We evaluate the aggregate, distributional and welfare consequences of alternative government education policies to encourage college completion, such as making college free and improving funding for public schooling. To do so, we construct a general equilibrium overlapping generations model with intergenerational linkages, a higher education choice as well as a multi-stage human capital production process during childhood and adolescence with parental and government schooling investments. The model features rich cross-sectional heterogeneity, distinguishes between single and married parents, and is disciplined by US household survey data on income, wealth, education and time use. Studying the transitions induced by unexpected policy reforms we show that the "free college" and the "better schools" reform generate significant welfare gains, which take time to materialize and are lower in general than in partial equilibrium. It is optimal to combine both reforms: tuition subsidies make college affordable even for children from poorer parental backgrounds and better schools increase human capital thereby reducing dropout risk.
@article{popova2025freecollege,title={Shaping Inequality and Intergenerational Persistence of Poverty: Free College or Better Schools?},author={Krueger, Dirk and Ludwig, Alexander and Popova, Irina},journal={Journal of Monetary Economics},volume={150},pages={103694},year={2025},month=mar,}
2023
IMFER
The Fiscal and Welfare Effects of Policy Responses to the Covid-19 School Closures
(joint withNicola Fuchs-Schündeln, Dirk Krueger, André Kurmann and Alexander Ludwig)
This paper studies the fiscal and welfare effects of policy responses to the Covid-19 school closures. We evaluate the long-run consequences of school closures on the affected cohorts of children and the fiscal consequences for the government, and study the effectiveness of compensating education policies.
@article{popova2023covidschoolsfiscal,title={The Fiscal and Welfare Effects of Policy Responses to the Covid-19 School Closures},author={Fuchs-Sch{\"u}ndeln, Nicola and Krueger, Dirk and Kurmann, Andr{\'e} and Ludwig, Alexander and Popova, Irina},journal={IMF Economic Review},volume={71},pages={35--98},year={2023},}
2022
EJ
The Long-Term Distributional and Welfare Effects of Covid-19 School Closures
(joint withNicola Fuchs-Schündeln, Dirk Krueger and Alexander Ludwig)
We study the long-run distributional and welfare effects of Covid-19 school closures using quantitative macroeconomic models with realistic human capital accumulation during childhood and adolescence.
@article{popova2022covidschools,title={The Long-Term Distributional and Welfare Effects of Covid-19 School Closures},author={Fuchs-Sch{\"u}ndeln, Nicola and Krueger, Dirk and Ludwig, Alexander and Popova, Irina},journal={The Economic Journal},volume={132},number={645},pages={1647--1683},year={2022},month=jul,}
2020
JME
Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave
(joint withChristopher Busch, Dirk Krueger, Alexander Ludwig and Zainab Iftikhar)
In 2015-2016 Germany experienced a wave of predominantly low-skilled refugee immigration. We evaluate its macroeconomic and distributional effects using a quantitative overlapping generations model calibrated using German micro data to replicate education and productivity differentials between foreign born and native workers. Workers are modelled as imperfect substitutes in aggregate production leading to endogenous wage differentials. We simulate the dynamic effects of this refugee wave, with specific focus on the welfare impact on low skilled natives. Our results indicate that the small losses this group suffers can be compensated by welfare gains of other parts of the native population.
@article{popova2020germany,title={Should Germany Have Built a New Wall? Macroeconomic Lessons from the 2015-18 Refugee Wave},author={Busch, Christopher and Krueger, Dirk and Ludwig, Alexander and Popova, Irina and Iftikhar, Zainab},journal={Journal of Monetary Economics},volume={113},pages={28--55},year={2020},}