Michèle Tertilt’s research while affiliated with University of Mannheim and other places

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Publications (72)


Consumer Credit with Over-Optimistic Borrowers
  • Article

December 2024

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7 Reads

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5 Citations

Journal of the European Economic Association

Florian Exler

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Igor Livshits

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Michèle Tertilt

Do cognitive biases call for regulation to limit the use of credit? We incorporate over-optimistic and rational borrowers into an incomplete markets model with consumer bankruptcy. Over-optimists face worse income risk but incorrectly believe they are rational. Thus, both types behave identically. Lenders price loans forming beliefs-type scores-about borrower types. This gives rise to a tractable theory of type scoring. As lenders cannot screen types, borrowers are partially pooled. Over-optimists face cross-subsidized interest rates but make financial mistakes: borrowing too much and defaulting too little. In equilibrium, the welfare losses from mistakes are more than compensated by cross-subsidization. We calibrate the model to the US and quantitatively evaluate policies to address these frictions: financial literacy education, reducing default cost, increasing borrowing costs, and debt limits. While some policies lower debt and filings, only reducing default costs and financial literacy education improve welfare. However, financial literacy education benefits only rationals at the expense of over-optimists. Score-dependent borrowing limits can reduce financial mistakes but lower welfare.


How families matter for understanding economic inequality

July 2024

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10 Reads

Oxford Open Economics

In this commentary, we discuss the importance of families for understanding economic inequality. Family structure can in principle be an amplifier or mitigator of economic inequality. We describe three channels on how families shape economic inequality. First, how people match to form families matters for inequality across families. Second, parental investments in children can amplify existing inequalities across generations. Third, inequality can exist even within families and the economic environment can shape inequality in consumption and leisure between spouses. In this survey, we describe these channels and discuss the related literature.


Status Externalities in Education and Low Birth Rates in Korea

June 2024

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44 Reads

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13 Citations

American Economic Review

South Koreans appear to be preoccupied with their offspring's education and also have the lowest total fertility rate in the world. We propose a novel theory with status externalities and endogenous fertility connecting these facts, motivated by novel empirical evidence on private education spillovers. Using a quantitative model calibrated to Korea, we find that fertility would be 28 percent higher without the externality. We explore the effects of government policy: a pro-natal transfer or an education tax can increase fertility and reduce education spending. An education tax of 22 percent together with moderate pro-natal transfers maximizes the current generation's welfare. (JEL D31, D62, E24, I21, I26, I28, J13, O40)



The Economics of Women’s Rights – The Mary Paley and Alfred Marshall Lecture

October 2022

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29 Reads

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2 Citations

Journal of the European Economic Association

Two centuries ago, in most countries around the world, women were unable to vote, had no say over their own children or property, and could not obtain a divorce. Women have gradually gained rights in many areas of life, and this legal expansion has been closely intertwined with economic development. We aim to understand the drivers behind these reforms. To this end, we distinguish between four types of dwomen’s rights—economic, political, labor, and body—and document their evolution over the past 50 years across countries. We summarize the political-economy mechanisms that link economic development to changes in women’s rights and show empirically that these mechanisms account for a large share of the variation in women’s rights across countries and over time.



Gendered Impacts of COVID-19 in Developing Countries

May 2022

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11 Reads

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12 Citations

AEA Papers and Proceedings

In many high-income economies, the COVID-19 recession has resulted in unprecedented declines in women's employment. We examine how the forces that underlie this observation play out in developing countries. A force affecting high- and low-income countries alike is increased childcare needs during school closures. In Nigeria, mothers of school-age children experience the largest declines in employment during the pandemic, just as in high-income countries. A key difference is the role of the sectoral distribution of employment: whereas in high-income economies, reduced employment in contact-intensive services had a large impact on women, this sector plays a minor role in low-income countries.


Covid-19 und das Arbeitsmarktverhalten von Frauen und Männern: Thünen-Vorlesung 2021

March 2022

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21 Reads

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2 Citations

Perspektiven der Wirtschaftspolitik

Zusammenfassung In Folge von Covid-19 sind bisher mehr Männer als Frauen gestorben. ¹ Aber wirtschaftlich sind Frauen von der Pandemie stärker betroffen als Männer. In ihrer Thünen-Vorlesung vor dem Verein für Socialpolitik im Herbst 2021 erläutert Michèle Tertilt die Auswirkungen der Corona-Pandemie auf das Arbeitsmarktverhalten von Frauen und Männern und die sich dadurch ergebenden langfristigen Konsequenzen. Tertilt berichtet zunächst von einer empirischen Studie, in der sie gemeinsam mit Koautoren untersucht hat, inwieweit sich das relative Arbeitsangebot von Frauen und Männern in der Pandemie in einer Reihe von Ländern verändert hat. Sie stellt außerdem Ergebnisse eines quantitativen Modells vor, das die mittel- und langfristigen Konsequenzen der Pandemie für die Geschlechtergerechtigkeit am Arbeitsmarkt und insbesondere für das Lohngefälle vorhersagen soll.




Citations (57)


... One study presents a model for e-commerce platforms to determine when to introduce consumer credit services and share them with third-party sellers, revealing that sharing services can benefit both parties under certain conditions but may reduce consumer surplus [13]. In another related study, cognitive biases in borrowers, especially over-optimism, are shown to lead to financial mistakes, with the study proposing policy solutions like financial literacy education and reducing default costs to improve welfare, although the results are mixed [14]. Additionally, research on buy now, pay later (BNPL) services highlights their significant impact on consumer financial behavior, influencing the likelihood of adopting other credit options and shaping broader financial decision making [15]. ...

Reference:

The Mutual Impact of Suppliers’ Online Sales Channel Choices and Platform Credit Decisions for Offline Channels
Consumer Credit with Over-Optimistic Borrowers
  • Citing Article
  • December 2024

Journal of the European Economic Association

... Any discussion of this subject is stiffened because both these fundamental factors operate throughout the demographic shift and have effects other than ageing [1,22,30]. Lee and Mason [23] pointed out that this change in demographics considering the rise of the ageing population, is inversely connected to the drop in fertility rate as a root cause of the issue of women entering the workforce [7] explores the complex relationship between female labor supply and fertility rates, highlighting the substantial influence that shifts in female labor force participation can have on fertility choices. It emphasizes that decisions about fertility may change if more women join the workforce. ...

The economics of fertility: a new era
  • Citing Chapter
  • January 2023

... This reasoning may extend to family policies, as family support is understood to especially benefit single working mothers, among whom African American mothers would be over-represented (see Complementary insight on the adoption of family policies can be gained from work on the origin of women's rights. Tertilt et al. (2022) discuss their economic and political origins, ranging from civil rights and the control over their own bodies, to equal treatment in the labor market. One view is that cultural change contributes to evolving attitudes towards women's rights, which eventually become adopted by (mostly male) legislators. ...

The Economics of Women's Rights
  • Citing Article
  • January 2022

SSRN Electronic Journal

... The available records and literature were nevertheless very scanty despite women's positions and activities which led them, to play such a vital role in any society. However, some women in other parts of the world made significant contributions to the economic development of their society but were not publicized [1], [2]. ...

The Economics of Women’s Rights – The Mary Paley and Alfred Marshall Lecture
  • Citing Article
  • October 2022

Journal of the European Economic Association

... This may reflect a nonlinear relationship between intelligence and reproductive success, with rare damaging variants being more predictive at the lower end of the intelligence spectrum. More recently, the relationship between SES and reproductive success, which seems to be nonlinear and sex-specific, seems to be reverting back to an overall positive one, both within and between a number of high-income countries; this is probably driven by multiple factors, such as an increased compatibility between women's careers and families due to more favourable family policies and social norms, cooperative fathers, and more flexible labour markets [109][110][111] . ...

The Economics of Fertility: A New Era
  • Citing Article
  • January 2022

SSRN Electronic Journal

... Correspondingly, Gummerson et al. (2021) report a high share of partial or complete income loss among women in four African countries during the first months of the pandemic with severe restrictions in place. Studying Nigeria during the pandemic, Alon et al. (2022) find that women's employment decreased more than men's during the early stage of the pandemic, with a particular large negative impact on women with school-aged children. However, Alon et al. (2022) further find that women also experienced a stronger rebound of their employment than men at the beginning of 2021, suggesting that employment losses in low-income countries are less persistent than in high-income countries. ...

Gendered Impacts of COVID-19 in Developing Countries
  • Citing Article
  • January 2022

SSRN Electronic Journal

... Likewise, in some LMICs, women were more likely to experience job losses and reductions in employment hours than men (Seck et al. 2021). However, in other countries, including many of those in MENA, women were not as heavily concentrated in service sectors at high risk of pandemic-related job losses (Alon, Doepke, and Manysheva 2022;International Labour Organization 2020;UNDP 2021). Rather, high shares of women were employed in education and healthcare, 'essential' sectors where the public sector plays a strong role and where healthcare saw an increase in demand during the pandemic (Ilkkaracan et al. 2020;UNDP 2021). ...

Gendered Impacts of COVID-19 in Developing Countries
  • Citing Article
  • May 2022

AEA Papers and Proceedings

... The greatest sudden change occurred in early 2020 when many governments worldwide implemented lockdown procedures, which resulted in the closure of schools, day cares, and businesses and a shift to remote learning and telecommuting work for many individuals, including academic researchers. Research conducted in the United States and several western European countries demonstrated that these measures greatly impacted households with young children (Biroli et al., 2021;Carlson et al., 2022;Del Boca et al., 2020;Farré et al., 2022;Feng & Savani, 2020;Flor et al., 2022;Hupkau & Petrongolo, 2020;Mangiavacchi et al., 2021;Sevilla & Smith, 2020), and in general, women had the largest burden of additional child care responsibilities (Albanesi & Kim, 2021;Alon et al., 2020Alon et al., , 2022Collins et al., 2021). ...

From Mancession to Shecession: Women’s Employment in Regular and Pandemic Recessions
  • Citing Article
  • May 2022

NBER Macroeconomics Annual

... Finally, our paper also relates to the studies that distinguish between the sign of the income-fertility relationship across income/skill groups and that within each income/skill group by exploring a mechanism based on a composition effect; see, e.g., Doepke et al. (2023); Strulik (2024a). We complement this literature by using a dynamic model with fertility and education choices and automation to explicitly address the time-series evidence of a (relatively) high but falling birth rate among low-skilled households and a low but increasing birth rate among high-skilled households (see Figure 1). ...

The Economics of Fertility: A New Era
  • Citing Article
  • January 2022

SSRN Electronic Journal