PhD Candidate, Department of Economics



 

Contact Information

Department of Economics
Northwestern University
2211 Campus Drive
Evanston, IL 60208

Phone: 857-241-7251

ndiaye@u.northwestern.edu

Personal web page

https://sites.google.com/site/andiayeresearch/

 

Education

Ph.D., Economics, Northwestern University, 2018 (expected)
M.A., Economics, Northwestern University, 2014
M.S., Economics and Finance, Ecole Polytechnique, 2013
B.S., Mathematics and Economics, Ecole Polytechnique, 2012

Primary Fields of Specialization

Macroeconomics, Public Economics

Curriculum Vitae

Download Vita

Job Market Paper

“Flexible Retirement and Optimal Taxation”
Download Job Market Paper

This paper studies optimal income taxes and retirement benefits in a life-cycle model with an intensive margin of labor supply and an endogenous retirement age. The government insures and redistributes resources across individuals who privately observe persistent shocks to their productivity.In this environment, the optimal labor tax is hump-shaped in age, unlike in existing models with no endogenous retirement choice, in which the optimal tax is everywhere increasing. Because of the retirement margin, the total Frisch elasticity of labor supply increases with age. This elasticity effect flattens the labor tax for old workers relative to the model without an extensive margin. In addition, as high-productivity workers retire later than low-productivity workers, the distribution of productivity in the labor force features, over time, a higher mean and lower variance than in the general population. This novel composition effect pushes for a labor tax that declines for old workers. Optimal policy balances these effects with the insurance benefits of taxation, yielding the hump-shape in tax rates. In numerical simulations, the optimum achieves sizable welfare gains that approximately optimal age-dependent taxes fail to capture under the current US Social Security system. Yet, an optimal combination of age-dependent linear taxes and increasing-in-age delayed retirement credits generates welfare gains that are close to those from the optimum.

Work in Progress

“Precautionary Savings, Bounded Rationality, and Savings for Retirement”

References

Prof. Alessandro Pavan (Committee Co-Chair)
Prof. Guido Lorenzoni (Committee Co-Chair)
Prof. Mariacristina De Nardi
Prof. Lawrence Christiano