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This paper studies hours worked volatility and the cyclicality of human capital investments by embedding a Ben-Porath life-cycle model of human capital accumulation into an RBC setting. Agents differ across two dimensions: age and productivity in learning. Our results show that individuals invest more in human capital during economic downturns. However, human capital accumulation is more counter-cyclical for young and low-productivity individuals because they face a lower opportunity cost of education and a higher marginal product of human capital. These results are confirmed empirically using US data from the Current Population Survey and the American Time Use Survey. In addition, the paper contributes to the RBC literature by showing that the model's business cycle properties, in particular hours worked volatility, are sensitive to assumptions of heterogeneity. Introducing heterogeneity in productivity increases the volatility of aggregate hours worked and changes the life-cycle profile for hours volatility to better match the data.

Recent empirical evidence finds that progressive taxation is an effective economic stabilizer, but theoretical results disagree. This paper shows that a lifecycle model with total factor productivity shocks can match the empirical evidence. If the US economy switched from progressive to proportional taxation, output volatility would increase by 5 percent. Progressive taxes act as stabilizers by reducing income volatility among the young and soon-to-be retirees. Thus, incorporating a rich lifecycle structure in the model is important to match the data. The model is then used to study the welfare implications of reducing tax progressivity.

Mauritius is classified as a high-income small island country. However, gender inequalities are still prevalent and therefore need to be addressed. This paper analyses the attempts made by the country to improve gender parity through the adoption of a national gender policy framework (NGPF) in 2008, using difference-in-differences with pooled cross-sectional data from Household Budget Surveys 2007, 2012 and 2017. The results indicate that no significant gender wage gap changes occurred in 2012 after controlling for human capital, industry, and occupation. On a longer run, the interaction of the gender and year variable was significant in 2017 only when controlling for industry and occupation. This study shows that the NGPF can help women climb the economic ladder within their occupation but does not help them increase their occupational prestige by moving to a higher-paying occupation. More focused policies with clear action plans, for instance, those that will promote the inclusion of women in high-level positions, will reduce the gender wage gap. Encouraging women to participate in the knowledge-based, high-income economy of Mauritius by overcoming the skills mismatch that pervades in sectors with fastest growth is a potential strategy for improving gender wage parity.

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