Minchul Yum, PhD student, Department of Economics
Minchul Yum is a highly trained PhD student who expects to complete his dissertation in 2015. He has a command of sophisticated quantitative tools for studying the macroeconomic consequences of individual behavior. You might expect him to apply these tools to study inflation, unemployment, the money supply, and other important macroeconomic issues. But he actually studies a topic that at first glance seems more closely related to developmental psychology than to macroeconomics: how time investment by parents in the cognitive development of their children affects economic mobility.
“Time investment” is economic jargon for the amount of time in a typical day or week that parents spend interacting directly with their children in stimulating activities. Such activities include reading to a child, talking with a child, taking a child to museums, concerts, and on trips and above all playing with a child. Developmental psychologists have long studied how such stimulation helps a child’s brain develop, with important consequences for a child’s life outcomes such as employment, earnings, marriage, fertility and general life satisfaction.
Yum asks how differences in time investment across families of different socioeconomic status affect economic mobility: the transmission of economic status from one generation to the next. He uses detailed data from household surveys of time-use to document the fact that parents with a college education invest substantially more time in their children compared to parents without a college degree.
This may seem surprising because college-educated parents have greater earnings potential, so it is more costly in terms of foregone earnings for well-educated parents to spend a lot of time investing in their children, compared to less well-educated parents. But well-educated parents are also more “efficient” investors: a child gets more cognitive stimulation per hour of time investment if his parents are well educated.
Yum analyzes how much of the “intergenerational correlation” between the lifetime earnings of parents and children can be explained by such differences in time investment. This correlation is rather high – roughly 0.4 percent in the United States, indicating a relatively low degree of mobility: high-earning parents tend to have high earning children. For example, Yum reports that a child whose parents were in the 20 percent of households with respect to lifetime income has about a one third probability of being in the lowest 20 percent of his generation’s lifetime income distribution and only an 8 percent chance of being in the highest 20 percent.
This is where Yum’s quantitative tools come into play. He builds a dynamic general equilibrium model of time investment and its consequences for child development, as well as the long impact of child development on the child’s earnings. A key feature of the model is that it allows for differences across households in innate ability.
Aggregating the decisions of many different types of households in order to derive the consequences for economic mobility makes the model very challenging to solve. He calibrates the model so that it is consistent with key patterns in the data. Yum uses advanced methods developed by his advisors, Professors Aubhik Khan and Julia Thomas, to solve the model in order to determine the quantitative importance of the time investment channel in perpetuating economic inequality.
“At Ohio State, I was fortunate to work with Professors Khan and Thomas, who have been advising me for several years,” said Yum. “Since they are leading scholars in heterogeneous agent quantitative macroeconomics, I had the opportunity to deepen my knowledge in the field and be equipped with techniques to solve complicated models effectively.”
Yum’s analysis demonstrates that the disparity in time investment across parents with different levels of education can explain up to 40 percent of the intergenerational correlation in lifetime income. That is, in a hypothetical world in which all parents invested the same amount of time in their children, the intergenerational correlation would be 40 percent lower and intergenerational mobility would be substantially higher. This is an important finding with significant policy implications.
Yum is from South Korea, where most colleges require students to declare a specific major before enrolling. His choice to major in economics was motivated by the fact that an economics degree can lead to a good job. However, as he continued his studies in college, he became fascinated by economic theories. He became particularly interested in macroeconomics after taking a notoriously difficult advanced macroeconomics course. Sounds like a prime candidate for graduate school in economics: someone who loves difficult and challenging courses!
Yum decided to pursue PhD studies and become a scholar when he worked with Professor In Choi in the master’s program at Sogang University. According to Yum, Choi was not only a good teacher but also an inspiring role model, demonstrating dedication as a scholar; although he had spent more than two decades writing academic papers and books, he still enjoyed his work and published academic papers consistently. Choi strongly recommended that Yum seek his PhD at the Ohio State, where Professor Choi spent his early career as an assistant professor (Note to readers in academic positions: Please follow this example and send us your best students).
“My sole long-term goal, since I decided to pursue the PhD degree, has been to become a scholar who writes academic papers and is able to contribute to the literature,” said Yum. “I enjoy reading papers to learn new knowledge, and like to share and discuss different ideas with other colleagues. In order to achieve such a long-term goal, my short-term goal is to perform well in the upcoming job market this year. I hope to find a position as a tenure-track assistant professor at a research university where I can collaborate with other economists who share similar interests”
In his free time, Yum likes to listen to music. He is a fan of Muse, a British rock band, and also likes symphonies and piano concertos by Beethoven, Chopin, Dvorak, Rachmaninoff and Tchaikovsky. He loves to play basketball (he is rather tall, so he has a comparative advantage in that sport).
“Like many Koreans, I like to watch soccer games” Unfortunately, South Korea did not do very well at the World Cup this year – a problem that even Yum cannot solve.
