Gonzalo Paz-Pardo

I am a Senior Economist at DG Research in the European Central Bank. I hold an Economics PhD from University College London.

I am interested in macroeconomics, household finance, and labor economics, with a particular focus on earnings dynamics and inequality.

My latest CV is available here.


Working papers

Homeownership and Portfolio Choice over the Generations (new version, October 2020)

Earnings are riskier and more unequal for households born in the 1960s and 1980s than for those born in the 1940s. Despite the improvements in financial conditions, younger generations are less likely to be living in their own homes than older generations at the same age. By using a life-cycle model with housing and portfolio choice that includes flexible earnings risk and aggregate asset price risk, I show that changes in earnings dynamics account for a large part of the reduction in homeownership across generations. Lower-income households find it harder to buy housing, and as a result accumulate less wealth.

Family and Government Insurance: Wage, Earnings, and Income Risks in the Netherlands and the U.S. (joint with Mariacristina De Nardi, Giulio Fella, Marike Knoef, and Raun van Ooijen), NBER working paper no. 25832 (2019). Forthcoming in the Journal of Public Economics. VoxEU column

We document new facts about risk in male wages and earnings, household earnings, and pre- and post-tax income in the Netherlands and the United States. We find that, in both countries, earnings display important deviations from the typical assumptions of linearity and normality. Individual-level male wage and earnings risk is relatively high at the beginning and end of the working life, and for those in the lower and upper parts of the income distribution. Hours are the main driver of the negative skewness and, to a lesser extent, the high kurtosis of earnings changes. Even though we find no evidence of added-worker effects, the presence of spousal earnings reduces the variability of household income compared to that of male earnings. In the Netherlands, government transfers are a major source of insurance, substantially reducing the standard deviation, negative skewness, and kurtosis of income changes. In the U.S. the role of family insurance is much larger than in the Netherlands. Family and government insurance reduce, but do not eliminate nonlinearities in household disposable income by age and previous earnings in either country.

Published papers

De Nardi, Fella and Paz-Pardo (2020), “Nonlinear household earnings dynamics, self-insurance, and welfare", Journal of the European Economic Association, volume 18, issue 2, pages 890-926. DOI https://doi.org/10.1093/jeea/jvz010 . An earlier, different version of the paper was circulated as “The Implications of Richer Earnings Dynamics for Consumption and Wealth", NBER working paper no. 21917 (2016).

Earnings dynamics are much richer than typically assumed in macro models with heterogeneous agents. This holds for individual-pre-tax and household-post-tax earnings and across administrative (Social Security Administration) and survey (Panel Study of Income Dynamics) data. We estimate two alternative processes for household after-tax earnings and study their implications using a standard life-cycle model. Both processes feature a persistent and a transitory component, but while the first one is the canonical linear process with stationary shocks, the second one has substantially richer earnings dynamics, allowing for age-dependence of moments, non-normality, and nonlinearity in previous earnings and age. Allowing for richer earnings dynamics implies a substantially better fit of the evolution of cross-sectional consumption inequality over the life cycle and of the individual-level degree of consumption insurance against persistent earnings shocks. The richer earnings process also implies lower welfare costs of earnings risk.

Work in progress

Household Earnings Risk, Government Policy, and Welfare in the UK (joint with Mariacristina de Nardi and Giulio Fella)

How much wealth inequality with preference heterogeneity?


I'm a proud winner of an UCL Education Award for my teaching work.

I have taught Economics 1001 at University College London for three years, as part of the CORE Project. Here they interviewed me about my experience teaching the material to first year students and introducing it to new teachers. I have also collaborated with the translation to Spanish of the book as an academic reviewer.

I have also taught Advanced Macroeconomics in the UCL MSc Economics (2018-2019) and Microeconomics for Policy in the UCL MSc Economic Policy (2014-2015).

I have also run a panel data course in A Coruña University for four years.