We study optimal dynamic lockdowns against Covid-19 within a commuting network. Our framework integrates canonical spatial epidemiology and trade models, and is applied to cities with varying initial viral spread: Seoul, Daegu and NYC-Metro. Spatial lockdowns achieve substantially smaller income losses than uniform lockdowns, and are not easily approximated by simple centrality-based rules. In NYM and Daegu—with large initial shocks—the optimal lockdown restricts inflows to central districts before gradual relaxation, while in Seoul it imposes low temporal but large spatial variation. Actual commuting responses were too weak in central locations in Daegu and NYM, and too strong across Seoul.
“The Valuation of Local Government Spending: Gravity Approach and Aggregate Implications”, June 2020. Draft
How much do people value local government spending? What are the effects of fiscal transfers that finance this spending? I develop a spatial equilibrium framework where people’s simultaneous (internal) migration and commuting choices reveal preferences. I combine this framework with administrative data from South Korea and leverage the plausibly exogenous variation in local government spending across districts induced by national tax reforms in 2008 and 2012. The estimated mobility responses imply that workers value each additional dollar of per-capita local government spending by 75 cents of their after-tax income. The general-equilibrium counterfactuals imply that a fiscal arrangement with lower redistribution would result in aggregate gains. A key aspect of my analysis is that bilateral migration and commuting decisions are made jointly. I show that ignoring any one of these margins biases the estimates of preferences for public goods, distance elasticities of migration or commuting, and the aggregate effects of alternative fiscal arrangements.
“Does Pro-Natalist Cash Transfer Work? The Case of South Korea” (new draft available soon)
This paper exploits rich variation in pro-natalist cash transfers in South Korea both overtime and cross-sectional and estimate the effects of pro-natalist cash transfers on birth outcomes. These transfers increased the total fertility rates. In terms of elasticity, a 1% increase in baby bonus raises the birth rates by 0.2%, 0.06%, and 0.04% for the first, second, and third child. I provide evidence that baby bonus only affects parent(s) at the margin of having an extra child. Based on the universe of birth records, I show that health outcomes and sex ratios at birth were not affected.