed at the seminar venue if needed.  Please send an electronic file of it to CIRJE at cirje [at mark] e.u-tokyo.ac.jp, so that CIRJE can duplicate it.  You can also bring its hardcopy directly to the CIRJE office on the 6th floor of Economics Research Annex (Kojima Hall).  The submission deadline is (please be punctual): by 4:30pm, July 3 (Wednesday) Make sure that Submission behind the deadline is not accepted for any reason. The file/hardcopy submitted to CIRJE should be the final version. You need to send your emergency contact information such as cell phone number along with your thesis file, so that CIRJE can reach you in case the file cannot be opened/is broken Please put a file of your presentation slides only in your USB memory when you come to the seminar venue since it is sometimes not recognized when other files are inculded in the USB memory. Those who missed the deadline or those who would like to revise the thesis paper after the submission, are required to make 15 hardcopies of it and bring them to the seminar venue on the presentation day. You MUST attend an official oral examination in addition to this master thesis presentation:  for details, please see the schedule to be distributed by the Graduate Office when you submit your thesis. Presenters can use equipment such as a computer and a pointer in a locker in the seminar venue on the presentation day:  make sure they should be back into place after use.

日時	Master's Thesis presentations July 4, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	10:25-10:55 GONG Xinying （Reader: 渡辺）   10:55-11:25 GAO Yun （Readers： 青木、植田、中嶋）   11:25-11:55 WANG Yang （Readers: 岡崎、青木、宮尾）   11:55-12:25 YAN Han （Readers: 岡崎、宮尾、谷本）

日時	July 11, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Satoshi Tanaka (Queensland University) Earnings Growth, Job Flows and Churn (joint with Lawrence F Warren and David Wiczer)
Abstract	Using matched employer-employee data, we study the relationship between firmlevel worker ows and workers' earnings growth when they switch from one firm to another. We estimate how employers' net job ow and churn rates aect workers' earnings when they transition from job to job. We find that job destruction at the origin leads to lower earnings growth and job creation at the destination leads to higher earnings growth, both immediately and in terms of the present discounted value of the match. These findings contravene some important predictions of job search theory, particularly that the recruitment motive behind wage posting in many directed search frameworks predicts high wages but not high wage growth for recruits to growing firms. Aggregating, the findings suggest that 10% of wage growth in job-to-job transitions is due to the eect of job reallocation.

日時	July 18, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Alexis Akira Toda (University of California, San Diego) Pareto Extrapolation: Bridging Theoretical and Quantitative Models of Wealth Inequality (joint with Emilien Gouin-Bonenfant) [paper]
Abstract	We propose a new, systematic approach for analyzing and solving heterogeneous-agent models with fat-tailed wealth distributions. Our approach exploits the asymptotic linearity of policy functions and the analytical characterization of the Pareto exponent to correct for the truncation error when computing the wealth distribution as well as aggregate quantities. Our algorithm is more transparent, efficient, and accurate with zero additional computational cost. Moreover, the performance is robust to the grid choice unlike in existing methods, which suffer from significant truncation error when the wealth distribution is fat-tailed. As an application, we solve a heterogeneous-agent model that features persistent earnings and investment risk, borrowing constraint, portfolio decision, and endogenous Pareto-tailed wealth distribution. We find that the introduction of a 1% wealth tax (with extra tax revenue used as consumption rebate) decreases wage by 6.5%, welfare (in consumption equivalent) by 7.7%, and total tax revenue by 0.72%.

日時	August 22, 2019 （木　Thursday） 10:25-12:10 共催：政策評価教育研究センター(CREPE)
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	清滝信宏 (Nobuhiro Kiyotaki) (Princeton University) Credit Booms, Financial Crises and Macroprudential Policy (joint with Mark Gertler and Andrea Prestipino) [slides]
Abstract	We develop a model of banking panics which is consistent with two features of the data: First, banking crises are usually preceded by credit booms. Second, nonetheless, credit booms often do not result in crises. That is, in the language of Gorton and Ordonez (2019), there can be "bad booms" as well as "good booms". We then study macro-prudential regulation in this kind of environment. We consider how the optimal policy weighs the benefits of preventing a crisis against the costs of stopping a good boom and analyze the features of optimal regulation. We show, for example, that countercyclical capital buffers are a critical feature of a successful macro-prudential policy.

日時	September 2, 2019 （月　Monday） 16:00-17:30　※日時に注意
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Paul Cashin (International Monetary Fund) Anchoring Japanese Inflation Expectations (joint with Francisco Ilabaca)
Abstract	This paper reviews the role of inflation expectations for the case of Japan. The key characteristics of Japanese inflation expectations are set out, in particular the expectation formation process for households and firms. Using a procedure implemented in recent Reserve Bank of New Zealand research, we investigate the movement of inflation expectations following changes in monetary policy in Japan, using Nelson Siegel curves. For robustness, we complement the analysis with further measures of anchored inflation expectations. Results show that while Japanese inflation expectations have not achieved the 2 percent target set by the Bank of Japan, there are signs of better anchoring of inflation expectations.

日時	September 26, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）１階 第１セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	Shigeru Fujita (Federal Reserve Bank of Philadelphia) Elasticities of Labor Supply and Labor Force Participation Flows (joint with Isabel Cairó and Camilo Morales-Jiménez) [paper]
Abstract	Using a representative-household search and matching model with endogenous laborforce participation, we study the interactions between extensive-margin labor supplyelasticities and the cyclicality of labor force participation flows. Our model successfullyreplicates salient business-cycle features of all transition rates between three labor mar-ket states, the unemployment rate, and the labor force participation rate, while usingvalues of elasticities consistent with micro evidence. Our results underscore the impor-tance of the procyclical opportunity cost of employment, together with wage rigidity,in understanding the cyclicality of labor market flows and stocks.

日時	October 3, 2019 （木　Thursday） 10:25-12:10
場所	東京大学大学院経済学研究科 学術交流棟 （小島ホール）1階 第1セミナー室 in Seminar Room 1 on the 1st floor of the Economics Research Annex (Kojima Hall) [Map]
報告	松田 一茂 (Kazushige Matsuda) (Hitotsubashi University) Optimal Timing of College Subsidies: Enrollment, Graduation, and the Skill Premium [paper]
Abstract	In the United States, half of college enrollees drop out before earning a bachelor’s degree. This paper examines the effect of a college subsidy scheme, in which the subsidy amount varies across years in college, on college dropout and wage inequality. I find that by increasing college subsidies from freshmen to seniors, the number of college graduates increases. In addition, the skill premium decreases more than the case in which the total budget for current constant subsidies is increased by 50%. The scheme is welfare improving, despite the fact that enrollment decreases.

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