Laura C. Murphy

This paper investigates the role of liquidity constraints in shaping loan term choices within the auto loan market, a major component of household debt in the United States. I address two key features of auto loan term lengths in the U.S.: their substantial cross-sectional heterogeneity and the notable rise in average term lengths over time. Using data from the Federal Reserve Bank of New York/Equifax Consumer Credit Panel, along with supplemental income and price data, I establish a causal link between liquidity constraints and loan term lengths, demonstrating that much of the cross-sectional variation in term lengths can be attributed to differences in liquidity constraints among borrowers. To further analyze these patterns, I develop a quantitative model of term length choice, showing that access to longer loan terms enables borrowers to smooth consumption and manage debt more effectively. Through this model, I also demonstrate that while time-series variation in liquidity constraints alone does not fully account for the increase in term lengths, the narrowing gap between interest rates on debt and savings, when interacted with liquidity constraints, has contributed to the observed trend toward longer loan maturities.

We study how demographic changes in the US affect men’s lifetime incomes through career spillovers. American men’s lifetime median incomes have followed a hump-shaped pattern: rising with each cohort entering the labour market from the late 1950s until the 1970s and subsequently falling. The start of the decline coincides with the entry of the baby boomers, who represent a structural break in the size of incoming cohorts. The availability of higher-compensated management tasks increases with the number of lower-ranked (younger) workers. So, a larger cohort of workers will increase (decrease) the opportunities of their predecessors (successors), in contrast to the symmetric effect predicted by traditional models. We utilize a simple model to show how cross-cohort differences in promotions to higher-rank jobs can account for the shape of lifetime median incomes observed in the data. We also show the promotion mechanism is consistent with several other cross-cohort empirical facts.

We study women’s labor market participation in England between 1851 and 1911 using newly digitized census microdata. We document three novel facts. First, women’s labor force participation rate slightly decreased between 1851 and 1911, driven by a 40% decrease among married women. Secondly, examining synthetic cohorts reveals that the drop in married women’s labor force participation is driven by younger cohorts choosing not to join the workforce, rather than older cohorts exiting at increasing rates. Lastly, we observe that women were predominantly employed in the textile and domestic service sectors. Our theoretical model suggests that increasing societal barriers may have influenced married women’s labor market engagement over time.

U.S. student debt has surged from $260 billion in 2004 to $1.5 trillion in 2019, with 43% of college attendees incurring education-related debt. When breaking down student debt and college enrollment by gender, two facts stand out. First, women are more likely than men to enroll in college. Second, among those attending college, women are more likely to carry student loan debt compared to men, a phenomenon we term the “twin gender gap in higher education." This project investigates whether men’s better non-college options contribute to the growing gender gap in both college enrollment and student loan uptake. We advance this research by: (i) utilizing large-scale credit data linked with FAFSA records from California to confirm these two patterns; (ii) assessing how macroeconomic factors influencing non-college employment shape the relationship between gender, college enrollment, and financing; and (iii) constructing a structural model to explain these dynamics and evaluate the welfare impacts of key policies.