NBER Publications by Danny Yagan

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Working Papers and Chapters

July 2014Riding the Bubble? Chasing Returns into Illiquid Assets
Household investors chase stock market returns. Surveys suggest that households intend to "ride the bubble" by buying stocks early in a boom and selling stocks early in a bust. This implies that households use only liquid assets to chase returns. I test this prediction using inflows to fixed annuities---illiquid tax-preferred assets that lock wealth out of the stock market for five to ten years. I find that fixed annuity inflows spike after poor stock market returns, inconsistent with ride-the-bubble intentions and instead indicating buy-and-hold intentions. The results are consistent with households extrapolating recent stock market returns into the long run.
Affirmative Action Bans and Black Admission Outcomes: Selection-Corrected Estimates from UC Law Schools
The consequences of banning affirmative action depend on schools' ability and willingness to avoid it. This paper uses rich application-level data to estimate the effect of the 1996 University of California affirmative action ban---the first and largest ban---on black admission advantages at UC law schools. Controlling for selective attrition from applicant pools, I find that the ban reduced the black admission rate from 61% to 31%. This implies that affirmative action ban avoidance is far from complete and suggests that affirmative action at law schools passes the constitutional test of not being easily replaced by non-racial alternatives. I further find that the affirmative action ban far from eliminated cross-sectional black admission advantages, which remained as high as 63 percent...
September 2010How Does Your Kindergarten Classroom Affect Your Earnings? Evidence From Project STAR
with Raj Chetty, John N. Friedman, Nathaniel Hilger, Emmanuel Saez, Diane Whitmore Schanzenbach: w16381
In Project STAR, 11,571 students in Tennessee and their teachers were randomly assigned to classrooms within their schools from kindergarten to third grade. This paper evaluates the long-term impacts of STAR by linking the experimental data to administrative records. We first demonstrate that kindergarten test scores are highly correlated with outcomes such as earnings at age 27, college attendance, home ownership, and retirement savings. We then document four sets of experimental impacts. First, students in small classes are significantly more likely to attend college and exhibit improvements on other outcomes. Class size does not have a significant effect on earnings at age 27, but this effect is imprecisely estimated. Second, students who had a more experienced teacher in kindergarten h...

Published: Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1593-1660. citation courtesy of

June 2009Optimal Taxation in Theory and Practice
with N. Gregory Mankiw, Matthew Weinzierl: w15071
We highlight and explain eight lessons from optimal tax theory and compare them to the last few decades of OECD tax policy. As recommended by theory, top marginal income tax rates have declined, marginal income tax schedules have flattened, redistribution has risen with income inequality, and commodity taxes are more uniform and are typically assessed on final goods. However, trends in capital taxation are mixed, and capital income tax rates remain well above the zero level recommended by theory. Moreover, some of theory's more subtle prescriptions, such as taxes that involve personal characteristics, asset-testing, and history-dependence, remain rare in practice. Where large gaps between theory and policy remain, the difficult question is whether policymakers need to learn more from theor...

Published: N. Gregory Mankiw & Matthew Weinzierl & Danny Yagan, 2009. "Optimal Taxation in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 147-74, Fall. citation courtesy of

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